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Title: |
Employment Agreement |
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Entities: |
Meritage Private Equity Fund, LP; Nuvox Inc /DE/; Paul, Hastings, Janofsky & Walker |
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Date: |
2000 |
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Size: |
Preview shows 18KB of 76KB total |
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Price: |
$41 |
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ID: |
#1428326 |
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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered
into as of the 13th day of December, 1999, by and between Gabriel
Communications, Inc., a Delaware corporation (the "Company"), and David L.
Solomon ("Executive").
WHEREAS, Executive desires to be employed by the Company, and
the Company desires to employ Executive, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the compensation and other
benefits of Executive's employment by the Company and the recitals, mutual
covenants and agreements hereinafter set forth, Executive and the Company agree
as follows:
1. Employment Services.
(a) Executive is hereby employed by the Company,
and Executive hereby accepts such employment, upon the terms and conditions
hereinafter set forth. During the Employment Period (as defined below),
Executive shall serve as Chief Executive Officer ("CEO"), Vice Chairman of the
Board of Directors of the Company (the "Board") and a member of the Executive
Committee of the Board. Executive shall report solely and directly to the Board.
(b) Executive agrees that, throughout the
Employment Period, Executive shall have such authorities, duties and
responsibilities as are customarily assigned to the Vice Chairman of the Board
and Chief Executive Officer of an enterprise like the Company. Such duties,
responsibilities, and authorities shall include, without limitation, but subject
to the authority and directions of the Board, responsibility for the management,
operation, strategic direction and overall conduct of the business of the
Company. The Executive shall be assigned no duties or responsibilities that are
materially inconsistent with, or that materially impair his ability to
discharge, the foregoing duties and responsibilities. During the Employment
Period, the Executive shall devote substantially his full business time and best
efforts to the business of the Company. All other employees of the Company shall
report directly or indirectly to the Executive and not directly to the Board or
the Chairman of the Board. The Executive may (i) with the consent of the Board-
(which shall not be unreasonably withheld), serve as a director or trustee of
other for profit corporations or businesses which are not in substantial
competition with the Company, any of its subsidiaries or any entity in which the
Company or any of its subsidiaries has a greater than forty percent (40%)
interest (the "Company's Business"), (ii) continue to serve as an investment
director and member of the general partner of Meritage Private Equity Fund
("Meritage"), and to receive compensation therefrom, and serve on the boards of
directors of Meritage portfolio companies (including, without limitation, the
Company), provided that such portfolio companies are not in substantial
competition with the Company's Business, (iii) serve on civic or charitable
boards or committees, and (iv) manage personal investments; provided, however,
that the Executive may not engage in any of the activities described in this
Section 1(b) to the extent such activities materially interfere with the
performance of Executive's duties and responsibilities to the Company.
(c) Executive shall not, during the Employment
Period, become or serve as a director, officer, employee or member of any
entity conducting, nor become an owner of any
<PAGE> 2
substantial interest in any entity conducting, a business in substantial
competition with the Company's Business.
2. Term of Employment. The term of this Employment
Agreement (the "Employment Period") shall commence on December 13, 1999 (the
"Effective Date"), shall end on December 31, 2002 (the "Initial Period"), and
shall thereafter continue from year to year (each an "Annual Extension"), unless
sooner terminated as provided in the second sentence of this Section 2 or in
Section 4 hereof. Unless sooner terminated as provided in Section 4 hereof, the
Employment Period may be terminated by either the Company or Executive, at the
end of the Initial Period or an Annual Extension, if a written notice of
nonrenewal is delivered to the other party at least six (6) months prior to the
end of such Initial Period or Annual Extension, as the case may be.
3. Compensation and Benefits.
(a) Annual Base Salary. During the Employment
Period, the Company shall pay Executive as compensation for his services an
annual base salary in an amount determined by the Compensation Committee of the
Board. Such annual base salary shall be at the annual rate of not less than
Three Hundred Twenty-Five Thousand Dollars ($325,000) from the Effective Date
through December 31, 2000, Four Hundred Thousand Dollars ($400,000) from
January 1, 2001 through December 31, 2001, and Four Hundred Seventy-Five
Thousand Dollars ($475,000) from January 1, 2002 through December 31, 2002.
Executive's annual base salary rate shall be reviewed at least annually for
increase in the discretion of the Compensation Committee; Executive's annual
base salary rate shall not be subject to decrease at any time during the
Employment Period. Executive's base salary shall be payable in accordance with
the Company's usual practices.
(b) Annual Bonus. During the Employment Period,
Executive shall be eligible for an annual bonus under a bonus program to be
established by the Compensation Committee of the Board and approved by the
Board. Under the bonus program, Executive's annual bonus will be tied to
performance criteria and Executive is expected to be eligible for a bonus of up
to one hundred percent (100%) of his annual base salary. During the first year
of the Employment Period (through December 31, 2000), Executive's annual bonus
shall be in an amount not less than fifty percent (50%) of his annual base
salary for such payment period and shall be payable in shares of common stock of
the Company at $3.00 per share. During subsequent years of the Employment
Period, Executive's annual bonus shall be paid, at Executive's option,
exercisable at or prior to the time of such bonus award, in cash and/or shares
of common stock of the Company at a price per share equal to the exercise price
per share established by the Board or Compensation Committee with respect to the
most recent grant of stock options at fair market value by the Company,
immediately preceding the bonus determination, pursuant to the Company's 1998
Stock Incentive Plan, as amended (the "Stock Plan"), or, if not then in effect,
any successor plan of a similar nature; provided, however, that the stock
portion of the annual bonus shall not exceed fifty percent (50%) of the annual
bonus after the first year of the Employment Period.
(c) Equity Participation. On the Effective
Date, Executive shall be granted the following:
2
<PAGE> 3
(1) The right to purchase, at any time
on or prior to January 13, 2000, 425,000 shares of common stock of the
Company at $2.40 per share under the Stock Plan;
(2) A warrant under the Stock Plan to
purchase 550,000 shares of common stock of the Company at $3.00 per
share, which warrant shall be in the form of Exhibit A hereto and shall
be vested and exercisable from the Effective Date through December 12,
2009; and
(3) Stock options under the Stock Plan
to purchase an aggregate of 1,000,000 shares of common stock of the
Company at $2.40 per share, one-third of which options shall vest upon
each of the first, second and third anniversaries of the Effective
Date; provided that such options may vest earlier than such dates under
circumstances referred to in Section 5.
To permit the foregoing grants, the Company shall amend the number "250,000" in
the penultimate sentence of Section 4.3 of the Stock Plan to read "2,000,000."
Notwithstanding the provisions of Sections 15.1, 15.2 or 15.3 of the Stock Plan,
the provisions of Section 5 of this Agreement shall govern to determine the
exercisability of Executive's Awards under the Stock Plan which are outstanding
immediately prior to the termination of Executives' employment. In connection
with Executive's acquisition of shares of common stock of the Company pursuant
to clause (1) above, Executive shall execute and deliver the Instruments of
Accession to the Company's shareholder documents in the form of Exhibit B
hereto, provided, however, that the first sentence of Section 7.5 of the
referenced Shareholders Agreement shall have been amended to read as set forth
on Exhibit C hereto.
(d) Diminished Opportunity Payment. In the
event that, during the Employment Period and prior to December 1, 2001, (A) the
stockholders of the Company approve (i) any acquisition of the Company by means
of a merger or other form of corporate reorganization in which the outstanding
shares of the Company are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation or any affiliate of
the acquiring corporation, or (ii) the liquidation, dissolution or winding up of
the Company or any sale of all or substantially all of the assets of the
Company, and the value of the consideration that would be received by or
distributed to the stockholders of the Company as a result of any such
transaction (without reduction for the following payment to Executive), on an
as-converted common equivalent basis, is less than $6.00 per share, or (B)
either (i) an event described in clause (2) or (3) of the definition of "Change
in Control" in the Stock Plan (as in effect on the date hereof) shall occur or
(ii) any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than any
stockholder of the Company on the date hereof, the Company, any subsidiary of
the Company, or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding securities,
and, in the case of either clause (A) or clause (B), within ten days thereafter,
Executive elects to terminate his employment hereunder, then, in either case,
the Company shall make or cause to be made to Executive a cash payment in the
amount of $2,500,000
3
<PAGE> 4
at the time of such distribution or termination of employment, as the case may
be. In the event the consideration received by or distributed to the
stockholders of the Company in any such transaction is payable in securities or
property other than cash, the value of such distribution shall be the fair
market value of such securities or other property as determined in good faith by
the Board. No more than one payment shall be made pursuant to this Section 3(d).
(e) Benefits. During the Employment Period,
Executive shall also (i) be eligible to participate in all benefit programs from
time to time maintained by the Company for the benefit of its most senior
executives including without limitation, its group medical, dental and term life
insurance coverages, 401 (k) Plan and the Stock Plan, in each case on and
subject to the terms and conditions of each of such programs as such programs
apply to the Company's most senior executives, (ii) be entitled to four (4)
weeks of paid vacation per year, (iii) be entitled to utilize a furnished
corporate apartment for the convenience of the Company and a Company owned or
leased automobile in St. Louis, Missouri for so long as the Company's corporate
headquarters remain in St. Louis, Missouri and its environs, (iv) be reimbursed
by the Company for customary business and travel expenses, including travel
between St. Louis, Missouri and Nashville, Tennessee, and (v) be required to
maintain an office and such limited staff in Nashville, Tennessee as is deemed
necessary by Executive and approved by the Executive Committee of the Board. In
order to defray commercial airline costs and enhance Executive's amount of time
to perform services, at Executive's request, the Company shall make available to
Executive, at the Company's cost, a private commercial aircraft for Executive to
utilize for business travel between St. Louis, Missouri and Nashville, Tennessee
and for such other purposes as the Executive may deem reasonably necessary in
connection with the performance of his services hereunder.
4. Termination of Employment. Prior to the expiration
of the Employment Period, this Agreement and Executive's employment may be
terminated as follows:
(a) Automatically upon Executive's death.
(b) By the Company, upon thirty (30) day's prior
written notice to Executive, in the event the Board believes that Executive, by
reason of physical or mental illness, is unable to perform a material portion of
the services required of Executive hereunder for a continuous one-hundred
thirty-five (135) day period; in the event of a disagreement concerning the
existence of any such disability (in which event any such termination shall not
become effective until such disagreement shall have been resolved), the matter
shall be resolved by a disinterested licensed physician chosen by the Company
(such physician to be located within 50 miles of Executive's principal
residence) and otherwise reasonably satisfactory to the Executive or his legal
representative.
(c) By the Company, for "Good Cause." "Good
Cause" shall mean:
(1) The willful and continued failure of
Executive to substantially perform material duties assigned to Executive by the
Board in accordance with Section 1(b) hereof (other than any such failure
resulting from incapacity due to physical or mental illness);
4
<PAGE> 5
(2) A material breach of Section 1(c) of
this Agreement by Executive; or
(3) Executive's commission of fraud or
willful conduct which significantly harms the Company or its subsidiaries or
which significantly impairs Executive's ability to perform his duties.
For purposes of this definition, no act, or failure to act, shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that his action or omission was in the best
interest of the Company.
Unless the Executive has been convicted of a felony, no termination for Good
Cause shall take effect unless the following provisions of this paragraph shall
have been complied with. The Board shall give the Executive written notice of
its intention to terminate him for Good Cause, such notice (i) to state in
detail the particular circumstances that constitute the grounds on which the
proposed termination for Good Cause is based and (ii) to be given within four
months of the Board learning of such circumstances. The Executive shall have
twenty days, after receiving such special notice, to cure such grounds, to the
extent such cure is possible. If he fails to cure such grounds to the Board's
satisfaction, the Executive shall then be entitled to a hearing by the Board,
during which he may, at his election, be represented by counsel. Such hearing
shall be held within thirty days of his receiving such special notice, provided
he requests a hearing within fifteen days of receiving the notice. If the Board
gives written notice to the Executive within five days following such hearing
confirming that, in the good faith judgment of a majority of the Board, Good
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