Employment Agreement - Speedus.com Inc. and Shant S. Hovnanian
EMPLOYMENT AGREEMENT
This Employment Agreement is dated as of April 25, 2002, and is entered
into between SPEEDUS.COM, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), and Shant S. Hovnanian ("Executive").
WHEREAS, Executive has been serving as Chief Executive Officer of the
Company under the terms of an Employment Agreement dated as of October 18, 1995
(the "Prior Agreement"), which agreement expired by its terms on February 8,
1997, and
WHEREAS, Executive and the Company desire to embody in this Agreement
mutually acceptable terms and conditions for Executive's continued employment by
the Company.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
Employment, Duties and Responsibilities
1.01. Employment. The Company shall continue to employ Executive as
President and Chief Executive Officer of the Company and Executive hereby
accepts such employment. Executive agrees to devote his full working time to the
Company's affairs, provided that he shall be free to pursue other activities
that are not inconsistent with his role as full-time Chief Executive Officer of
the Company or with the provisions of Article V below.
1.02. Duties and Responsibilities. Executive shall have such duties and
responsibilities as are consistent with his position as Chief Executive Officer
of the Company and such other duties and responsibilities as shall be defined
from time to time by the Board of Directors of the Company (the "Board").
ARTICLE II
Term
2.01. Term. The term of this Agreement (the "Term") shall commence on the
date hereof (the "Effective Date") and shall continue in effect for a period of
three years thereafter or until earlier terminated by the Executive or the
Company pursuant to Article VI hereof.
ARTICLE III
[Reserved]
ARTICLE IV
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Compensation and Expenses
4.01. Salary, Bonuses and Benefits. As compensation and in consideration
for the performance by Executive of his obligations under this Agreement,
Executive shall be entitled to the following (subject, in each case, to the
provisions of ARTICLE VI hereof):
(a) Salary. The Company shall pay Executive a base salary during the
Term, payable in accordance with the normal payment procedures of the Company
and subject to such withholdings and other normal employee deductions as may be
required by law, at the annual rate of $250,000.
(b) Benefits. Executive shall participate during the Term in such
pension, life insurance, health, disability, dental and major medical insurance
plans, and in such other employee benefit plans and programs, for the benefit of
the employees of the Company, as may be maintained from time to time during the
Term, in each case to the extent and in the manner available to other officers
of the Company and subject to the terms and provisions of such plans or
programs.
(c) Stock Awards. Executive shall be eligible to participate in the
Company's 1995 Stock Incentive Plan, as amended from time to time (the "Plan"),
to the extent the Board or the Compensation Committee of the Board determines to
grant Executive a discretionary award under the Plan. Without limiting the
forgoing, the Board shall grant to Executive, as of the Effective Date, an
option (the "Option") pursuant to the Plan to purchase 250,000 shares of the
Company's Common Stock with an exercise price equal to the fair market value of
the share of the Company's Common Stock on the Effective Date as determined by
the Board. The Option shall have such terms and conditions consistent with the
Plan, as shall be set forth in an Option Agreement between the Company and the
Executive.
(d) Bonuses.
(i) Contingent Bonus. In view of the substantial degree of
commitment required on the part of Employee in connection with the
Company's current litigation with Western International
Communications and related parties, the Company agrees that
Executive shall be entitled, in addition to any other compensation
to Executive, to 20% of the net proceeds (after legal and other
expenses) realized by the Company in connection with such matter, as
and when realized and whether by reason of a favorable judgment,
settlement or otherwise.
(ii) Annual Bonuses. Subject to Executive's continued
employment pursuant to the terms hereof, the Executive shall be
eligible for annual bonuses as determined by the Board, in the
Board's discretion, on the basis of the performance of the Company
as well as Executive's individual performance and contribution. Such
annual bonus shall be targeted at 50% or more of Executive's base
salary, determined as of the end of each fiscal year of the Company
during the Term and, to the extent earned, payable as promptly as
practical thereafter; provided, however, that such percentages shall
be a guideline, and the Board (or the Compensation Committee as
appropriate) shall make the final determination of Executive's bonus
subject to a review of all relevant facts and circumstances at the
time.
(e) Other Matters. In addition to the foregoing, Executive shall be
entitled to the payments and/or reimbursements set forth on Schedule I.
4.02. Expenses. The Company will reimburse Executive for reasonable
business related expenses incurred by him in connection with the performance of
his duties hereunder during the Term, subject, however, to the Company's
policies relating to business related expenses as in effect from time to time
during the Term.
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ARTICLE V
Exclusivity, Etc.
5.01. Exclusivity. Executive agree to perform his duties, responsibilities
and obligations hereunder efficiently and to the best of his ability. Executive
also agrees that so long as he is employed by the Company he will not engage in
any other business activities, pursued for gain, profit or other pecuniary
advantage that are competitive with the activities of the Company, except as
permitted in Section 5.02 below. Executive agrees that all of his activities as
an employee of the Company shall be in conformity with all policies, rules and
regulations and directions of the Company not inconsistent with this Agreement.
5.02. Other Business Ventures. Executive agrees that, so long as he is
employed by the Company, and for a period of two (2) years thereafter, he will
not own, directly or indirectly, any controlling or substantial stock or other
beneficial interest in any business enterprise which is engaged in, or
competitive with, any business engaged in by the Company and he will not engage
in any business activities, pursued for gain, profit or other pecuniary
advantage, that are competitive with the activities of the Company, except that
he may devote such working time and efforts to closely-held family investments
that are not competitive with the Company and do not interfere with Executive's
obligations hereunder. Notwithstanding the foregoing, Executive may own,
directly or indirectly, up to 5% of the outstanding capital stock of any
business having a class of capital stock which is traded on any national stock
exchange or in the over-the-counter market.
5.03. Confidentiality. Executive agrees that he will not, at any time
during or after the Term, make use of or divulge to any other person, firm or
corporation any trade or business secret, process, method or means, or any other
confidential information concerning the business or policies of the Company,
which he may have learned in connection with his employment. For purposes of
this Agreement, a "trade or business secret, process, method or means, or any
other confidential information" shall mean and include written information
treated as confidential or as a trade secret by the Company. Executive's
obligation under this Section 5.03 shall not apply to any information which (i)
is known publicly or (ii) is in the public domain or hereafter enters the public
domain without the fault of Executive. Executive agrees not to remove from the
premises of the Company, except as an employee of the Company in pursuit of the
business of the Company or except as specifically permitted in writing by the
Company, any document or other object containing or reflecting any such
confidential information. Executive recognizes that all such documents and
objects, whether developed by him or by someone else, will be the sole exclusive
property of the Company. Upon termination of his employment hereunder, Executive
shall forthwith deliver to the Company all such confidential information,
including without limitation all lists of customers, correspondence, accounts,
records and any other documents or property made or held by him or under his
control in relation to the business or affairs of the Company, and no copy of
any such confidential information shall be retained by him.
ARTICLE VI
Termination
6.01. Termination by the Company.
(a) The Company shall have the right to terminate the Executive's
employment at any time, with or without "Cause." For purposes of this Agreement,
"Cause" shall mean (i) substantial and continued failure by the Executive to
perform his duties hereunder, (ii) conduct grossly insubordinate or disloyal to
the Company, or (iii) Executive's conviction of, or pleading no contest to a
charge of, a felony.
(b) In the event that the Company shall terminate Executive's
employment hereunder
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for Cause, the Company shall promptly submit a written statement to the full
Board setting forth in reasonable detail the relevant facts and circumstances
relating to such determination.
(c) Upon the occurrence of a Change of Control (as defined below),
Executive may elect, by written notice to the Company within 30 days thereof,
that such Change of Control be treated as a termination of Executive's
employment by the Company other than for Cause for the purposes of this
Agreement (a "Change of Control Termination"). As used herein, a "Change of
Control' shall be deemed to have occurred if (i) any person or entity (other
than persons currently holding in excess of 20% of the outstanding capital stock
of the Company) becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the
Company, or (ii) the consummation of (x) a merger or consolidation of the
Company with another corporation where the shareholders of the Company
immediately prior to such merger or consolidation, will not own, immediately
after such merger or consolidation, shares entitling such shareholders to more
than 50% of all votes to which all shareholders of the surviving corporation
would be entitled in the election of directors (without considering the rights
of any class of stock to elect directors by a separate class vote), (y) a sale
or other disposition of all or substantially all of the assets of the Company or
(z) a liquidation or dissolution of the Company.
6.02 Termination by the Executive.
(a) The Executive shall have the right to terminate his employment
at any time for any reason, or for good reason in the event of (i) a material
and continuing breach by the Company of its obligations to the Executive
hereunder or (ii) the long-term assignment of the Executive by the Company to
duties not commensurate with the Executive's position, title and abilities
(either such event in (i) or (ii), "Good Reason"). Notwithstanding the forgoing,
the election by Executive to terminate for Good Reason shall not constitute a
waiver of Executive's rights, or have the effect of diminishing such rights, in
the event that the Company is determined to have breached this Agreement or
defaulted on its obligations hereunder.
(b) In the event that the Executive shall terminate his employment
hereunder for Good Reason, the Executive shall promptly submit a written
statement to the full Board setting forth in reasonable detail the relevant
facts and circumstances relating to such determination.
6.03. Death or Disability.
(a) In the event Executive dies during the Term, this Agreement
shall automatically terminate, such termination to be effective on the date of
Executive's death.
(b) In the event that Executive shall suffer a disability which
shall have prevented him from performing satisfactorily his obligations
hereunder for a period of at least 90 consecutive days, or 180 non-consecutive
days within any 365 day period, the Company shall have the right to terminate
this Agreement, such termination to be effective upon the giving of notice
thereof to Executive in accordance with Section 7.02 hereof.
6.04. Effect of Termination.
(a) In the event of termination of Executive's employment for any
reason, the Company shall pay Executive (or his beneficiary in the event of his
death) any base salary or other compensation earned but not paid to Executive
prior to the effective date of such termination.
(b) In the event that the Executive shall terminate his employment
hereunder for
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Good Reason, the Executive shall be entitled to six months base salary beyond
the effective date of such termination (or base salary for such shorter period
as shall remain in the Term as if not so terminated).
(c) In the event of termination of Executive's employment (i) by the
Company for Cause, (ii) by Executive for any reason other than Good Reason, or
(iii) because of Executive's death or disability, neither the Executive nor any
beneficiary shall be entitled to any further compensation other than the amounts
described in Section 6.04(a) hereof.
(d) In the event of termination of Executive's employment by the
Company other than for Cause (including a Change of Control Termination), the
Company shall pay Executive, in addition to the amounts described in Section
6.04(a) hereof, an amount equal to the value of the continued payment of
Executive's base salary for the remainder of the Term as if not so terminated.
In addition, upon termination of the Executive's employment by the Company other
than for Cause (including a Change of Control Termination), the Company shall
pay to Executive upon such termination an amount, determined by the Board in its
reasonable discretion, equivalent to the value of the benefits that Executive
was receiving at the time of termination, including without limitation those
benefits referred to in Section 4.01(b) hereof and Schedule I hereto, for the
remainder of the Term as if not so terminated. All amounts due under this
Section 6.04(d) shall be payable, at the discretion of the Company, either (i)
in a lump sum, or (ii) in equal monthly installments for the remainder of the
Term as if not so terminated.
ARTICLE VII
Miscellaneous
7.01. Benefit of Agreement; Assignment; Beneficiary.
(a) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, including, without limitation, any
corporation or person which may acquire all or substantially all of the
Company's assets or business, or with or into which the Company may be
consolidated or merged. This Agreement shall also inure to the benefit of, and
be enforceable by, the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
the Executive hereunder if he had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to the Executive's
beneficiary, devisee, legatee or other designee, or if there is no such
designee, to the Executive's estate.
(b) The Company shall require any successor (whether direct or
indirect, by operation of law, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.
7.02. Notices. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
facsimile (receipt confirmed), telegram or telex or by registered or certified
mail, postage prepaid, with return receipt requested, addressed: (a) in the case
of the Company, to SPEEDUS.COM, Inc., 140 58th Street, Suite 7E, Brooklyn, New
York 11220, Facsimile Number: (718) 567-4388, Attention: General Counsel, or to
such other address and/or to the attention of such other person as the Company
shall designate by written notice to Executive; and (b) in the case of
Executive, to SPEEDUS.COM, Inc., 140 58th Street, Suite 7E, Brooklyn, New York
11220, Facsimile Number: (718) 567-4388, or to such other address as Executive
shall designate by written notice to the
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Company. Any notice given hereunder shall be deemed to have been given at the
time of receipt thereof by the person to whom such notice is given.
7.03. Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties hereto with respect to the terms and conditions of
Executive's employment during the term and supersedes any and all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to compensation due for services rendered hereunder. This
Agreement may not be changed or modified except by an instrument in writing
signed by both of the parties hereto.
7.04. Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
7.05. Headings. The Article and Section headings herein are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
7.06. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York
without reference to the principles of conflict of laws.
7.07. Agreement to Take Actions. Each party hereto shall execute and
deliver such documents, certificates, agreements and other instruments, and
shall take such other actions, as may be reasonably necessary or desirable in
order to perform his or its obligations under this Agreement or to effectuate
the purposes hereof.
7.08. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
7.09. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect. If any provision of this Agreement is held to be invalid, void
or unenforceable in any jurisdiction, any court or arbitrator so holding shall
substitute a valid and enforceable provision that preserves to the maximum
lawful extent the terms and intent of such provisions of this Agreement. If any
of the provisions of, or covenants contained in, this Agreement are hereafter
construed to be invalid or unenforceable in any jurisdiction, the same shall not
affect the remainder of the provisions or the enforceability thereof in any
other jurisdiction, which shall be given full effect without regard to the
invalidity or unenforceability in such other jurisdiction. Any such holding
shall affect such provision of this Agreement solely as to that jurisdiction,
without rendering that or any other provisions of this Agreement invalid,
illegal or unenforceable in any other jurisdiction. If any covenant should be
deemed invalid, illegal or unenforceable because its scope is considered
excessive, such covenant will be modified so that the scope of the covenant is
reduced only to the minimum extent necessary to render the modified covenant
valid, legal and enforceable.
7.10 Remedies. Executive acknowledges the Company's remedy at law for a
breach by Executive of the provisions of Sections 5.02 and 5.03 will be
inadequate. Executive further acknowledges that Executive's agreement to abide
by the provisions of Section 5.02 and 5.03 is a material condition to the
Company's willingness to employ Executive and enter into this Agreement.
Accordingly, in the event of a breach or threatened breach by Executive of any
provision of Section 5.02 and 5.03, the Company shall be entitled to injunctive
relief in addition to any other remedy it may have.
7.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
SPEEDUS.COM, Inc.
By: /s/ Angela M. Vaccaro
------------------------------------
Name: Angela M. Vaccaro
Title: Controller and Chief Accounting
Officer
/s/ Shant S. Hovnanian
----------------------------------------
Shant S. Hovnanian
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SCHEDULE I
Employment Agreement Between SPEEDUS.COM, Inc. (the "Company") and
Shant S. Hovnanian ("Executive")
Additional Payments and/or Reimbursements to the Executive During the Term
1. Executive shall be entitled to the use of a corporate apartment in
Manhattan commencing on the Effective Date and continuing through the
Term. The amounts expended by the Company for the rental and maintenance
of such apartment shall be subject to the approval of the Compensation
Committee of the Board of Directors.
2. During the Term, the Company shall pay for the membership of Executive in
a country club in the New York metropolitan area and membership of
Executive in up to two relevant "social clubs" in New York City acceptable
to the Company (the National Arts Club and the Penn Club being two that
are acceptable).
3. During the Term, the Company shall pay, or reimburse Executive, for the
premium payments for a $1,000,000 term life insurance policy with the
beneficiary designated by Executive.
4. During the Term, Executive shall be entitled to the use of, or
reimbursement for the lease of, a "company car" plus insurance, repairs
and maintenance and garage costs.