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USweb - MANAGEMENT CONTINUITY AGREEMENT (JOSEPH FIRMAGE)
EXHIBIT 10.7
USWEB CORPORATION
MANAGEMENT CONTINUITY AGREEMENT
This Management Continuity Agreement (the "Agreement") is made and entered into effective as of 2/12/96, by and between Joe Firmage (the
------- ----------- "Employee") and USWeb Corporation, a Utah corporation (the "Company").
R E C I T A L S
A. The Board believes that it is in the best interests of the Company and its shareholders to provide the Employee with an incentive to continue his employment and to motivate the Employee to maximize the value of the Company.
B. It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control. The Board of Directors of the Company (the "Board") recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company.
C. The Board believes that it is imperative to provide the Employee with certain benefits upon termination of employment or upon a Change of Control, which benefits are intended to provide the Employee with financial security and provide sufficient incentive and encouragement to the Employee to remain with the Company notwithstanding the possibility of a Change of Control.
D. To accomplish the foregoing objectives, the Board of Directors has directed the Company, upon execution of this Agreement by the Employee, to agree to the terms provided herein.
NOW THEREFORE, in consideration of the mutual covenants herein contained, and in consideration of the continuing employment of Employee by the Company, the parties agree as follows:
1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:
(a) Base Compensation. "Base Compensation" shall have the meaning assigned to it in Section 3 of this Agreement.
(b) Cause. "Cause" shall mean (i) any act of personal dishonesty taken by the Employee in connection with his responsibilities as an employee and intended to result in substantial personal enrichment of the Employee or his associates at the expense of the Company or its shareholders, (ii) committing a felony or an act of fraud against the Company or its affiliates and (iii) continued violations by the Employee of the Employee's obligations under this Agreement which are demonstrably willful and deliberate on the Employee's part after there has been delivered to the Employee a written demand for performance from the Company which describes the basis for the Company's belief that the Employee has not substantially performed his duties.
(c) Change of Control. "Change of Control" shall mean the occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) other than SOFTBANK Corporation and/or any of its affiliates (collectively, "SOFTBANK") becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; or
(ii) A merger or consolidation of the Company with any other corporation or business entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(iii) Effectiveness of an agreement for the sale, lease or disposition by the Company of all or substantially all of the Company's assets.
(d) Involuntary Termination. "Involuntary Termination" shall mean (i) without the Employee's express written consent, the assignment to the Employee of any duties or the significant reduction of the Employee's duties, either of which is inconsistent with the Employee's position with the Company and responsibilities in effect immediately prior to such assignment, or the removal of the Employee from such position and responsibilities; (ii) without the Employee's express written consent, a substantial reduction, without good business reasons, of the facilities and perquisites (including office space, support staff and location) available to the Employee immediately prior to such reduction; (iii) a reduction by the Company in the Base Compensation of the Employee as in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction with the result that the Employee's overall benefits package is significantly reduced; (v) the relocation of the Employee to a facility or a location more than 50 miles from the Employee's then present location, without the Employee's express written consent; (vi) any purported termination of the Employee by the Company which is not effected for Disability or for Cause, or any purported termination for which the grounds relied upon are not valid; or (vii) the failure of the Company to obtain the assumption of this agreement by any successors contemplated in Section 8 below.
(e) Disability. "Disability" shall mean that the Employee has been unable to perform his duties under this Agreement as the result of his incapacity due to physical or mental illness, and such inability, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Employee or
the Employee's legal representative (such Agreement as to acceptability not to be unreasonably withheld). Termination resulting from Disability may only be effected after at least 30 days' written notice by the Company of its intention to terminate the Employee's employment. In the event that the Employee resumes the performance of substantially all of his duties hereunder before the termination of his employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.
2. Duties and Scope of Employment. The Company shall employ the Employee in the position of Chairman, CEO, President, as such position was defined in
------------------------ terms of responsibilities and compensation as of the effective date of this Agreement; provided, however, that the Board of Directors shall have the right, subject to the terms of this Agreement, to revise such responsibilities and compensation as the Board in its discretion may deem necessary or appropriate. The Employee shall continue to devote his full business efforts and time to the Company and its subsidiaries. The Employee shall comply with and be bound by the Company's operating policies, procedures and practices from time to time in effect during his employment. During the term of the Employee's employment with the Company, the Employee shall devote his full time, skill and attention to his duties and responsibilities, and shall perform them faithfully, diligently and competently, and the Employee shall use his best efforts to further the business of the Company and its affiliated entities.
3. Base Compensation. The Company shall pay the Employee as compensation for his services a base salary at the annualized rate of $200,000, along with
-------- such performance bonus amounts as the Board shall authorize, in its discretion, from time to time. Such salary shall be paid periodically in accordance with normal Company payroll. The annual compensation (including bonus amounts), together with any increases in such compensation that the Board of Directors may grant from time to time, is referred to in this Agreement as "Base Compensation."
4. Employee Benefits. The Employee shall be eligible to participate in the employee benefit plans and executive compensation programs maintained by the Company and applicable to other key executives of the Company, including (without limitation) retirement plans, savings or profit-sharing plans, stock option, incentive or other bonus plans, life, disability, health, accident and other insurance programs, paid vacations and similar plans or programs, subject in each case to the generally applicable terms and conditions of the applicable plan or program in question and to the determination of any committee administering such plan or program.
5. At-Will Employment. The Company and the Employee acknowledge that the Employee's employment is and shall continue to be at-will, as defined under applicable law. If the Employee's employment terminates for any reason, including (without limitation) any termination prior to a Change of Control, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be available in accordance with the Company's established employee plans and policies at the time of termination.
6. Severance Benefits.
(a) Termination Apart from Change of Control. In the event the Employee's employment is terminated in an Involuntary Termination more than 60 days prior to the occurrence of a Change of Control or after the 18-month period following a Change of Control (the "No-Change Period"), then the Employee shall be entitled to receive severance pay equal to 12 months' Base Compensation, to be paid out monthly at the same time as the Company's regular payroll is paid, and any other benefits that may then be established under the Company's existing severance and benefit plans and policies for employees generally at the time of such termination. In the event the Employee's employment is terminated voluntarily by the Employee during the No-Change Period, then no severance payment shall be made unless in accordance with the Company's existing severance and benefit plans and policies for employees generally at the time of such termination.
(b) Termination Following A Change of Control. Subject to the limitation on payments set forth in Section 7 below, if the Company terminates the Employee's employment at any time 60 days or less before, or within eighteen (18) months after, a Change of Control, and the Employee's employment is terminated by the Company in an Involuntary Termination, or Employee voluntarily terminates his employment with the Company, then the Employee shall be entitled to receive severance pay in an amount equal to the Employee's Base Compensation for the year immediately preceding or coinciding with the year of payment, whichever is greater. Any severance payments to which the Employee is entitled pursuant to this paragraph shall be paid in a lump sum within thirty (30) days of the Employee's termination.
(c) Unvested Stock and Options.
(i) Subject to the limitation on payments set forth in Section 7 below, upon a Change of Control, the Company's right of repurchase in any unvested portion of any stock held by the Employee shall lapse, and the unexercisable portion of any option held by Employee to buy stock of the Company under the Company's stock option plans shall become immediately exercisable in full. In all other respects, the Employee's stock or option shall rem...
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