EXHIBIT 10.22
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT (the “
Agreement ”), dated as of January 1, 2009, by and
between VONAGE HOLDINGS CORP., a Delaware corporation (the “
Company ”), and John S. Rego (the “
Executive ”).
WHEREAS, the Executive and the
Company are parties to an Employment Agreement dated as of
August 1, 2005 (“ Existing Agreement ”);
and
WHEREAS, the Executive and the
Company now desire to amend the Existing Agreement to comply with
Section 409A of the Code (as defined below) and to make other
appropriate changes to comply with applicable law.
NOW, THEREFORE, in consideration of
the covenants and agreements hereinafter set forth, the parties
agree as follows:
1. Employment and Duties .
(a) General . The Executive shall serve as Chief
Financial Officer of the Company, reporting to the Chief Executive
Officer. The Executive shall have such duties and responsibilities,
commensurate with the Executive’s position, as may be
assigned to the Executive from time to time by the Chief Executive
Officer of the Company. The Executive’s principal place of
employment shall be the principal offices of the Company, currently
located in the Holmdel, New Jersey area; provided ,
however , that the Executive understands and agrees that he
shall be required to travel from time to time for business
reasons.
(b) Exclusive Services . For
so long as the Executive is employed by the Company, the Executive
shall devote his full-time working time to his duties hereunder,
shall faithfully serve the Company, shall in all respects conform
to and comply with the lawful and good faith directions and
instructions given to him by the Chief Executive Officer and shall
use his best efforts to promote and serve the interests of the
Company. Further, the Executive shall not, directly or indirectly,
render services to any other person or organization without the
consent of the Company or otherwise engage in activities that would
interfere significantly with the faithful performance of his duties
hereunder. Notwithstanding the foregoing, the Executive may serve
on (i) corporate boards, with the prior consent of the Board
of Directors (the “ Board ”) or (ii) civic
or charitable boards or engage in charitable activities without
remuneration therefor, provided that such activities do not
contravene the first sentence of this Section 1(b).
2. Term of Employment . The
Executive’s employment under this Agreement commenced as of
August 1, 2005 (the “ Effective Date ”) and
shall terminate on the earlier of (i) August 1, 2009 or
(ii) the termination of the Executive’s employment under
this Agreement; provided , however , that the Term
(as defined below) of the Executive’s employment shall be
automatically extended without further action of either party for
additional one-year periods, unless written notice of either
party’s intention not to extend has been given to the other
party at least 90 days prior to the expiration of the then
effective Term.
Notwithstanding anything to the contrary herein,
in the event of a “ Change in Control ” of the
Company (as defined below), the Term under this Agreement shall be
automatically extended without further action of either party for
an additional one-year period from the date of such Change in
Control, subject to further automatic renewals as provided above.
The period from the Effective Date until the termination of the
Executive’s employment under this Agreement is referred to as
the “ Term ”. The term “Change of Control
for purposes of this Agreement shall mean a Change of Control as
such term is defined in the Company’s 2006 Incentive Plan, as
amended from time to time, (the “ Stock Incentive Plan
”); provided , however , that subpart
(i) of such definition shall not apply to the acquisition of
Beneficial Ownership (as defined in the Stock Incentive Plan),
directly or indirectly, of securities of the Company by Silver
Point Finance, LLC to the extent Silver Point Finance, LLC has
Beneficial Ownership of less than 35% of the combined voting power
of the Company’s then outstanding securities).
3. Compensation and Other
Benefits . Subject to the provisions of this Agreement, the
Company shall pay and provide the following compensation and other
benefits to the Executive during the Term as compensation for
services rendered hereunder:
(a) Base Salary . The Company
shall pay to the Executive an annual base salary (the “
Base Salary ”) at the rate of $300,000, payable in
substantially equal installments at such intervals as may be
determined by the Company in accordance with its ordinary payroll
practices as established from time to time. The Base Salary shall
be reviewed by the Compensation Committee of the Board and the
Chief Executive Officer in good faith, based upon the
Executive’s performance, not less often than
annually.
(b) Annual Cash Bonus . For
each fiscal year during the Term, the Executive shall be eligible
to receive an annual discretionary performance-based bonus in
accordance with the Company’s annual bonus program, as
applicable to senior executives as in effect from time to time. The
amount, if any, of the Executive’s annual bonus shall be
determined by the Compensation Committee of the Board upon the
recommendation of the Chief Executive Officer. The bonus shall be
prorated for any year in which the Executive’s employment is
terminated due to (i) the Executive’s resignation for
Good Reason (as defined in Section 4(a)(iii) below);
(ii) the Company’s termination of the Executive’s
employment without Cause (as defined in Section 4(a)(ii)
below); (iii) the Executive’s death or disability (as
defined in Section 4(c) below). If the Executive’s
employment is terminated due to (i), (ii), or (iii) above, the
prorated bonus, if any, shall be paid to the Executive as set forth
in Section 4 below. If the Executive’s employment with
the Company is terminated by the Company for Cause or the Executive
resigns from his employment other than for Good Reason prior to the
scheduled payout of the bonus due for a fiscal year, the Executive
shall not receive any portion of such bonus. The Executive’s
annual bonus shall be paid at the same time as the Company pays
bonuses to its other executives, but in no event later than
March 15 following the close of the calendar year for which
such bonus was earned, in accordance with the “short-term
deferral” exception under Section 409A of the Internal
Revenue Code of 1986, as amended (the “ Code
”).
(c) Equity Incentive
Compensation . During the Term, the Executive shall be eligible
to participate in the Company’s equity compensation plans and
programs generally applicable to senior executives of the Company
as in effect from time to time, including
without limitation, the Stock Incentive Plan.
Notwithstanding anything to the contrary in the Stock Option Plan
or any stock option agreement, upon the (i) Company’s
termination of the Executive’s employment without Cause or
(ii) Executive’s resignation from employment for Good
Reason, in either case on or following a Change in Control of the
Company, all outstanding Options granted by the Company to the
Executive shall become fully vested and immediately exercisable on
the date of such termination or resignation, as the case may
be.
(d) Employee Benefit Plans .
The Executive shall be entitled to participate in all employee
welfare, pension and fringe benefit plans, programs and
arrangements of the Company, in accordance with their respective
terms, as may be amended from time to time, and on a basis no less
favorable than that made available to other senior executives of
the Company.
(e) Expenses . The Company
shall reimburse the Executive for reasonable travel and other
business-related expenses incurred by the Executive in the
fulfillment of his duties hereunder upon presentation of written
documentation thereof, in accordance with the applicable expense
reimbursement policies and procedures of the Company as in effect
from time to time. All reimbursements shall be made subject to
Section 22 below.
(f) Vacation . The Executive
shall be entitled to 15 vacation days for each fiscal year during
the Term.
(g) Other Benefits and
Perquisites . The Executive shall be entitled to such other
benefits and perquisites as may be available generally to other
senior executives of the Company.
4. Termination of Employment
. (a) Termination for Cause, Resignation Without Good
Reason . (i) If, prior to the expiration of the Term, the
Company terminates the Executive’s employment for Cause or if
the Executive resigns from his employment hereunder other than for
Good Reason, the Executive shall only be entitled to payment of any
unpaid Base Salary through and including the date of termination or
resignation and any other amounts or benefits required to be paid
or provided by law or under any plan, program, policy or practice
of the Company (the “ Other Accrued Compensation and
Benefits ”). The Executive shall have no further right to
receive any other compensation or benefits after such termination
or resignation of employment.
(ii) For purposes of this Agreement,
“ Cause ” shall mean termination of the
Executive’s employment due to: (A) any act or omission
that constitutes a breach by the Executive of any of his
obligations under this Agreement; (B) the willful and
continued failure or refusal of the Executive (not as a consequence
of illness, accident or other disability) to satisfactorily perform
the duties reasonably required of him as an employee of the
Company; (C) the Executive’s conviction of, or plea of
nolo contendere to, (x) any felony or (y) another
crime involving dishonesty or moral turpitude or which could
reflect negatively upon the Company or otherwise impair or impede
its operations; (D) the Executive’s engaging in any
misconduct, negligence, act of dishonesty, violence or threat of
violence (including any violation of federal securities laws) that
is injurious to the Company or any of its subsidiaries
or
affiliates (collectively, the “ Company
Group ”); (E) the Executive’s material breach
of a written policy of the Company or the rules of any governmental
or regulatory body applicable to the Company; (F) the
diverting or usurping of a corporate opportunity of the Company
Group by the Executive; (G) the Executive’s refusal to
follow the lawful directions of the Company; or (H) the
Executive’s willful failure to comply with any of the
material terms of this Agreement or any other willful misconduct by
the Executive which is materially injurious to the financial
condition or business reputation of the Company Group);
provided , however , that no event or condition
described in clauses (A), (B) or (H) shall constitute
Cause unless (i) the Company first gives the Executive written
notice of its intention to terminate his employment for Cause and
the grounds for such termination and (ii) such grounds for
termination (if susceptible to correction) are not corrected by the
Executive within 15 days of his receipt of such notice (or, in the
event that such grounds cannot be corrected within such 15-day
period, the Executive has not taken all reasonable steps within
such 15-day period to correct such grounds as promptly as
practicable thereafter).
(iii) For purposes of this
Agreement, “ Good Reason ” shall mean
termination of employment with the Company by the Executive because
of the occurrence of any of the following events without the
Executive’s prior written consent: (A) a material
decrease in the Executive’s Base Salary; (B) a material
diminution of the authorities, duties or responsibilities of the
Executive from those set forth in this Agreement including without
limitation, ceasing to be the most senior financial officer of a
company (whether the Company or its ultimate parent) following a
Change in Control; (C) the Company requiring the Executive to
be based at any office or location more than 50 miles from the
Holmdel, New Jersey area; (D), a material breach by the Company of
any term or provision of this Agreement, including a failure of the
Company to pay material compensation due and payable to the
Executive in connection with his employment under this Agreement,
or (E) the Company’s delivery of a notice of non-renewal
of the Term of the Agreement following a Change in Control,
provided the Executive is willing and able to execute a new
Agreement providing terms and conditions substantially similar to
those in this Agreement and to continue providing such services to
the Company; provided , however , that no event or
condition described in clauses (A) through (E) shall
constitute Good Reason unless (x) the Executive gives the
Company written notice, in a form that meets the requirements of
Section 22 hereof, of his intention to terminate his
employment for Good Reason and the grounds for such termination,
within 60 days after the occurrence of the event giving rise to the
“Good Reason” termination, and (y) such grounds
for termination (if susceptible to correction) are not corrected by
the Company within 30 days of its receipt of such notice (or, in
the event that such grounds cannot be corrected within such 30-day
period, the Company has not taken all reasonable steps within such
30-day period to correct such grounds as promptly as practicable
thereafter). If the Company does not correct the grounds for
termination during such cure period, the Executive’s
termination of employment for “Good Reason” must become
effective within 30 days after the end of the cure
period.
(b) Termination without Cause;
Resignation for Good Reason . (i) If, prior to the
expiration of the Term, the Executive’s employment is
terminated by the Company without Cause, or if the Executive
resigns from his employment hereunder for Good Reason, the Company
shall pay the Executive (A) a lump sum cash payment equal to a
pro-rata portion of his bonus for the year in which the termination
of employment occurs, which shall be paid
on the date such bonus would have been payable
to the Executive had he remained employed by the Company;
(B) an amount equal to the greater of the Executive’s
Base Salary (at the rate in effect on the date the
Executive’s employment is terminated) for (x) the
remainder of the term or (y) a one-year period following the
Executive’s termination of employment as described in this
Section 4(b), which shall be paid over the period described
below; and (C) the Other Accrued Compensation and Benefits.
The severance pay described in subsection (B) shall be paid in
substantially equal installments (based on the Company’s
normal payroll practices) over the six-month period following
termination of employment, commencing within 30 days after the
termination date; provided, however, that to the extent that any
portion of the severance pay exceeds the Section 409A
“separation pay exception” amount described in
Section 22 below and would otherwise be payable after
March 15 following the calendar year in which the termination
of employment occurs, such portion shall instead be paid in a lump
sum payment between March 1 and March 15 following the
calendar year in which the termination of employment occurs. The
Executive shall have no further rights under this Agreement or
otherwise to receive any other compensation or benefits after such
termination or resignation of employment.
(ii) The Company shall not be
required to make the payments and provide the benefits provided for
under Section 4(b)(i) (including the Other Accrued
Compensation and Benefits), unless the Executive executes and
delivers to the Company, a release substantially in the form used
by the Company at the time of the Executive’s termination of
employment and the release has become effective and irrevocable in
its entirety.
(iii) If, following a termination of
employment without Cause or a resignation for Good Reason, the
Executive breaches the provisions of Section 5 or 7 hereof,
the Executive shall not be eligible, as of the date of such breach,
for the payments and benefits described in Section 4(b)(i),
and any and all obligations and agreements of the Company with
respect to such payments shall thereupon cease.
(c) Termination Due to Death or
Disability . The Executive’s employment with the Company
shall terminate automatically on the Executive’s death. In
the event of the Executive’s disability the Company shall be
entitled to terminate his employment. In the event of termination
of the Executive’s employment by reason of Executive’s
death or disability, the Company shall pay to the Executive (or his
estate, as applicable), (i) a lump sum cash payment equal to a
pro-rata portion of the Executive’s bonus for the year in
which the termination of employment occurs on the date such bonus
would have been payable to the Executive had he remained employed
by the Company; (ii) a lump sum cash payment equal to the
Executive’s earned but unpaid Base Salary through and
including the date of termination which shall be paid within 15
days of the Executive’s termination of employment on account
of disability or death; (iii) a lump sum cash payment equal to
12 months of the Executive’s Base Salary (at the rate in
effect on the date the Executive’s employment is terminated)
which shall be paid within 15 days of the Executive’s
termination of employment on account of disability or death;
provided , however , that if the Executive is
receiving short-term or long-term disability benefits pursuant to a
Company policy, such payment shall be reduced (but in no event to
an amount below zero) by the present value of the tax-adjusted
disability payments, excluding any supplemental disability benefits
funded through employee contributions, to be received by
the
Executive during the 12 month period following
the Executive’s termination of employment on account of
disability; and (iv) the Other Accrued Compensation and
Benefits. For purposes of this Agreement, “ disability
,” means that the Executive (i) is unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefit for a period of not less than three months
under an accident and health plan covering employees of the
participant’s employer.
(d) Notice of Termination .
Any termination of employment by the Company or the Executive shall
be communicated by a written “ Notice of Termination
” to the other party hereto given in accordance with this
Section 4(d) of this Agreement. In the event of a termination
by the Company for Cause, or resignation by the Executive for Good
Reason, the Notice of Termination shall (i) indicate the
specific termination provision in this Agreement relied upon,
(ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and
(iii) specify the date of termination, which date shall not be
more than 30 days after the giving of such notice. The failure by
the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
(e) Resignation from
Directorships and Officerships . The termination of the
Executive’s employment for any reason shall constitute the
Executive’s resignation from (i) any director,
office
