Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of this 13th day of
February, 2001, by and between Allin Corporation, a Delaware corporation
("Employer"), and Xxxxxxx X. X'Xxxx ("Employee"), a resident of Pennsylvania.
WITNESSETH:
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WHEREAS, Employer and Employee entered into that certain Employment
Agreement as of January 25, 1999 (the "Prior Employment Agreement") pursuant to
which Employee was employed by the Employer; and
WHEREAS, Employer desires to continue to employ Employee and Employee is
willing to continue his employment but Employer and Employee desire to replace
the Prior Employment Agreement with this Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and intending to be legally bound hereby, the parties agree as
follows:
Section 1. Employment. Subject to the terms and conditions of this
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Agreement, Employer agrees to continue to employ Employee as President of
Employer, and Employee accepts such employment. Employee will diligently and
faithfully and in conformity with the directions of the Board of Directors of
Employer perform the duties of his employment hereunder, and he will devote his
best efforts and attention on a full-time basis to the performance of said
duties.
Section 2. Employment Period. The term of Employee's employment hereunder
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shall begin on January 1, 2001 and shall continue through December 31, 2001
unless sooner terminated in accordance with the terms of this Section 2
("Employment Period"). The Employment period shall terminate upon (i) Employee's
death or, unless waived by Employer, his disability, either physical or mental
(as determined by Employer's physician) which may reasonably be anticipated to
render him unable, for a period of at least three (3) months, effectively to
perform the obligations, duties and responsibilities of Employee's employment
with Employer; or (ii) the termination of Employee's employment by the Board of
Directors with cause (as hereinafter defined); or (iii) the passage of fourteen
(14) days from the date of delivery by either party to the other of his or its
election to terminate this Agreement. As used herein, "cause" shall mean (i)
dishonest, fraudulent or illegal conduct; (ii) misappropriation of Employer
funds; (iii) conviction of a felony; (iv) excessive use of alcohol; (v) use of
controlled substances or other addictive behavior; (vi) unethical business
conduct; (vii) breach of any statutory or common law duty of loyalty to
Employer; and (viii) action by Employee which is prejudicial or injurious to the
business or goodwill of Employer or a material breach of this Agreement.
Section 3. Employment Compensation and Other Benefits.
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(a) Salary. For services performed by Employee during the
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Employment Period, Employer will pay to Employee a salary of
One Hundred Seventy Thousand dollars ($170,000) per annum,
payable in equal semi-monthly installments of $7,083.33,
prorated for any partial period of employment.
(b) Benefits. During the term of his employment hereunder,
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Employee will be entitled to the following:
(i) payment by Employer of the premiums for medical
insurance coverage for himself and his family consistent
with programs from time to time in effect for the
employees of Employer;
(ii) up to four weeks of paid vacation each year of
employment; and
(iii) such other benefits as are available to other employees
of Employer generally.
(c) Business Expenses. Employer will reimburse Employee for
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reasonable out-of-pocket expenses incurred by him, in
accordance with Employer's policies as in effect from time to
time, for entertainment, travel, lodging and similar items in
connection with the business of Employer, provided that
Employee properly accounts for and promptly submits
appropriate supporting documentation with respect to all such
expenses.
(d) Discretionary Bonus. The Board of Directors of Employer may,
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on an annual basis, in its sole and absolute discretion, award
a bonus to Employee. Such bonus, if any, shall be determined
based on Employee's performance and the performance of
Employer for the respective twelve (12) month periods ending
at fiscal year end 12/31/01. After consultation with the Board
of Directors and the Employee, parameters and objectives will
be set by the chief executive officer of Employer on an annual
basis to be utilized as guidelines for payment of any
discretionary bonus. The parameters and objectives for the
twelve months ending 12/31/01 are set out in Exhibit 1 to this
Agreement. The decision to award a bonus is within the sole
discretion of the Board of Directors of Employer, and Employer
has absolutely no obligation to award a bonus to Employee.
Furthermore, the decision to award a bonus to Employee in a
particular year shall in no way obligate Employer to award a
bonus to Employee in any other year.
(e) Stock Options. Employee acknowledges receipt of options to
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purchase 60,000 shares of Employer's common stock at $3.25 per
share, 15,000 shares at $4.50 per share, 10,000 shares at
$1.91 per share and 40,000 shares at $1.25 per share. These
options are governed by the Stock Plan(s) of Employer. The
options vest ratably at 20% per year on the anniversary of
issuance; however, all options granted to Employee prior to
February 13, 2001 that have not previously expired or been
terminated will become fully vested on the date on which (i)
Employer sells all or substantially all of its assets, (ii)
Employer merges with another entity in a transaction in which
Employer is not the surviving corporation, or (iii) any person
or group of affiliated persons other than the shareholders of
Employer as of January 1, 2001 owns or controls 40% or more of
Employer (collectively, events described in (i), (ii) or (iii)
are referred to herein as a "Change in Control". At the sole
discretion of Employer's Board of Directors, additional
options may be issued to Employee; however, Employer's Board
of Directors is under no obligation to grant to Employee
additional options, and any such options granted will be
governed by the terms of the option award agreement to be
entered into between Employer and Employee at or about the
time of any such future option grant.
(f) Annual Merit Review. Annually, on or before December 25th of
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each year, Employer will conduct an annual review of
Employee's performance under this Agreement and, if deemed
appropriate, implement adjustments to this Section 3 for the
following year.
(g) Liability as an Officer. Employee will be covered by any
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directors and officers insurance policy procured by Employer.
Employee shall also be entitled to the indemnification set
forth in Employer's Bylaws with respect to actions taken by
officers and directors of Employer.
(h) Severance Pay. If Employee's employment is terminated, during
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the Employment Period, by the Employer in conjunction with, or
within one year after, the occurrence of a Change of Control,
Employee shall receive (i) semi-monthly severance payments
equal to the semi-monthly base salary payment which Employee
was receiving immediately prior to the termination until the
one year anniversary date of termination and (ii) the right to
convert each of his vested options to purchase stock of the
Employer granted prior to February 13, 2001 into the right to
receive cash in an amount equal to the difference between the
fair market value of the stock on the date that the right is
exercised and the exercise price of the option from which the
right was converted. These rights may be exercised at any time
prior to the "Expiration Date" as defined in Employee's stock
option agreement from which the right was converted,
notwithstanding the expiration of the options based on an
Employee's termination prior to the "Expiration Date".
Employee's options granted prior to February 13, 2001 will
automatically convert into
such rights immediate prior to the day such options otherwise
terminate based on the termination of Employee's employment
with Employer.
Section 4. Conditions of Employment. As conditions of his employment and
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in consideration of his employment, Employee covenants and agrees as follows:
(a) that, during the Employment Period, he will devote his full
time, services and attention and best efforts to the
performance of his duties and to the promotion of the business
and interests of Employer;
(b) that, during the Employment Period he will not, without the
prior written consent of the Board of Directors of Employer,
directly or indirectly, as a stockholder (except as a
stockholder owning beneficially or of record less than five
percent (5%) of the outstanding shares of any class of stock
of any issuer listed on a national securities exchange), or as
an officer, director, manager, member, employee, partner,
joint venturer, proprietor or otherwise, engage in, become
interested in, consult with, lend to or borrow from, advise or
negotiate for or on behalf of, any business which is of the
type in which Employer or any affiliate or subsidiary of
Employer engages during the Employment Period; provided that
the prohibition contained in this subsection 4(b) shall not
apply to any business which Employer was engaged during the
Employment Period if, during the three year period thereafter,
Employer permanently ceases to be engaged in such business;
(c) that, during the Employment Period, and for a period one (1)
year thereafter, he will not solicit any customer of Employer
or any customer of any affiliate of subsidiary of Employer,
directly or indirectly, for the purpose of enticing such
customers to do business with anyone other than Employer;
(d) that, during the Employment Period, and for a period of one
(1) year thereafter, he will not solicit (or employ or cause
to be employed other than by Employer) other employees of
Employer or any affiliate or subsidiary of Employer, directly
or indirectly, for the purpose of enticing them to leave their
employment with Employer or any affiliate or subsidiary of
Employer;
(e) that, during the Employment Period and for a period of one (1)
year thereafter, he will make full and complete disclosure of
the existence of this Agreement and the content of this
Section 4 to all prospective employers with whom he may
discuss possible employment.
(f) that, he will refrain from directly or indirectly disclosing,
making available or using or causing to be used in any manner
whatsoever, any information of Employer of a proprietary or
confidential nature (including without limitation, information
regarding inventions, processes, formulas, systems, plans,
programs, studies, techniques, "know-how," trade secrets,
income or earnings, tax data, customer lists and contracts to
which Employer is a party, but excluding any such information
which may be in the public domain through proper means) and,
upon termination of his employment, such information, to the
extent that it has been reduced to writing (including any and
all copies thereof), together with all copies of all forms,
documents and materials of every kind, whether confidential or
otherwise, shall forthwith be returned to the Employer and
shall not be retained by Employee or furnished to any third
party, either by sample, facsimile or by verbal communication;
(g) that, during the Employment Period, and for a period of one
(1) year thereafter, he will refrain from any disparagement,
direct or indirect, through innuendo or otherwise, of Employer
or any of its employees, agents, officers, directors,
shareholders or affiliates;
(h) that, during the Employment Period, he will not, without the
prior written consent in each case of the Board of Directors
of Employer: (i) participate actively in any other business
interests or investments which would conflict with his
responsibilities under this
Agreement, or (ii) borrow money from, or lend to, customers
(except those commercial institutions whose business it is to
lend money) or individuals or firms from which Employer or any
affiliate or subsidiary of Employer buys services, materials,
equipment or supplies, or with whom Employer or any affiliate
or subsidiary does business;
(i) that, during the Employment Period, he will not, without the
prior written consent in each case of the Board of Directors
of Employer (i) exchange goods, products or services of
Employer in return for goods, products or services of any
individual or firm or (ii) accept gifts or favors from any
outside organization or agency which, individually or
collectively, may cause undue influence in his selection of
goods, products or services for Employer;
(j) that, after the termination of his employment, he will not
secure, or attempt to secure, from any employee or former
employee of Employer or any affiliate or subsidiary of
Employer, any information relating to Employer or any
affiliate or subsidiary of Employer or their business
operations; and
(k) that he will promptly and voluntarily advise the Board of
Directors of Employer of any activities which might result in
a conflict of interest with his duties to Employer hereunder,
and, further, will make such other and further disclosures as
Employer may reasonably request from time to time.
Employee represents and warrants to Employer that, notwithstanding the
operation of the covenants contained in this Section 4, upon the termination of
his employment hereunder, Employee will be able to obtain employment for the
purpose of earning a livelihood.
Section 5. Injunctive Relief. Because the services to be performed by
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Employee hereunder are of a special, unique, unusual, confidential extraordinary
and intellectual character which character renders such services unique and
because Employee will acquire by reason of his employment and association with
Employer an extensive knowledge of Employer's trade secrets, customers,
procedures, and other confidential information, the parties hereto recognize and
acknowledge that, in the event of a breach or threat of breach by Employee of
any of the terms and provisions contained in Section 4 or Section 7 of this
Agreement, monetary damages alone to Employer would not be an adequate remedy
for a breach of any of such terms and provisions. Therefore, it is agreed that
in the event of a beach or threat of a breach of any of the provisions of
Section 4 or Section 7 of this Agreement by Employee, Employer shall be entitled
to an immediate injunction from any court of competent jurisdiction restraining
Employee, as well as any third parties including successor employers of Employee
whose joinder may be necessary to effect full and complete relief, from
committing or continuing to commit a breach of such provisions without the
showing or proving of actual damages. Any preliminary injunction or restraining
order shall continue in full force and effect until any and all disputes between
the parties to such injunction or order regarding this Agreement have been
finally resolved. Employee hereby agrees to pay all costs of suit incurred by
Employer, including but not limited to reasonable attorneys' fees, in obtaining
any such injunction or order. Employee hereby waives any right he may have to
require Employer to post a bond or other security with respect to obtaining or
continuing any such injunction or temporary restraining order and, further,
hereby releases Employer, its officers, directors, employees and agents from and
waives any claim for damages against them which he might have with respect to
Employer obtaining in good faith any injunctions or restraining order pursuant
to this Agreement.
Section 6. Absence of Restrictions. Employee will promptly submit to
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Employer written disclosures of all inventions, improvements, discoveries,
technological innovations and new ideas, relating to Employer's business,
whether or not patentable (hereinafter called "Inventions"), which are directly
or indirectly made, conceived, created or prepared by Employee, alone or jointly
with others, during the Employment Period. Worldwide right, title and interest
in and to the intellectual property rights (including but not limited to
copyrights created in, patents to, or any other form of legal protection as may
be obtained or obtainable in the United States of America or any foreign
country), relating to all such Inventions that shall be within the existing or
contemplated scope of Employer's business at the time such inventions are made
or conceived or which result from or are suggested by any work Employee or
others may do for or on behalf of Employer, shall belong to Employer. Employee
will assign all right, title and interest in and to such intellectual property
rights to Employer, and upon request of Employer, will at any time during the
Employment Period and after termination of Employee's employment for any reason,
execute all proper papers for use in applying for, obtaining, maintaining and
enforcing such copyrights, patents or other legal
protection as Employer may desire and will execute and deliver all proper
assignments thereof, when so requested, without remuneration but at the expense
of Employer.
Section 7. Patents and Inventions. Employee will promptly submit to
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Employer written disclosures of all inventions, improvements, discoveries and
new ideas, relating to Employer" business, whether or not patentable
(hereinafter called "Inventions"), which are made or conceived by Employee,
alone or jointly with others, during the period during which Employee is
employed by Employer. Title to all such Inventions that shall be within the
existing or contemplated scope of Employer's business at the time such
Inventions are made or conceived or which result from or are suggested by any
work Employee or others may do for or on behalf of Employer, together with such
patent, patents or other legal protection as may be obtained thereon in the
United States of America and all foreign countries, shall belong to Employer.
Employee will assign any rights or interest in such title to Employer, and upon
the request of Employer, will at any time during the period during which
Employee is employed by Employer and after termination of Employee's employment
for any reason, execute all proper papers for use in applying for, obtaining,
maintaining and enforcing such patents or other legal protection as Employer may
desire and will execute and deliver all proper assignments thereof, when so
requested, without remuneration but at the expense of Employer.
Section 8. General.
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(a) Interpretation. If the provisions of subsections 4(b), 4(c) or
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4(d) of this Agreement should be held to be invalid, illegal
or unenforceable by a court of competent jurisdiction because
of time limitation or geographical area therein provided, such
provisions shall nevertheless be effective and enforceable for
such period of time and/or such geographical area as may be
held to be reasonable by such court. Any provision of this
Agreement that is invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable the remaining
provisions of this Agreement, any such invalidity, illegality
or unenforceability shall not, of itself, affect the validity,
legality or enforceability of such provision in any other
jurisdiction.
(b) Notices. In any case where any notice or other communications
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is to be given or made pursuant to any provision of this
Agreement, such notice or communication shall be deemed to be
delivered when actually received on the date specified in the
return receipt for a notice or communication mail by
registered or certified mail, postage prepaid, addressed as
follows:
If to Employer:
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Allin Corporation
000 Xxxxxxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
with copies to:
Xxxxx X. Xxxxxxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
If to Employee:
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Xxxxxxx X. X'Xxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
or such other address or addresses as any party may specify by notice to the
other party given as herein provided.
(c) Headings. The headings in this Agreement are inserted for
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convenience and identification and in no way describe,
interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
(d) No Presumption on Interpretation. Nothing herein shall be
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construed more strongly against or more favorably toward
either party by reason of either party having drafted this
Agreement or any portion hereof.
(e) Binding Effect. This Agreement shall be binding upon, and
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inure to the benefit of, the parties hereto and their
respective heirs, beneficiaries, executors, administrators,
personal representatives, successors and permissible assigns.
(f) Integration. This Agreement constitutes and contains the
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entire Agreement and understanding between the parties with
respect to the subject matter hereof and supersedes any all
prior agreements (including the Prior Employment Agreement),
understandings and negotiations relating thereto. No promise,
understanding, representation, inducement, condition or
warranty not set forth herein has been made or relied upon by
any party hereto.
(g) Waivers: Modification. This Agreement, or any provision
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hereof, may be amended, supplemented or modified only by a
writing signed by both parties and may be waived only by a
writing signed by the party to be bound thereby. A written
waiver of any provision shall be valid only in the instance
for which given and shall not be deemed to be a continuing
waiver or construed as a waiver of any other provisions.
(h) Governing Law. This Agreement shall be construed in accordance
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with and governed in all respects by the laws of the
Commonwealth of Pennsylvania (without giving effect to the
conflicts of laws provisions thereof).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
WITNESS: ALLIN CORPORATION
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxx
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Name Printed: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
WITNESS: EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. X'Xxxx
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