EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective as of
the_____________________________day of November, 2002 (the "Effective Date").
BETWEEN:
INVISINET, INC., a body corporate formed pursuant to the laws of the State of
Delaware and having an office for business located at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx 00, Xxxxx, Xxxxxxxxxxxx 00000 ("Invisinet") AND:
X.X. XXX XXXXXXXXXX, an individual having an address at 00
Xxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("von Schaumburg")
WHEREAS:
A. Invisinet was formed on July 10, 2000;
B. von Schaumburg has acted as President and Treasurer of Invisinet since July
10, 2000; and
C. von Schaumburg and Invisinet are parties to that certain Agreement and Plan
of Merger, made as of November _, 2002 (the "Merger Agreement"), pursuant to
which von Schaumburg has agreed to continue to serve as President and Treasurer
of Invisinet, and Invisinet has agreed to hire von Schaumburg as such, pursuant
to the terms and conditions of this Employment Agreement (the "Agreement").
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, the Merger Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, von Schaumburg and
Invisinet hereby agree as follows:
ARTICLE 1
EMPLOYMENT
Invisinet hereby affirms, renews and extends the employment of von
Schaumburg as Invisinet's President and Treasurer, and von Schaumburg hereby
affirms, renews and accepts such employment by Invisinet, for the "Term" (as
defined in Article 3 below), upon the terms and conditions set forth herein.
ARTICLE 2
DUTIES
During the Term, von Schaumburg shall serve Invisinet faithfully,
diligently and to the best of his ability, under the direction of the Board of
Directors of Invisinet and shall use his best efforts to promote the interests
and goodwill of Invisinet and any affiliates, successors, assigns, parent
corporations, subsidiaries, and/or future purchasers of Invisinet. von
Schaumburg shall render such services during the Term at Invisinet's principal
place of business or at such other place of business as may be determined by the
Board of Directors of Invisinet, as Invisinet may from time to time reasonably
require of him, and shall devote all of his business time to the performance
thereof. von Schaumburg shall have those duties and powers as generally pertain
to each of the offices of which he holds, as the case may be, subject to the
control of the Board of Directors. The precise services and duties which von
Schaumburg is obligated to perform hereunder may from time to time be changed,
amended, extended or curtailed by the Board of Directors of Invisinet.
ARTICLE 3
TERM
The "Term" of this Agreement shall commence on the Effective Date and
continue thereafter for a term of two (2) years, as may be extended or earlier
terminated pursuant to the terms and conditions of this Agreement. The Term of
this Agreement shall automatically renew for successive three (3) month periods
unless, within thirty (30) days of the expiration of the then existing Term,
either Invisinet or von Schaumburg provides written notice to the other that it
elects not to renew the Term. Upon delivery of such notice, this Agreement shall
continue until expiration of the Term, whereupon this Agreement shall terminate
and neither party shall have any further obligation thereafter arising under
this Agreement, except as explicitly set forth herein to the contrary.
ARTICLE 4
COMPENSATION
Salary
4.1 Invisinet shall pay to von Schaumburg an annual salary (the "Salary") of One
Hundred Twenty Thousand Dollars ($120,000.00), payable in equal installments at
the end of such regular payroll accounting periods as are established by
Invisinet, or in such other installments upon which the parties hereto shall
mutually agree, and in accordance with Invisinet's usual payroll procedures, but
no less frequently than monthly.
Benefits
4.2 During the Term, von Schaumburg shall be entitled to participate in all
medical and other employee benefit plans, including vacation, sick leave,
retirement accounts and other employee benefits provided by Invisinet to
similarly situated employees on terms and conditions no less favorable than
those offered to such employees. Such participation shall be subject to the
terms of the applicable plan documents, Invisinet's generally applicable
policies, and the discretion of the Board of Directors or any administrative or
other committee provided for in, or contemplated by, such plan.
Expense Reimbursement
4.3 Invisinet shall reimburse von Schaumburg for reasonable and necessary
expenses incurred by him on behalf of Invisinet in the performance of his duties
hereunder during the Term, including, without limitation, reimbursement for
automobile and cellular telephone expenses in accordance with Invisinet's then
customary policies, provided that such expenses are adequately documented.
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Commission/Draw
4.4 In addition to the Salary, von Schaumburg shall be paid a non-recoverable
annual draw (the "Draw") of Fifty-One Thousand Dollars ($51,000), payable in
equal installments at the end of such regular payroll accounting periods as are
established by Invisinet, or in such other installments upon which the parties
hereto shall mutually agree, and in accordance with Invisinet's usual payroll
procedures. von Schaumburg shall be entitled to a commission (the "Commission")
equal to 15% of the Gross Profit (as defined below), less any and all payments
made on account of the Draw, for each fiscal year ending on the first
anniversary date of this Agreement (each such year being a "Commission Period").
Invisinet shall pay the Commission, if any, to von Schaumburg no later than 90
days following the end of each Commission Period. For greater certainty, in the
event that the Commission is less than the amount of the Draw, the Draw shall be
non-refundable.
Gross Profit
4.6 Within 90 days of the end of each Commission Period, Invisinet shall
calculate its Gross Profit for the Commission Period using the following
meanings each determined in accordance with generally accepted accounting
principles in the United States:
(a) "Direct Costs" means the aggregate of the direct costs (but no
other costs) of materials and labor allocable to any and all
products the sale of which constitute Gross Sales, and which
shall include shipping charges, handling charges, applicable
sales taxes and surcharges;
(b) "Gross Sales" means the gross revenue from the sale by
Invisinet of any and all products; and
(c) "Gross Profit" means, in respect of any Commission Period, the
dollar amount by which the aggregate of Gross Sales exceeds
Direct Costs, expressed as a dollar amount.
Report
2.2 Invisinet shall instruct its auditor to calculate Direct Costs, Gross
Sales, and Gross Profit for each Commission Period, and to deliver a report
thereon (an "Auditor's Sales Report") within 90 days following the end of each
Commission Period.
Reviews
2.3 Invisinet shall provide a copy of each Auditor's Sales Report to von
Schaumburg promptly upon receipt thereof. von Schaumburg shall have the right
to review and independently verify the conclusions of any Auditor's Sales
Report by delivering notice in writing to Invisinet within 30 days after
receipt of any such Auditor's Sales Report indicating that von Schaumburg
wishes to exercise his right of review and verification. Within 10 business
days after receipt of any such notice, Invisinet shall make available to von
Schaumburg and his representatives, at reasonable times during normal business
hours, the books and records of Invisinet which are reasonably necessary to
conduct such review and verification. von Schaumburg shall cause such review to
be conducted and concluded as quickly as reasonably practicable and in such a
manner so as not to unreasonably interfere with the business and operations of
Invisinet. Any representatives conducting such review shall, prior to being
given access to such books and records, be required to enter into
confidentiality and non-disclosure agreements with Invisinet on terms and
conditions satisfactory to Invisinet, acting reasonably. The costs of any such
review shall be borne by von Schaumburg unless the review indicates a
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discrepancy between the Gross Profit figure contained in the Auditor's Sales
Report and the figure, if any, agreed to by Invisinet and von Schaumburg
following such review of greater than 10%. If von Schaumburg and Invisinet
shall be unable to resolve any dispute respecting any determination contained
in any Auditor's Sales Report, then any disputed matters ("Disputed Items")
shall, within 20 days after notice is delivered by von Schaumburg to Invisinet
that there exist Disputed Items, be submitted to arbitration as set forth
below.
Arbitration
2.4 An independent chartered accountant chosen by Invisinet (hereinafter
referred to as "Invisinet's Accountant") and an independent chartered
accountant chosen by von Schaumburg (herein after referred to as "von
Schaumburg's Accountant") shall together within 20 days, appoint a
representative from an accounting firm recognized in the State of Pennsylvania
(other than Invisinet's Accountant or von Schaumburg's Accountant) to arbitrate
the dispute (hereinafter referred to as the "Arbitrator"). The parties shall,
within 20 days after the appointment of the Arbitrator, present their position
with respect to the Disputed Items to the Arbitrator together with such other
materials as the Arbitrator deems appropriate. The Arbitrator shall within 20
days after the submission of such evidence, submit its written decision on each
Disputed Item to the parties. Any determination by the Arbitrator with respect
to any Disputed Item shall be final and binding on such parties. The Arbitrator
shall comply, and the arbitration shall be conducted in accordance with, the
Commercial Arbitration Rules of American Arbitration Association then in force.
If the Arbitrator determines that the Auditor's Sale Report was correct so that
the Gross Profits presented therein were equal to or greater than the actual
Gross Profits, or less than the actual Gross Profits by a less than 10%
variance, the costs of any such arbitration shall be borne by von Schaumburg.
If the Arbitrator determines that the Auditor's Sales Report was incorrect so
that the Gross Profits presented therein were less than the actual Gross
Profits by more than 10%, the costs of any such arbitration shall be borne by
Invisinet.
No Further Salary
4.5 There will be no cost-of-living increase or merit increase in the Salary,
the Draw or the Commission unless agreed to by the Board of Directors of
Invisinet. No decrease will be made, in any event, to the Salary or the Draw.
ARTICLE 5
OTHER EMPLOYMENT
von Schaumburg shall devote substantially all of his business and
professional time and effort, attention, knowledge, and skill to the management,
supervision and direction of Invisinet's business and affairs as von
Schaumburg's highest professional priority. Invisinet shall be entitled to all
benefits, profits or other issues arising from or incidental to all work,
services and advice performed or provided by von Schaumburg. von Schaumburg
shall not, during the term hereof, be interested directly or indirectly, in any
manner, as partner, officer, director, stockholder, advisor, employee or in any
other capacity in any other business except such investments as are specifically
enumerated in Schedule "A" hereto; provided, however, that nothing herein
contained shall prevent or limit the right of von Schaumburg to invest any of
his surplus funds in the capital stock or other securities of any corporation,
company or limited partnership whose products or activities are unrelated to the
Invisinet's primary business or any substantially similar product or process, or
whose stock or securities are publicly owned or are regularly traded on any
public exchange; nor shall anything herein contained prevent von Schaumburg from
investing or limit von Schaumburg's right to invest his surplus funds in real
estate; nor shall anything herein contained prevent von Schaumburg from serving
in a volunteer capacity as officer, director, or
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advisor for professional organizations with which he is affiliated, provided
that such service does not impede or hinder the performance of von Schaumburg's
duties hereunder. von Schaumburg hereby represents and warrants to and in favor
of Invisinet that he is not any contractual obligation to any other company,
entity or individual that would prohibit or impede von Schaumburg from
performing his duties and responsibilities under this Agreement.
ARTICLE 6
CONFIDENTIAL INFORMATION/ INVENTIONS
Confidential Information
6.1 von Schaumburg shall not, in any manner, for any reasons, either directly or
indirectly, divulge or communicate to any person, firm or corporation, any
confidential information concerning any matters not generally known in the
wireless communications industry or otherwise made public by Invisinet which
affects or relates to Invisinet's business, finances, marketing and/ or
operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, "Confidential Information") except in
the ordinary course of business or as required by applicable law. Without regard
to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known in the wireless
communications industry, such item is important, material, and confidential and
affects the successful conduct of Invisinet's business and good will, and that
any breach of the terms of this Section 6.1 shall be a material and incurable
breach of this Agreement. Confidential Information shall not include: (i)
information obtained or which became known to von Schaumburg other than through
his employment by Invisinet; and (ii) information in the public domain at the
time of the disclosure of such information by von Schaumburg.
Documents
6.2 von Schaumburg further agrees that all documents and materials furnished to
von Schaumburg by Invisinet and relating to the Invisinet's business or
prospective business are and shall remain the exclusive property of Invisinet.
von Schaumburg shall deliver all such documents and materials, uncopied, to
Invisinet upon demand therefor and in any event upon expiration or earlier
termination of this Agreement. Any payment of sums due and owing to von
Schaumburg by Invisinet upon such expiration or earlier termination shall be
conditioned upon returning all such documents and materials, and von Schaumburg
expressly authorizes Invisinet to withhold any payments due and owing pending
return of such documents and materials. Inventions
6.3 All ideas, inventions, and other developments or improvements conceived or
reduced to practice by von Schaumburg, alone or with others, during the term of
this Agreement, whether or not during working hours, that are within the scope
of the business of Invisinet or that relate to or result from any of Invisinet's
work or projects or the services provided by von Schaumburg to Invisinet
pursuant to this Agreement, shall be the exclusive property of Invisinet. Von
Schaumburg agrees to assist Invisinet, at Invisinet's expense, to obtain patents
and copyrights on any such ideas, inventions, writings, and other developments,
and agrees to execute all documents necessary to obtain such patents and
copyrights in the name of Invisinet.
Disclosure
6.4 During the Term, von Schaumburg will promptly disclose to the Board of
Directors of Invisinet full information concerning any interest, direct or
indirect, of von Schaumburg (as
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owner, shareholder, partner, lender or other investor, director, officer,
employee, consultant or otherwise) or any member of his immediate family in any
business that is reasonably known to von Schaumburg to purchase or otherwise
obtain services or products from, or to sell or otherwise provide services or
products to, Invisinet or to any of its suppliers or customers.
ARTICLE 7
COVENANT NOT TO COMPETE
Except as expressly permitted in Article 5 above, during the term of
this Agreement, von Schaumburg shall not engage in any of the following
competitive activities: (a) engaging directly or indirectly in any business or
activity substantially similar to any business or activity engaged in (or
proposed to be engaged in) by Invisinet; (b) engaging directly or indirectly in
any business or activity competitive with the any business or activity engaged
in (or proposed to be engaged in) by Invisinet; (c) soliciting or taking away
any employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor of Invisinet, or attempting to so solicit or take
away; (d) interfering with any contractual or other relationship between
Invisinet and any employee, agent, representative, contractor, supplier, vendor,
customer, franchisee, lender or investor; or (e) using, for the benefit of any
person or entity other than Invisinet, any Confidential Information of
Invisinet. The foregoing covenant prohibiting competitive activities shall
survive the termination of this Agreement and shall extend, and shall remain
enforceable against von Schaumburg, for the period of two (2) years following
the date this Agreement is terminated. In addition, during the two-year period
following such expiration or earlier termination, neither von Schaumburg nor
Invisinet shall not make or permit the making of any negative statement of any
kind concerning Invisinet or its affiliates, or their directors, officers or
agents or Xx. Xxx Xxxxxxxxxx.
ARTICLE 8
SURVIVAL
von Schaumburg agrees that the provisions of Articles 6 and 7 shall
survive expiration or earlier termination of this Agreement for any reasons,
whether voluntary or involuntary, with or without cause, and shall remain in
full force and effect thereafter.
ARTICLE 9
INJUNCTIVE RELIEF
von Schaumburg acknowledges and agrees that the covenants and
obligations of von Schaumburg set forth in Articles 6 and 7 with respect to
non-competition, non-solicitation, confidentiality and Invisinet's property
relate to special, unique and extraordinary matters and that a violation of any
of the terms of such covenants and obligations will cause Invisinet irreparable
injury for which adequate remedies are not available at law. Therefore, von
Schaumburg agrees that Invisinet shall be entitled to an injunction, restraining
order or such other equitable relief (without the requirement to post bond) as a
court of competent jurisdiction may deem necessary or appropriate to restrain
von Schaumburg from committing any violation of the covenants and obligations
referred to in this Article 9. These injunctive remedies are cumulative and in
addition to any other rights and remedies Invisinet may have at law or in
equity.
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ARTICLE 10
TERMINATION
Termination by von Schaumburg
10.1 von Schaumburg may terminate this Agreement without cause at any time and
for any reason upon thirty (30) days written notice to Invisinet. von Schaumburg
may immediately terminate this Agreement for Good Reason at any time by written
notice to Invisinet.
Good Reason
10.2 In this Agreement, "Good Reason" means, without von Schaumburg's prior
written consent, the occurrence of any of the following events, unless Invisinet
shall have fully cured all grounds for such termination within thirty (30) days
after von Schaumburg gives notice thereof
(i) any reduction in his then-current Draw or Salary;
(ii) any material failure to timely grant, or timely honor, any equity
or long-term incentive award;
(iii) failure to pay or provide required compensation and benefits;
(iv) any failure to appoint, elect or reelect him to the position of
President of Invisinet; the removal of him from any such
position; or any changes in the reporting structure so that von
Schaumburg reports to someone other than the board or Xx. Xxxx
Xxxxxxx;
(v) any diminution in his title or duties or the assignment to him of
duties that materially impair his ability to perform his duties;
(vi) any relocation of von Schaumburg's office as assigned to him by
Invisinet, to a location more than 25 miles from 00 Xxxxx Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, it being acknowledged by von
Schaumburg that immediately following the closing of the Merger
Agreement Invisinet's principal office will be relocated to
Exton, PA;
viii) the failure of Invisinet to obtain the assumption in writing of
its obligation to perform the Employment Agreement by any
successor to all or substantially all of the assets of Invisinet
upon a merger, consolidation, sale or similar transaction; or
(ix) the voluntary or involuntary dissolution of Invisinet.
The written notice given hereunder by von Schaumburg to Invisinet shall
specify in reasonable detail the cause for termination, and such termination
notice shall not be effective until thirty (30) days after Invisinet's receipt
of such notice, during which time Invisinet shall have the right to respond to
von Schaumburg's notice and cure the breach or other event giving rise to the
termination.
Termination by Invisinet
10.3 Invisinet may terminate its employment of von Schaumburg under this
Agreement without cause at any time and for any reason upon thirty (30) days
notice to von Schaumburg. Invisinet may terminate its employment of von
Schaumburg under this Agreement for cause at any time by written notice to von
Schaumburg. For purposes of this Agreement, the term "cause"
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for termination by Invisinet shall be (a) a conviction of or plea of guilty or
nolo contendere by von Schaumburg to a felony; (b) the consistent refusal by von
Schaumburg to perform his material duties and obligations hereunder; (c) von
Schaumburg's willful and intentional misconduct in the performance of his
material duties and obligations; or (d) if von Schaumburg or any member of his
family makes any personal profit arising out of or in connection with a
transaction to which Invisinet is a party or with which it is associated without
making disclosure to and obtaining the prior written consent of Invisinet. The
written notice given hereunder by Invisinet to von Schaumburg shall specify in
reasonable detail the cause for termination. In the case of a termination for
the causes described in (a) and (d) above, such termination shall be effective
upon receipt of the written notice. In the case of the causes described in (b)
and (c) above, such termination notice shall not be effective until thirty (30)
days after von Schaumburg's receipt of such notice, during which time von
Schaumburg shall have the right to respond to Invisinet's notice and cure the
breach or other event giving rise to the termination.
Severance
10.4 Upon a termination of this Agreement without Good Reason by von Schaumburg
or with cause by Invisinet, Invisinet shall immediately pay to von Schaumburg
all accrued and unpaid compensation as of the date of such termination, subject
to the provision of Section 6.2. Upon a termination of this Agreement with Good
Reason by von Schaumburg or without cause by Invisinet, Invisinet shall
immediately pay to von Schaumburg all accrued and unpaid compensation as of the
date of such termination and the "Severance Payment." The "Severance Payment"
shall equal the total amount of the Salary payable to von Schaumburg under
Section 4.1 of this Agreement from the date of such termination until the end of
the Term of this Agreement (prorated for any partial month), but in no event
shall the Severance Payment exceed six months' Salary payable under Section 4.1
hereof.
Termination Upon Death
10.5 If von Schaumburg dies during the term of this Agreement, this Agreement
shall terminate, except that von Schaumburg's legal representatives shall be
entitled to receive any earned but unpaid compensation due hereunder.
Termination Upon Disability
10.6 If, during the term of this Agreement, von Schaumburg suffers and
continues to suffer from a "Disability" (as defined below), then Invisinet may
terminate this Agreement by delivering to von Schaumburg thirty (30) calendar
days' prior written notice of termination based on such Disability, setting
forth with specificity the nature of such Disability and the determination of
Disability by Invisinet. For the purposes of this Agreement, "Disability" means
von Schaumburg's inability, with reasonable accommodation, to substantially
perform von Schaumburg's duties, services and obligations under this Agreement
due to physical or mental illness or other disability for a continuous,
uninterrupted period of sixty (60) calendar days.
ARTICLE 11
PERSONNEL POLICIES, CONDITIONS, AND BENEFITS
Except as otherwise provided herein, von Schaumburg's employment shall
be subject to the personnel policies and benefit plans which apply generally to
Invisinet's employees as the same may be interpreted, adopted, revised or
deleted from time to time, during the term of this Agreement, by Invisinet in
its sole discretion. During the term hereof, von Schaumburg shall be entitled
to vacation during each year of the Term at the rate of two (2) weeks per year
beginning on the Effective Date; provided that no vacation shall accrue from
year to year during the term.
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von Schaumburg shall take such vacation at a time approved in advance by the
Board of Directors of Invisinet, which approval will not be unreasonably
withheld but will take into account the staffing requirements of Invisinet and
the need for the timely performance of von Schaumburg's responsibilities.
ARTICLE 12
BENEFICIARIES OF AGREEMENT
This Agreement shall inure to the benefit of Invisinet and any
affiliates, successors, assigns, parent corporations, subsidiaries, and/or
purchasers of Invisinet as they now or shall exist while this Agreement is in
effect.
ARTICLE 13
GENERAL PROVISIONS
No Waiver
13.1 No failure by either party to declare a default based on any breach by the
other party of any obligation under this Agreement, nor failure of such party to
act quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
Modification
13.2 No waiver or modification of this Agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in writing and duly
executed by the parties to be charged therewith.
Choice of Law/Jurisdiction
13.3 This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to any conflict-of-laws
principles. Invisinet and von Schaumburg hereby consent to personal jurisdiction
before all courts in the State of Delaware, and hereby acknowledge and agree
that Delaware is and shall be the most proper forum to bring a complaint before
a court of law.
Entire Agreement
13.4 This Agreement embodies the whole agreement between the parties hereto
regarding the subject matter hereof and there are no inducements, promises,
terms, conditions, or obligations made or entered into by Invisinet or von
Schaumburg other than contained herein.
Severability
13.5 All agreements and covenants contained herein are severable, and in the
event any of them, with the exception of those contained in Articles 1 and 4
hereof, shall be held to be invalid by any competent court, this Agreement shall
be interpreted as if such invalid agreements or covenants were not contained
herein.
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Headings
13.6 The headings contained herein are for the convenience of reference and are
not to be used in interpreting this Agreement.
Independent Legal Advice
13.7 Invisinet has obtained legal advice concerning this Agreement and has
requested the von Schaumburg obtain independent legal advice with respect to
same before executing this Agreement. von Schaumburg, in executing this
Agreement, represents and warranties to Invisinet that he has been so advised to
obtain independent legal advice, and that prior to the execution of this
Agreement he has so obtained independent legal advice, or has, in his
discretion, knowingly and willingly elected not to do so.
No Assignment
13.8 von Schaumburg may not assign, pledge or encumber his interest in this
Agreement nor assign any of his rights or duties under this Agreement without
the prior written consent of Invisinet.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
INVISINET, INC.
By:
Witness Xxxx Xxxxxxx, Director
Name
Address
Witness X.X. XXX XXXXXXXXXX
Name
Address
This is page 11 to the Employment Agreement dated November____________________,
2002 between Invisinet, Inc. and X.X. xxx Xxxxxxxxxx.
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Schedule "A" Investments by von Schaumburg This is Schedule "A" to the
Employment Agreement dated November_________________________, 2002 between
Invisinet, Inc. and X.X. xxx Xxxxxxxxxx.
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