I-LINK INCORPORATED
EMPLOYMENT AGREEMENT
Xxxx X. Xxxx, Vice President Operations
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between I-LINK INCORPORATED, a Florida corporation with its principal
placeof business located at 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxx Xxxx Xxxx, Xxxx 00000 (the "Company"), and XXXX X. XXXX ("Employee"),
effective this 28th day of August, 1998;
RECITALS
WHEREAS, the Company, itself and through its subsidiaries, is in the
business of developing, marketing and providing telephony and
communications products and services; and
WHEREAS, Employee has acknowledged skills and experience in managing
corporate operations; and
WHEREAS, the Company desires to obtain the benefit of Employee's
knowledge, skills, and experience and assure itself of the ongoing right to
Employee's services from and after the date hereof, and is willing to do so
on the terms and conditions set forth in this Agreement; and
WHEREAS, Employee is willing and able to render services to the
Company, from and after the date hereof, on the terms and conditions set
forth in this Agreement;
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions, and covenants contained in this Agreement, the
Company and Employee hereby agree as follows:
1. Employment.
(a) Title and Duties of Employee. Subject to all of the terms
and conditions herein provided, the Company hereby employs Employee in the
position of Vice President of Operations, and Employee hereby accepts such
employment with the Company. Employee's duties shall consist of those
generally associated with his title, as well as those duties assigned to
him from time-to-time by the Company, consistent with Employee's position
and qualifications and the best interests of the Company. Employee shall
at all times be subject to and shall observe and carry out such reasonable
rules, regulations, policies, directions, and restrictions as may be
established from time-to-time by the Company.
(b) Performance. Throughout the Employment Term, Employee shall
devote his full business time, attention, knowledge, and skills, faithfully
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diligently, and to the best of his ability, to the active performance of
his duties and responsibilities hereunder, and do such traveling as may
reasonably be required in connection with the performance of such duties
and responsibilities.
2. Term of Employment. Unless terminated as provided in Section 5
hereof, the term of this Agreement shall be for a period of two (2) years,
commencing on the date hereof and continuing through and including the day
immediately preceding the second anniversary of the date hereof (the
"Initial Period"), and thereafter shall automatically continue on a year-
to-year basis (including the Initial Period, the "Employment Term") unless
either party shall deliver written notice to the other party not more than
sixty (60), nor less than thirty (30), days preceding the expiration of the
Initial Period or any one-year extension thereof of its intention not to
extend the term of this Agreement.
3. Compensation and Benefits.
(a) Salary. For services rendered by Employee to the Company
and upon the conditions that Employee fully and faithfully performs all of
his duties and obligations owed during the Employment Term under this
Agreement, the Company shall pay Employee an annual base salary equal to
$120,000, payable in equal semi-monthly installments, less income tax
withholdings and other normal employee deductions. This base salary set
forth herein shall be reviewed annually by the Company at the end of each
fiscal year of the Company (hereafter "Fiscal Year") (with the first such
review to occur after the Fiscal Year ending December 31, 1998, with
respect to base salary for the Fiscal Year ending December 31, 1999), or at
such other times as deemed appropriate by the Company, and may at the sole
discretion of the Company, be adjusted by an amount which it deems
appropriate, provided that said base salary shall not be less than
$120,000.
(b) Bonus Compensation. Employee shall be eligible to receive
such bonus compensation, if any, as and when determined by the Company's
board of directors commensurate with Employee's position as a Vice
President.
(c) Stock Options. The Company grants to Employee options to
purchase 350,000 shares of its common stock (the "Options"), at an exercise
price of $3.125 per common share, which is equal to the closing price of
the Company's publicly traded shares as of the effective date of this
Agreement. Options as to 200,000 shares shall vest in twelve equal
quarterly increments over a three-year period (the "Three-Year Vesting
Options), with the first quarterly vesting to occur on the effective date
of this Agreement for that partial quarter ended September 30, 1998, the
second quarterly vesting to occur on October 1, 1998, and similarly on the
first day of each subsequent calendar quarter with the final quarterly
vesting to occur April 1, 2001. Options as to the remaining 150,000 shares
shall vest upon the Company's attainment of certain specified performance
benchmarks to be mutually agreed upon by Employee and the Company (the
"Performance-Vesting Options"). Upon any "change of control" of the
Company (as defined hereafter), all of Employee's then unvested Three-Year
Vesting Options shall thereupon immediately vest. For purposes of this
Agreement, "change of control" shall mean a direct or indirect transfer, in
one or more transactions, of fifty percent (50%) or more of the legal or
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beneficial ownership of the voting stock in the Company to anyone other
than an entity controlled by the current shareholders, or the sale of
substantially all of the assets of the Company. In the event that, prior
to the expiration of one year from the effective date of this Agreement,
Employee's employment is terminated either by the Company for cause
pursuant to Section 5(b) below or by the Employee, all Options, whether
vested or unvested, shall be cancelled. Thereafter, in the event
Employee's employment is so terminated, all then unvested Options shall be
cancelled. The Option grant shall be evidenced by a written Option
Agreement, the terms of which shall be consistent with the terms of this
Agreement. The Company's Board of Directors, at their sole discretion,
shall determine what number of additional stock options, if any, shall be
granted to Employee, and upon what terms.
(d) Benefits. During the Employment Term, Employee shall be
eligible to participate in and receive coverage and benefits under all
group insurance, pension, profit-sharing, bonus, stock option, stock
ownership, and other employee benefit plans, programs, and arrangements of
the Company which are now or hereafter adopted by the Company for the
benefit of its employees, subject to and on a basis consistent with the
terms, conditions, and overall administration of such plans, programs, and
arrangements.
(e) Expense Reimbursement. The Company shall reimburse Employee
for the business expenses reasonably incurred by Employee within the scope
of his employment, pursuant to standard employee expense reimbursement
policy and procedure as established by the Company.
(f) Severance. Recognizing that Employee is foregoing
alternative employment opportunities to accept employment with the Company
as an executive officer, the parties agree that in the event the Company
terminates this Agreement prior to the expiration of the full term of this
Agreement for any reason other than for cause pursuant to Section 5(b)
below, Employee shall be entitled to receive upon such termination a lump
sum equal to the lesser of (a) Employee's salary payable through the end of
the full term of this Agreement, or (b) Employee's salary payable over
twelve (12) months, together with the immediate accelerated vesting of all
then unvested Three-Year Vesting Options.
4. Compensation Upon Termination or During Disability.
(a) Compensation Upon Termination. If Employee's employment
hereunder is terminated under Section 5 hereof, Employee shall be entitled
to exercise, pursuant to the terms and conditions of the Option Agreement,
the Options that shall have vested as of the date of such termination, and
the Company shall have no further liability under this Agreement except (i)
to pay Employee within ten days of the Date of Termination any accrued
salary or other compensation due under this Agreement on the Date of
Termination (or in the event of Employee's subsequent death, to his estate
or devisee, legatee, or other designee, as applicable), and (ii) provide
Employee, or his estate, or devisee, legatee, or other designee, with any
benefits payable (including any death benefit, if applicable) under all
employee benefit plans, programs, or arrangements of the Company in which
Employee is a participant on the Date of Termination.
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(b) Compensation Upon Disability. During any period that
Employee fails to perform his duties hereunder as a result of incapacity
due to a "disabled condition," as such term is defined in Section 5(c)
hereof (the "disability period"), Employee shall continue to receive his
full base salary at the rate then in effect for the disability period until
Employee's employment hereunder is terminated pursuant to Section 5(c)
hereof; provided, however, that such salary payments so made to Employee
during the first 180 days of the disability period shall be reduced by the
sum of the amounts, if any, actually received by Employee prior to or
during this period, as the result of such incapacity, under any disability
benefit plan of the Company in which Employee participates.
5. Termination.
(a) By Employee. This Agreement may be terminated by Employee
at any time following the one-year anniversary of the effective date of
this Agreement, upon sixty- days written notice to the Company. In the
event of such termination by Employee, Employee shall be entitled to
exercise, pursuant to the terms of this Agreement and the Option Agreement,
the Options that shall have vested as of the date of such termination, and
the Company shall have no further obligation to Employee beyond the timely
payment of all salary and bonus (if any) accrued through the date of such
termination.
(b) Cause. This Agreement may be terminated at any time at the
option of the Company for cause. As used herein, the term "cause" shall
mean and be limited to: (i) any felony conviction of Employee; (ii)
Employee's willful misconduct or failure to reasonably perform in
connection with the performance of Employee's duties, responsibilities,
agreements, and covenants hereunder, or Employee's refusal to comply with
the reasonable rules, regulations, policies, directions, and restrictions
as may be established from time-to-time by the Company, which misconduct,
non-performance, or refusal to so comply shall continue after written
notice from the Company, such notice to specify the respects in which
Employee is in violation; (iii) Employee's breach of the provisions of
Sections 6 and 8 hereof; (iv) any illegal use by Employee of narcotics or
other controlled substances; or (v) Employee's inability to perform his
duties and responsibilities hereunder due to the issuance of an injunction
or restraining order, which is not rescinded within 45 days of issuance.
(c) Death. This Agreement shall terminate automatically upon
the death of Employee.
(d) Disability. In the event Employee becomes mentally or
physically disabled during the Employment Term, Employee's employment
hereunder shall terminate as of the date such disability is "established."
As used in this Subsection, the term "disabled" means suffering from any
mental or physical condition, other than that resulting from the use of
alcohol or illegal use of narcotics or other controlled substances, which
renders Employee unable to substantially perform all of his duties and
services under this Agreement in a satisfactory manner substantially
similar to his previous performance (a "disabled condition") for a period
of one hundred twenty (120) consecutive days or for more than one hundred
twenty (120) days in any 12-month period. For purposes of this Subsection,
the date that Employee's disability is "established" shall be, in the case
of a disabled condition which exists for a period of 120 consecutive days,
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the 121st day on which such disabled condition exists, and, in the case of
a disabled condition existing for more than 120 days in any 12-month
period, the 121st day on which such disabled condition exists.
(e) Impaired Health. Employee may terminate his employment
hereunder if his health should become impaired to an extent that makes his
continued performance of his duties and obligations hereunder hazardous to
his physical or mental health or his life ("impaired health"), provided
that Employee shall have furnished the Company with a written statement
from a qualified doctor to such effect and, provided further, that, at the
Company's request, Employee shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred in the
conclusion of Employee's doctor.
(f) Reassignment, Relocation. This Agreement may be terminated
by Employee in the event of any of the following (i) without Employee's
express written consent, the assignment to Employee of any duties or the
significant reduction of Employee's duties, authority, or responsibilities,
which is inconsistent with Employee's duties, authority, or
responsibilities in effect immediately prior to such assignment, or the
removal of Employee from such duties, authority, or responsibilities; or
(ii) without Employee's express written consent, the relocation of Employee
to a facility or a location more than forty-five (45) miles from Employee's
then-present location.
(g) Notice of Termination. Any termination of Employee's
employment hereunder by the Company or by Employee (other than termination
pursuant to Section 5(b) (death)) shall be communicated by written Notice
of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment hereunder under the Section
and Subsection so indicated.
(h) Date of Termination. "Date of Termination" shall mean the
following: if Employee's employment hereunder is terminated by (i)
Sections 5(a) (Employee), 5(b) (cause), 5(d) (disability), or 5(e)
(impaired health), the date specified in the Notice of Termination; (ii)
5(c) (death), the date of Employee's death; and (iii) Section 5(f)
(Reassignment, Relocation) 30 days after delivery of the Notice of
Termination; and (iv) for any other reason, the date on which the Notice of
Termination is given.
6. Confidential Information.
(a) Disclosure and Use. Employee shall not disclose or use at
any time, either during or subsequent to the Employment Term, any trade
secrets or other confidential information, whether or not patentable, of
the Company or any other direct or indirect parent or subsidiary of the
Company (collectively referred to herein as the "Company"), including but
not limited to, information and lists relating to customers, suppliers, or
independent sales representatives, compensation of employees or independent
sales representatives, products and product pricing, technical or non-
technical data, programs, devices, methods, techniques, drawings,
processes, or financial data, of which Employee is or becomes informed or
5
aware during the Employment Term, whether or not developed by Employee,
except (i) as may be required for Employee to perform Employee's employment
duties with the Company, (ii) to the extent such information has been
disclosed to Employee by a third party who is not subject to restriction on
the dissemination of such information or becomes generally available to the
public through no wrongful act of Employee, (iii) information which must be
disclosed as a result of a subpoena or other legal process, after the
Company has had the opportunity to request a suitable protective order for
such information, or (iv) unless Employee shall first secure the Company's
prior written authorization. This covenant shall survive the termination
of Employee's employment hereunder, and shall remain in effect and be
enforceable against Employee for so long as any such Company secret or
confidential information retains economic value, whether actual or
potential, from not being generally known to other persons who can obtain
economic value from its disclosure or use. Employee shall execute such
reasonable further agreements and/or confirmations of Employee's
obligations to the Company concerning non-disclosure of Company trade
secrets and confidential information as the Company may reasonably require
from time-to-time.
(b) Return of Materials. Upon termination of Employee's
employment hereunder, Employee shall promptly deliver to the Company all
customers lists, specifications, drawings, listings, documentation,
manuals, letters, notes, notebooks, reports, and copies thereof, and all
other materials of a secret or confidential nature relating to the
Company's business, which are in the possession or under the control of
Employee.
7. Inventions and Discoveries.
(a) Disclosure of Employment Invention. Employee agrees for
himself and his heirs, executors, and administrators that Employee will,
without further consideration, disclose immediately to a person designated
by the Company as its agent to receive such disclosures each and every
discovery, invention, part thereof or improvement thereon, or works of
authorship, as defined below ("Employment Invention") which Employee may
conceive, develop, reduce to practice, or create, either solely or jointly
with others, which is:
(i) conceived, developed, reduced to practice or created
(a) within the scope of Employee's employment, or (b) on the Company's
time, or (c) with the aid, assistance, or use of any of the Company's
property, equipment, facilities, supplies, resources, or intellectual
property; or
(ii) the result of any work, services, or duties performed
by Employee for the Company; or
(iii) related to the current or demonstrably anticipated
business, research, or development of the Company.
(b) Assignment of Employee Invention. Employee hereby
irrevocably assigns to the Company all of Employee's entire rights, title,
interest, and Intellectual Property in and to the Employment Inventions
referred to in Section 7(a), and will upon request and without further
consideration do everything reasonably necessary or required to vest in the
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Company Employee's entire right, title, interest, and Intellectual Property
in and to such Employment Inventions including executing all instruments
and documents and performing all acts reasonably necessary or required for
making, filing, or presenting any applicable for the benefit of the Company
for Letters Patent or Copyrights in the United States or throughout the
world for such Employment Inventions and executing assignments of such
patents or applications thereof for the Company.
(c) Definitions. As used herein, "Intellectual Property" means
any and all patents, trade secrets, know-how, technology, confidential
information, ideas, copyrights, trademarks, and service marks and any and
all rights, applications, and registrations relating to them. "Works of
authorship" mean any original work of authorship within the purview of the
copyright laws of the United States, and both parties agree that all works
of authorship created by Employee under Section 7(a) shall be works for
hire within the meaning and purview of such copyright laws.
(d) Exclusions. The foregoing provisions of Sections 7(a) and
8(b) do not apply to any invention not included in Section 7(a) as an
Employment Invention and created by Employee entirely on his own time and
with his own resources.
(e) Recordkeeping. Employee agrees to keep and maintain, or
assist in keeping and maintaining, such records (such as laboratory
notebooks properly and periodically witnessed and understood) as will show
the conception, reduction to practice and operation of all Employment
Inventions, as well as such other records as the Company may request, which
records shall be and remain the property of and available to, the Company.
8. Restrictive Covenant.
(a) Restriction on Competition During Employment Term. So long
as Employee is employed by the Company, Employee shall not, without the
prior written authorization of the Company, directly or indirectly render
services of a business, professional or commercial nature (whether for
compensation or otherwise) to any person or entity engaged in any business
which competes either directly or indirectly with the Company (a
"Competitive Business") during the Employment Term, or engage in any
activity whether along, as a partner, or as an officer, director, employee,
consultant independent contractor, or stockholder in any Competitive
Business. Notwithstanding the foregoing, this section shall not prevent
Employee from purchasing an equity interest in any Competitive Business as
a strictly passive investment and which does not comprise more than Five
Percent (5%) of such Competitive Business's then-outstanding stock.
(b) Restriction on Competition Following Termination. During
the twelve-month period following the applicable Date of Termination (the
"Non-Compete Period"), Employee shall not:
(i) engage in business as, or own an interest in, directly
or indirectly, any individual proprietorship, partnership,
corporation, joint venture, trust, or any other form of business
entity that is a Competitive Business, whether as an individual
proprietor, partner, shareholder, joint venturer, officer, director,
consultant, finder, broker, employee, trustee, or in any other manner
whatsoever if such entity, within any state, province, country or
7
other jurisdiction in which the Company markets and sells its products
and services, develops and/or markets products and/or services that
either directly or indirectly compete with the Company's products
and/or services in existence or that Employee has actual knowledge are
being actively developed by the Company at the commencement of the
Non-Compete Period; or
(ii) attempt in any manner to solicit from any customer
business of the type performed by the Company or to persuade any
customer of the Company to cease doing business or to reduce the
amount of business which any such customer has customarily done or
contemplates doing with the Company, whether or not the relationship
between the Company and such customer was originally established in
whole or in part through Employee's efforts; or employ or attempt to
employ or assist anyone else to employ an person who is at such time,
or at any time during the preceding six months was, an employee or
independent sales representative of or consultant to the Company,
provided that this clause shall not restrict Employee from employing a
third-party vendor who supplies generic services to the industry.
As used in this Section 8, the verb "employ" shall include its variations,
for example, retain, engage, or conduct business with; the term the
"Company" shall include subsidiaries, a parent, or affiliates, if any, of
the Company; and the term "customer" shall mean anyone who is a customer of
the Company as of the date immediately prior to or at any time during the
Non-Compete Period. Notwithstanding the foregoing, nothing in this Section
8 shall limit Employee's ability during the Non-Compete Period to seek
employment by a Competitive Business if Employee refrains from providing
services of any kind to said Competitive Business until the expiration of
the Non-Compete Period. So long as Employee fulfills the performance
obligations contained in Section 1(b), nothing in this Agreement shall
limit or prevent Employee, during the Employment Term and thereafter during
the Non-Compete Period, from engaging in business as, or own an interest
in, directly or indirectly, any individual proprietorship, partnership,
corporation, joint venture, trust, or any other form of business entity,
whether as an individual proprietor, partner shareholder, joint venturer,
officer, director, consultant, finder, broker, employee, trustee, or in any
other manner whatsoever if such entity does not market products and/or
services performing substantially the same functions as the Company's
products and/or services in existence or that Employee has actual knowledge
are being actively developed by the Company both during the Employment Term
and at the commencement of the Non-Compete Period.
(c) Acknowledgment. The parties acknowledge that the time,
scope, geographic area, and other provisions of this Agreement have been
specifically negotiated by the parties and agree that all such provisions
are reasonable under the circumstances and are given as an integral and
essential part of Employee's employment hereunder. In the event that any
covenant contained in this Agreement shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for
too great a period of time or over too great a geographical area or by
reason of its being too extensive in any other respect, it shall be
interpreted to extend only over a maximum period of time for which it may
be enforceable and/or over the maximum geographical area as to which it may
be enforceable and/or to the maximum intent in all other respects as to
which it may be enforceable, all as determined by such court in such
action.
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9. Severability. If any provision of this Agreement is held invalid
or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be
deemed modified only to the extent necessary to render same valid, or not
applicable to given circumstances, or excised from this Agreement, as the
situation may require, and this Agreement shall be construed and enforced
as if such provision had been included herein as so modified in scope or
application, or had not been included herein, as the case may be. Should
this Agreement, or any one or more of its provisions hereof, be held to be
invalid, illegal, or unenforceable within any governmental jurisdiction or
subdivision thereof, the Agreement or any such provision or provisions
shall not as a consequence thereof be deemed to be invalid, illegal, or
unenforceable in any other governmental jurisdiction or subdivision
thereof.
10. Enforcement. The Company will be entitled to institute
proceedings and avail itself of all remedies at law or in equity to recover
damages occasioned by a breach or threatened breach by the other party of
any of the provisions herein and shall have the right to pursue one or more
of such proceedings and remedies simultaneously or from time-to-time.
Employee hereby acknowledges that the Company would suffer irreparable
injury if the provisions of Sections 6 through 8 above, which shall survive
the termination of the Agreement, were breached and that the Company's
remedies at law would be inadequate in the event of such breach.
Accordingly, Employee hereby agrees that any such breach or threatened
breach may, in addition to any and all other available remedies, be
preliminarily enjoined by the Company.
11. Legal Fees and Expenses. In the event of litigation under this
Agreement, each of the Company and Employee shall pay its own attorneys'
fees and expenses.
12. Non-Assignability. In light of the unique personal services to
be performed by Employee hereunder, it is acknowledged and agreed that any
purported or attempted assignment or transfer by either party of this
Agreement or any of Employee's duties, responsibilities, or obligations
hereunder shall be void, and if purported or attempted by the Company,
shall be considered a termination without cause by the Company under
Paragraph 5(c).
13. Notices. Any notice, request, demand, or other communication
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally or when mailed by
certified mail, return-receipt requested, addressed as follows:
To the Company: I-Link Incorporated
13751 So. Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Xx., CFO
To Employee: Xxxx X. Xxxx
0000 X. Xxxxxx Xxxxxx
Xxxxxx, XX 00000
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or to such other address or addresses as may be specified from time-to-time
by notice; provided, however, that any notice of change of address shall
not be effective until its receipt by the party to be charged therewith.
14. General.
(a) Amendments. neither this Agreement nor any of the terms or
conditions hereof may be waived, amended, or modified except by means of a
written instrument duly executed by the party to be charged therewith.
(b) Captions and Headings. The captions and paragraph headings
used in this Agreement are for convenience of reference only, and shall not
affect the construction or interpretation of this Agreement or any of the
provisions hereof.
(c) Successors and Assigns. This Agreement and Employee's duties
and rights hereunder shall not be assignable by Employee. This Agreement
and the Company's duties and rights hereunder shall be assignable in the
event of a merger, acquisition or other bona fide business reorganization
to which the Company is a party. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors, and
permitted assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original hereof,
but all of which together shall constitute one and the same instrument.
(e) Entire Agreement. Except as otherwise set forth or referred
to in this Agreement, this Agreement constitutes the sole and entire
agreement and understanding between the parties hereto as to the subject
matter hereof, and supersedes all prior discussions, agreements, and
understandings of every kind and nature between them as to such subject
matter.
(f) Reliance by Third Parties. This Agreement is intended for
the sole and exclusive benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors, and
permitted assigns, and no other person or entity shall have any right to
rely on this Agreement or to claim or derive any benefit therefrom absent
the express written consent of the party to be charged with such reliance
or benefit.
(g) Governing Law. This Agreement shall be construed in
accordance with governed by the laws of the State of Utah.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the date first set forth above.
I-LINK INCORPORATED
By: ______________________________________
Xxxx X. Xxxxxxx, President
__________________________________________
XXXX X. XXXX
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