Exhibit 10.1
Form SB-2
Skypath Networks, Inc.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into and made effective as of
November 1, 2002, by and among Skypath Networks, Inc., a Delaware corporation,
("Employer") and Xxxxx X. Paolo ("Employee").
R E C I T A L S
Employer is desirous of hiring Employee as one of its key employees; WHEREAS,
Employee is willing to accept employment as an employee of Employer; and
WHEREAS, the parties hereto desire to delineate the responsibilities of Employee
and the expectations of Employer;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
AGREEMENT
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts employment with Employer, upon the terms and conditions set
forth in this Agreement.
2. TERM OF EMPLOYMENT. The employment of Employee pursuant to the terms
of this Agreement shall commence as of November 1, 2002, and shall
continue for a period of Six (6) years, unless sooner terminated
pursuant to the provisions hereof; PROVIDED, HOWEVER, that this
Agreement shall, unless earlier terminated, as of the fifteenth of
each month of the term of this Agreement, be automatically extended
for an additional month.
3. DUTIES.
3.1. BASIC DUTIES. Subject to the direction and control of the Board
of Directors of Employer, Employee shall serve as the President
and Chief Executive Officer of Employer and shall fulfill all
duties and obligations of such office.
3.2. OTHER DUTIES OF EMPLOYEE. In addition to the foregoing, Employee
shall perform such other or different duties related to those set
forth in Paragraph 3.1 as may be assigned to him from time to
time by Employer; PROVIDED, HOWEVER, that any such additional
assignment shall be at a level of responsibility commensurate
with that set forth in Paragraph 3.1 and PROVIDED, FURTHER, that
Employee may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in,
companies or entities that in the judgment of Employer will not
present any conflict of interest with Employer or any of its
operations or adversely affect the performance of Employee's
duties pursuant to this Agreement.
3.3. TIME DEVOTED TO EMPLOYMENT. Employee shall devote his full time
to the business of Employer during the term of this Agreement to
fulfill his obligations hereunder.
3.4. PLACE OF PERFORMANCE OF DUTIES. The services of Employee shall be
performed at Employer's place of business and at such other
locations as shall be designated from time to time by Employer.
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4. COMPENSATION AND METHOD OF PAYMENT.
4.1 TOTAL COMPENSATION. As compensation under this Agreement,
Employer shall pay and Employee shall accept the following:
(1) For each year of this Agreement, measured from the effective
date hereof, base compensation of One hundred fifty thousand
dollars ($150,000), increased annually by ten percent (10%)
per year, plus such additional increases as may be approved
from time to time by the Board of Directors of Employer. All
such increases shall be effective as of the beginning of
such calendar year in which the increase becomes effective
pursuant to the terms hereof or is approved by the Board of
Directors, as the case may be. Such adjustments may be based
on the performance of Employer, the value of Employee to
Employer or any other factors considered relevant by
Employer.
(2) For each year:
(i) an income performance based bonus ("Income Performance
Bonus"), payable quarterly, which will consist of 10%
of pre-taxed profits and other measure set fourth in
the 2003 management incentive plan.
(3) Reimbursement of such discretionary expenses as are
reasonable and necessary, in the judgment of the Board of
Directors, for Employee's performance of his
responsibilities under this Agreement.
(4) Nonqualified options as described in the 2003 employee stock
option plan.
(5) Participation in Employer's employee fringe benefit programs
in effect from time to time for employees at comparable
levels of responsibility. Participation will be in
accordance with any applicable policies adopted by Employer.
Employee shall be entitled to vacations, absences for
illness, and to similar benefits of employment, and shall be
subject to such policies and procedures as may be adopted by
Employer. Without limiting the generality of the foregoing,
it is initially anticipated that such benefits of employment
shall include four (4) weeks' vacation during each 12-month
period of employment with Employer (which shall accrue
monthly on a PRO RATA basis and which shall be carried
forward for a period not to exceed three (3) years and
otherwise in accordance with Employer's policies); major
medical and health insurance; life and disability insurance;
and stock option plans for employees and members of the
Board of Directors. Employer further agrees that in the
event it offers disability insurance to its employees,
Employer shall arrange for Employee to be covered by similar
insurance.
(6) In addition, Employee shall be entitled to: (a) a car
allowance of $950 per month, (b) a club membership expense
allowance of $450 per month, the reasonable cost of premiums
for a whole life insurance policy with a death benefit of
one million dollars ($1,000,000), and (d) if for any reason
Employee shall not be covered by a health insurance policy
of Employer, a medical insurance coverage expense allowance
of $800 per month.
(7) In the event of a Change of Control of Employer (as such
term is defined in Section 4.3(2) hereof), Employee shall be
entitled to receive 150% of the balance of the unpaid base
compensation ("Unpaid Base Compensation") which would
otherwise be payable to Employee during the remainder of the
term of this Agreement pursuant to Section 4.1(1) hereof
within thirty (30) days of the date of such Change of
Control and any and all options granted to Employee pursuant
to Section 4.1(4) hereof and otherwise shall vest
immediately upon the date of such Change of Control;
PROVIDED, HOWEVER, in the event of such Change of Control of
Employer, the term of this Agreement shall automatically be
extended to a period of five (5) years from the date of such
Change of Control of Employer for purposes of this Section
4.1(7).
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4.2 PAYMENT OF COMPENSATION. Employer shall pay the compensation
provided for in Section 4.1 hereof as follows:
(1) Employer shall pay the base compensation in cash in
fifty-two equal installments or in accordance with
Employer's payroll practices for all its employees, but in
no event less frequently than bi-monthly.
(2) Employer shall pay all Incentive Compensation in cash or in
securities ("Securities") issued by Employer, which shall be
at the sole election of Employee, to a Deferred Compensation
Trust, to be established by Employer in the form provided in
Exhibit "B" hereto. With respect to each year, Employee
shall, on or before the beginning of such year, inform
Employer in writing of the percentage of Incentive
Compensation which shall be paid in cash and of the
percentage thereof which shall be paid in Securities to the
Deferred Compensation Trust.
(3) Employer shall pay in cash the reimbursement of such
discretionary expenses provided in Section 4.1(3) hereof.
4.3 AMOUNTS PAID TO THE DEFERRED COMPENSATION TRUST
(1) The amount of Incentive Compensation paid by the Company to
the Deferred Compensation Trust may not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment or garnishment
by creditors of Employee or his beneficiaries, and Employee
has only the status of a general unsecured creditor of the
Company as to the amounts of Incentive Compensation paid
pursuant to this Agreement.
(2) The total of Incentive Compensation paid to the Deferred
Compensation Trust pursuant to this Agreement will be
distributed to Employee therefrom in a lump sum on the
occurrence of the earliest of the following:
(a) Employee's termination of service because of death,
disability, or termination of employment
(b) Employee's attainment of the age of sixty-five (65)
years; or
(c) A Change of Control of Employer. For all purposes of
this Agreement, a "Change of Control" shall mean: (i)
the acquisition by any person, entity or group of
persons, within the meaning of Section 13(d) or 14(d),
or any comparable successor provisions, of the
Securities Exchange Act of 1934 (the "Act") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of at least twenty percent
(20%) of either the outstanding shares of common stock
or the combined voting power of Employer's then
outstanding voting securities entitled to vote
generally, or (ii) the approval by the stockholders of
Employer of a reorganization, merger or consolidation,
in which persons who were stockholders of Employer
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own or
control more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election
of directors of the surviving corporation of such
reorganization merger or consolidation, or a
liquidation or dissolution of Employer or of the sale
of all or substantially all of Employer's assets, or
(iii) in the event Employer terminates Employee
pursuant to this Agreement for any reason other than
the occurrence of any of the events set forth in
Sections 5.2(2),(3),(4),(6), (7) or (9) hereof, or (iv)
in the event any person shall be elected by the
stockholders of Employer to the Board of Directors of
Employer who shall not have been nominated for election
by a majority of the Board of Directors of Employer or
any duly appointed committee thereof
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5. TERMINATION OF AGREEMENT.
5.1. BY NOTICE. This Agreement, and the employment of Employee
hereunder, may be terminated by Employee or Employer upon ninety
(90) days' written notice of termination; PROVIDED, HOWEVER, in
the event Employer terminates this Agreement for any reason other
than the occurrence of any of the events set forth in Sections
5.2 (2), (3), (4), (6), (7) or (9), and subject to Section 4.1(7)
hereof, Employee shall be entitled to receive the balance of the
unpaid base salary which would otherwise be payable to Employer
during the remainder of the term of this Agreement pursuant to
Sections 4.1(1) and 4.1(6) hereof within thirty (30) days after
such ninety (90) day notice period.
5.2. OTHER TERMINATION. This Agreement, and the employment of Employee
hereunder, shall terminate immediately upon the occurrence of any
one of the following events:
(1) The death or mental or physical incapacity of Employee.
(2) The loss by Employee of legal capacity (other than as
described in Section 5.2(1) hereof).
(3) The failure by Employee to devote substantially all of his
available professional time to the business of Employer or
the willful and habitual neglect of duties.
(4) The willful engaging by Employee in an act of dishonesty
constituting a felony under the laws of the state in which
Employer's principal place of business is located, resulting
or intending to result in gain or personal enrichment at the
expense of Employer or to the detriment of Employer's
business and to which Employee is not legally entitled.
(5) The continued incapacity in excess of one hundred eighty
(180) days on the part of Employee to perform his duties,
unless waived by Employer.
(6) The mutual written agreement of Employee and Employer.
(7) The expiration of the term of this Agreement.
(8) The involuntary termination of Employee as a director of
Employer.
(9) Employee's breach of this Agreement.
5.3 EFFECT OF TERMINATION BY REASON OF DEATH OR INCAPACITY. In the
event of the termination of Employee's employment pursuant to
Sections 5.2(1) or (5) of this Agreement prior to the completion
of the term of employment specified herein, and subject to
Section 4.1(7) hereof, Employee shall be entitled to receive the
balance of the unpaid compensation (including any Incentive
Compensation pursuant to Section 4.4 hereof) which is not covered
by disability or other insurance and which would otherwise be
payable to Employee during the term of this Agreement pursuant to
Section 4.1(1) hereof within 60 days after such termination.
5.4. REMEDIES. No termination of the employment of Employee pursuant
to the terms of this Agreement shall prejudice any other remedy
to which any party to this Agreement may be entitled either at
law, in equity, or under this Agreement.
6. PROPERTY RIGHTS AND OBLIGATIONS OF EMPLOYEE.
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6.1. TRADE SECRETS. For purposes of this Agreement, "trade secrets"
shall include without limitation any and all financial, cost and
pricing information and any and all information contained in any
drawings, designs, plans, proposals, customer lists, records of
any kind, data, formulas, specifications, concepts or ideas,
where such information is reasonably related to the business of
Employer and has not previously been publicly released by duly
authorized representatives of Employer or Parent or otherwise
lawfully entered the public domain.
6.2. PRESERVATION OF TRADE SECRETS. Employee will preserve as
confidential all trade secrets pertaining to Employer's business
that have been or may be obtained or learned by him by reason of
his employment or otherwise. Employee will not, without the
written consent of Employer, either use for his own benefit or
purposes or disclose or permit disclosure to any third parties,
either during the term of his employment hereunder or thereafter
(except as required in fulfilling the duties of his employment),
any trade secret connected with the business of Employer.
6.3. TRADE SECRETS OF OTHERS. Employee agrees that he will not
disclose to Employer or induce Employer to use any trade secrets
belonging to any third party.
6.4. PROPERTY OF EMPLOYER. Employee agrees that all documents,
reports, files, analyses, drawings, designs, tools, equipment,
plans (including, without limitation, marketing and sales plans),
proposals, customer lists, computer software or hardware, and
similar materials that are made by him or come into his
possession by reason of his employment with Employer are the
property of Employer and shall not be used by him in any way
adverse to Employer's interests. Employee will not allow any such
documents or things, or any copies, reproductions or summaries
thereof to be delivered to or used by any third party without the
specific consent of Employer. Employee agrees to deliver to the
Board of Directors of Employer or its designee, upon demand, and
in any event upon the termination of Employee's employment, all
of such documents and things which are in Employee's possession
or under his control.
6.5 NONCOMPETITION BY EMPLOYEE. During the term of this Agreement,
and for a period of one (1) year following the termination of
this Agreement, Employee shall not, directly or indirectly,
either as an employee, employer, consultant, agent, principal,
partner, principal stockholder, corporate officer, director, or
in any other individual or representative capacity: (i) engage or
participate in any business that is in competition in any manner
with the business of Employer; (ii) divert, take away or attempt
to divert or take away (and during the one year period, call on
or solicit) any of Employer's clients within the United States.
For purposes of this Agreement, the term "Employer's clients"
shall mean clients who had a business relationship with Employer
prior to Employee's employment with Employer and those who
develop a business relationship with Employer, during Employee's
employment with Employer; (iii) undertake planning for or
organization of any business within the United States or in any
other country in which Employer is engaged in business activity
competitive with Employer's business within the United States or
in any other country in which Employer is engaged in business or
combine or conspire with employees or other representative of
Employer's business within the United States or in any other
country in which Employer is engaged in business for the purpose
of organizing any such competitive activity within the United
States or in any other country in which Employer is engaged in
business; or (iv) induce or influence (or seek to induce or
influence) any person who is engaged, as an employee, agent,
independent contractor or otherwise by Employer within the United
States or in any other country in which Employer is engaged in
business to terminate his or her employment or engagement.
6.6 SURVIVAL PROVISIONS AND CERTAIN REMEDIES. Unless otherwise agreed
to in writing between the parties hereto, the provisions of this
Section 6 shall survive the termination of this Agreement. The
covenants in this Section 6 shall be construed as separate
covenants and to the extent any covenant shall be judicially
unenforceable, it shall not affect the enforcement of any other
covenant. In the event Employee breaches any of the provisions of
this Section 6, Employee agrees that Employer shall be entitled
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to injunctive relief in addition to any other remedy to which
Employer may be entitled.
7. GENERAL PROVISIONS.
7.1. NOTICES. Any notices or other communications required or
permitted to be given hereunder shall be given sufficiently only
if in writing and served personally or sent by certified mail,
postage prepaid and return receipt requested, addressed as
follows:
If to Employer: Skypath Networks, Inc.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to Employee: Xxxxx X. Paolo
XX XXX 0000
Xxxxxxxxxx, XX 00000
However, either party may change his/its address for purposes of this
Agreement by giving written notice of such change to the other party in
accordance with this Paragraph 7.1. Notices delivered personally shall be
deemed effective as of the day delivered and notices delivered by mail
shall be deemed effective as of three days after mailing (excluding
weekends and federal holidays).
7.2. CHOICE OF LAW AND FORUM. Except as expressly provided otherwise
in this Agreement, this Agreement shall be governed by and
construed in accordance with the laws of the State of Rhode
Island. The parties agree that any dispute arising under this
Agreement, whether during the term of this Agreement or at any
subsequent time, shall be resolved exclusively in the courts of
the State of Rhode Island and the parties hereby submit to the
jurisdiction of such courts for all purposes provided herein and
appoint the Secretary of State of the State of Rhode Island as
agent for service of process for all purposes provided herein.
7.3. ENTIRE AGREEMENT; MODIFICATION AND WAIVER. This Agreement
supersedes any and all other agreements, whether oral or in
writing, between the parties hereto with respect to the
employment of Employee by Employer and contains all covenants and
agreements between the parties relating to such employment in any
manner whatsoever. Each party to this Agreement acknowledges that
no representations, inducements, promises, or agreements, oral or
written, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement
shall be valid or binding. Any modification of this Agreement
shall be effective only if it is in writing signed by the party
to be charged. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
7.4. ASSIGNMENT. Because of the personal nature of the services to be
rendered hereunder, this Agreement may not be assigned in whole
or in part by Employee without the prior written consent of
Employer. However, subject to the foregoing limitation, this
Agreement shall be binding on, and shall inure to the benefit of,
the parties hereto and their respective heirs, legatees,
executors, administrators, legal representatives, successors and
assigns.
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7.5. SEVERABILITY. If for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable, or invalid as applied to any
particular case or in all cases, such circumstances shall not
have the effect of rendering any such provision inoperative,
unenforceable, or invalid in any other case or of rendering any
of the other provisions of this Agreement inoperative,
unenforceable or invalid.
7.6 CORPORATE AUTHORITY. Employer represents and warrants as of the
date hereof that Employer's execution and delivery of this
Agreement to Employee and the carrying out of the provisions
hereof have been duly authorized by Employer's Board of Directors
and authorized by Employer's shareholders and further represents
and warrants that neither the execution and delivery of this
Agreement, nor the compliance with the terms and provisions
thereof by Employer will result in the breach of any state
regulation, administrative or court order, nor will such
compliance conflict with, or result in the breach of, any of the
terms or conditions of Employer's Articles of Incorporation or
Bylaws, as amended, or any agreement or other instrument to which
Employer is a party, or by which Employer is or may be bound, or
constitute an event of default thereunder, or with the lapse of
time or the giving of notice or both constitute an event of
default thereunder.
7.7. ATTORNEYS' FEES. In any action at law or in equity to enforce or
construe any provisions or rights under this Agreement, the
unsuccessful party or parties to such litigation, as determined
by the courts pursuant to a final judgment or decree, shall pay
the successful party or parties all costs, expenses, and
reasonable attorneys' fees incurred by such successful party or
parties (including, without limitation, such costs, expenses, and
fees on any appeals), and if such successful party or parties
shall recover judgment in any such action or proceedings, such
costs, expenses, and attorneys' fees shall be included as part of
such judgment.
7.8. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
7.9. HEADINGS AND CAPTIONS. Headings and captions are included for
purposes of convenience only and are not a part hereof.
7.10.CONSULTATION WITH COUNSEL. Employee acknowledges that he has had
the opportunity to consult with counsel independent of Employer
or Employer's counsel, Xxxxxxxx Xxxxxx Esq., regarding the
entering into of this Agreement and has done so to the extent he
sees fit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first written above at Providence, Rhode Island.
"Employer"
Skypath Networks, Inc.,
a Delaware corporation
By: /s/
_______________________
Chief Financial Officer
"Employer"
Skypath Networks, Inc.,
a Delaware corporation
By: /s/
_______________________
Chief Financial Officer
"Employee"
By: /s/ Xxxxx X. Paolo
_______________________
Xxxxx X. Paolo
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