EMPLOYMENT AGREEMENT
EXHIBIT
10.107.4
This
Employment Agreement (this "Agreement") is executed as of ___________ ____,
2007
by NTS Communications, Inc. (the "Employer"), and Xxxx Xxxxxxxxxxx, an
individual (the "Executive") to be effective on the date of consummation
of the
transactions contemplated by the Stock Purchase Agreement (as defined herein)
(the “Effective Date”).
RECITALS
The
Executive is currently the Executive Vice President – Chief Operating Officer
and a shareholder of the Employer. Concurrently with the execution
and delivery of this Agreement, XFone, Inc. (“XFone” or “Parent”) is purchasing
the issued and outstanding common stock of NTS Communications, Inc. pursuant
to
and in accordance with that certain Stock Purchase Agreement dated ___________
____, 2007 among the Company, the Employer, and the shareholders of the Company
(the "Stock Purchase Agreement"). The Executive's continued
employment with the Employer after the stock purchase and the Employee's
execution of this Agreement is a condition to the consummation of the stock
purchase pursuant to the Stock Purchase Agreement by XFone. The
Employer agrees to employ the Executive, and the Executive wishes to accept
such
continued employment, upon the terms and conditions set forth in this
Agreement.
AGREEMENT
The
parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For
the
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Section 1.
"Agreement"--this
Employment Agreement, as amended from time to time.
"Compensation"--Salary
and Benefits.
"Benefits"--as
defined in Section 3.1(b).
"Board
of Directors"--the board of directors of the Employer.
"Confidential
Information" means any and all of the following with respect to the
Employer or XFone, their Subsidiaries or any of their affiliates (the “XFone
Companies”):
(a) trade
secrets concerning the business and affairs of the XFone Companies, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, any other
confidential or proprietary information or data), and any other information,
however documented, that is a trade secret within the meaning of any applicable
federal or state laws; and
(b) information
concerning the business and affairs of the XFone Companies (which includes
but
is not limited to historical financial statements, financial projections
and
budgets, historical and projected sales, capital spending budgets and plans,
the
names and backgrounds of key personnel, personnel training and techniques
and
materials, interconnect agreements, supply sources, marketing, production
or
merchandising systems or plans), however documented; and
(c) notes,
analysis, compilations, studies, summaries, and other material prepared by
or
for the XFone Companies containing or based, in whole or in part, on any
information included in the foregoing.
"Disability"--as
defined in Section 6.4.
"Effective
Date"--the date stated in the first paragraph of the
Agreement.
"Executive
Invention"--any idea, invention, technique, modification, process,
or improvement (whether patentable or not), any industrial design (whether
registerable or not), any mask work, however fixed or encoded, that is suitable
to be fixed, embedded or programmed in a semiconductor product (whether
recordable or not), and any work of authorship (whether or not copyright
protection may be obtained for it) created, conceived, or developed by the
Executive, either solely or in conjunction with others, during the Employment
Period with Employer or any predecessor or successor of the Employer, or
a
period that includes a portion of the Employment Period, that relates in
any way
to, or is useful in any manner in, the business then being conducted or proposed
to be conducted by the Employer, and any such item created by the Executive,
either solely or in conjunction with others, following termination of
the Executive's employment with the Employer, that is based upon or uses
Confidential Information.
"Employment
Period"--the term of the Executive's employment under this
Agreement, as the same may be extended and as used herein the term "Employment
Year" means each twelve month period occurring during the employment period.
"Employment Year 1" shall mean the first twelve months of employment from
the
Effective Date, "Employment Year 2" shall mean the 12 month period following
Employment Year 1, "Employment Year 3" shall mean the 12 month period following
Employment Year 2, "Employment Year 4" shall mean the 12 month period following
Employment Year 3, and "Employment Year 5" shall mean the 12 month period
following Employment Year 4.
"Fiscal
Year"--the Employer's fiscal year, as it exists on the Effective
Date or as changed from time to time.
"For
cause"--as defined in Section 6.2.
"For
good reason"--as defined in Section 6.3.
"Parent
Common Stock" shall mean shares of the common stock of the
Parent.
"Person"--any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, or governmental body.
"Post-Employment
Period"--as defined in Section 8.2.
"Proprietary
Items"--as defined in Section 7.2(a)(iv).
"Salary"--as
defined in Section 3.1(a).
“Subsidiaries”–
shall mean, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity
of which securities or other ownership interests representing more than 50%
of
the equity securities or more than 50% of the voting securities or, in the
case
of a partnership, more than 50% of the general partnership interests are,
as of
such date, owned, controlled or held, directly or indirectly, by one or more
of
the parent and its Subsidiaries.
2. EMPLOYMENT
TERMS AND DUTIES
2.1 EMPLOYMENT
The
Employer hereby employs the Executive, and the Executive hereby accepts
employment by the Employer, upon the terms and conditions set forth in this
Agreement.
2.2 TERM
Subject
to the provisions of Section 6, the term of the Executive's employment under
this Agreement will be five (5) years, beginning on the Effective Date and
ending on the fifth anniversary of the Effective Date.
2.3 DUTIES
The
Executive will have such duties as are assigned or delegated to the Executive
by
the Board of Directors or Chairman of the Board, and will initially serve
as
Executive Vice President – Chief Operating Officer of the
Employer. The Executive will devote his entire business time,
attention, skill, and energy exclusively to the business of the Employer,
will
use his best efforts to promote the success of the Employer's business, and
will
cooperate fully with the Board of Directors in the advancement of the best
interests of the Employer. If the Executive is elected as a director
of the Employer or as a director or officer of any of the XFone Companies,
the
Executive will fulfill his duties as such director or officer without additional
compensation.
3. COMPENSATION
(a) Salary. The
Executive will be paid an annual salary of $243,840.00 for Employment Year
1 and
the Salary for each employment year thereafter shall be set by the Board
of
Directors of the Employer which in no event shall be less than the Salary
for
Employment Year 1 (the "Salary"). The Salary will be payable in equal
periodic installments according to the Employer's customary payroll practices,
but no less frequently than monthly, and shall be subject to all applicable
withholding and other applicable taxes as required by law.
(b) Benefits. The
Executive will, during the Employment Period, be permitted to participate
in
such life insurance, hospitalization, major medical, and other Executive
benefit
plans of the Employer that may be in effect from time to time, to the extent
the
Executive is eligible under the terms of those plans (collectively, the
"Benefits"); provided that such Benefits will be substantially similar to
those
enjoyed by the Employee under the terms of his employment with the Company
as of
the Effective Date.
(c) Bonus. On
the Effective Date, Executive will receive a one-time cash signing bonus
in the
amount of $243,840.00. Executive acknowledges that this signing bonus
paid by Employer is in lieu of any “stay pay” bonuses previously approved by the
board of the Employer, and by accepting the signing bonus Executive agrees
to
forego any such “stay pay” bonuses previously approved by the
Employer.
(d) Stock
Option Plan. The Executive will receive options to purchase
Parent Common Stock as set forth below:
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(i)
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On
the Effective Date, the Employee shall be granted fully vested
options
with a term of five years for 400,000 shares of Parent Common Stock
with a
strike price of 10% above the average closing price for the prior
ten
trading days immediately prior to the date of execution of the
Stock
Purchase Agreement; and
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(ii)
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At
the end of the Second Employment Year, the Employee shall be granted
fully
vested options with a term of five years for an additional 267,000
shares
of the Parent Common Stock with a strike price of $5.00 per
share.
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4. FACILITIES
AND EXPENSES
The
Employer will furnish the Executive office space, equipment, supplies, and
such
other facilities and personnel as the Employer deems necessary or appropriate
for the performance of the Executive's duties under this Agreement.
5. VACATIONS
AND HOLIDAYS
The
Executive will be entitled to four weeks' paid vacation each Employment Year
in
accordance with the vacation policies of the Employer in effect for its
executive officers from time to time. Vacation must be taken by the Executive
at
such time or times as approved by the Chairman of the Board. The Executive
will
also be entitled to the paid holidays set forth in the Employer's policies.
Up
to ten vacation days during any Employment Year that are not used by the
Executive during such Employment Year may be used in any subsequent Employment
Year. The Executive shall be allowed to keep and use 33 accrued sick
days that have been earned during the course of his employment with the Company
prior to the execution date of this Agreement.
6. TERMINATION
6.1 EVENTS
OF
TERMINATION
The
Employment Period, the Executive's Compensation, and any and all other rights
of
the Executive under this Agreement or otherwise as an Executive of the Employer
will terminate (except as otherwise provided in this Section 6):
(a) upon
the
death of the Executive;
(b) for
cause
(as defined in Section 6.2), immediately upon notice from the Employer to
the
Executive, or at such later time as such notice may specify;
(c) for
good
reason (as defined in Section 6.3) upon not less than thirty days' prior
notice
from the Executive to the Employer;
(d) upon
termination of employment by Executive for any reason other than for good
reason
(as defined in Section 6.3); or
(e) upon
the
disability of the Executive (as defined in Section 6.4).
6.2 DEFINITION
OF "FOR CAUSE"
For
purposes of Section 6.1, the phrase "for cause" means: (a) the Executive's
breach of this Agreement which remains uncorrected for 30 days following
notice
from the Employer; (b) the Executive's failure to adhere to any written
Employer policy if the Executive has been given a reasonable opportunity
to
comply with such policy or cure the failure to comply (which reasonable
opportunity must be granted during the ten-day period preceding termination
of
this Agreement); (c) the appropriation (or attempted appropriation) of a
material business opportunity of the Employer, including attempting to secure
or
securing any personal profit in connection with any transaction entered into
on
behalf of the Employer; (d) the misappropriation (or attempted
misappropriation) of any of the Employer's funds or property; or (e) after
the Execution Date hereof, the conviction of, the indictment for (or its
procedural equivalent), or the entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a possible punishment.
6.3 DEFINITION
OF "FOR GOOD REASON"
For
purposes of Section 6.1, the phrase "for good reason" means the Employer's
material breach of this Agreement which is not cured within 30 days from
the
date of notice from the Executive.
6.4 DEFINITION
OF "DISABILITY"
For
purposes of Section 6.1, the Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable
to
perform the Executive's duties under this Agreement for 60 consecutive calendar
days or more or 90 calendar days or more during any twelve month period,
as
determined in accordance with this Section 6.4. The disability of the
Executive will be determined by a medical doctor selected by written agreement
of the Employer and the Executive upon the request of either party by notice
to
the other. If the Employer and the Executive cannot agree on the selection
of a
medical doctor, each of them will select a medical doctor and the two medical
doctors will select a third medical doctor who will determine whether the
Executive has a disability. The determination of the medical doctor selected
under this Section 6.4 will be binding on both parties. The Executive must
submit to a reasonable number of examinations by the medical doctor making
the
determination of disability under this Section 6.4, and the Executive hereby
authorizes the disclosure and release to the Employer of such determination
and
all supporting medical records. If the Executive is not legally competent,
the
Executive's legal guardian or duly authorized attorney-in-fact will act in
the
Executive's stead, under this Section 6.4, for the purposes of submitting
the
Executive to the examinations, and providing the authorization of disclosure,
required under this Section 6.4.
6.5 TERMINATION
PAY
Effective
upon the termination of this Agreement, the Employer will be obligated to
pay
the Executive (or, in the event of his death, his designated beneficiary
as
defined below) only such compensation as is provided in this Section 6.5,
and in
lieu of all other amounts and in settlement and complete release of all claims
the Executive may have against the Employer. For purposes of this Section
6.5,
the Executive's designated beneficiary will be such individual beneficiary
or
trust, located at such address, as the Executive may designate by notice
to the
Employer from time to time or, if the Executive fails to give notice to the
Employer of such a beneficiary, the Executive's estate. Notwithstanding the
preceding sentence, the Employer will have no duty, in any circumstances,
to
attempt to open an estate on behalf of the Executive, to determine whether
any
beneficiary designated by the Executive is alive or to ascertain the address
of
any such beneficiary, to determine the existence of any trust, to determine
whether any person or entity purporting to act as the Executive's personal
representative (or the trustee of a trust established by the Executive) is
duly
authorized to act in that capacity, or to locate or attempt to locate any
beneficiary, personal representative, or trustee.
(a) Termination
by the Executive for Good Reason. If the Executive terminates
this Agreement for good reason, the Employer will pay the Executive the
Executive's Salary for the remainder of the term of this Agreement (the
"Remainder Term") as and when such salary would otherwise become due and
payable. Notwithstanding the preceding sentence, if the Executive
obtains other employment or becomes self-employed as a consultant or otherwise
prior to the end of the Remainder Term, he must promptly give notice thereof
to
the Employer, and the Salary payments under this Agreement for any period
after
the Executive obtains such other employment will be reduced by the amount
of the
cash compensation received and to be received by the Executive from the
Executive's other employment for services performed during such
period.
(b) Termination
by the Employer for Cause or Termination by Executive without Good
Reason. If the Executive terminates his employment for any reason
other than for good reason (as defined in Section 6.3), the Executive will
be
entitled to receive his Salary only through the date such termination is
effective and any unexercised vested options for Parent Common Stock and
rights
to receive any additional options for Parent Common Stock shall be
cancelled. If the Employer terminates this Agreement for cause, the
Executive will be entitled to receive his Salary through the date such
termination is effective and any option for Parent Common Stock issued in
any
year subsequent to Employment Year 1 shall be cancelled.
(c) Termination
upon Death/Expiration. If this Agreement is terminated because of
the Executive's death, the Executive will be entitled to receive his Salary
through the end of the calendar month in which his death occurs and any right
to
receive any additional options for Parent Stock shall be
cancelled. If this Agreement expires after the performance for the
full term hereof and the Employer and Employee can not agree on the terms
for
the extension of this Agreement or a new employment agreement to replace
this
Agreement, and the Employee terminates employment, then in such event the
Employee will be entitled to receive him salary for a period of three (3)
months
following the date of such termination as severance pay.
(d) Termination
Upon Disability. If this Agreement is terminated by either party
as a result of the Executive's disability, as determined under Section 6.4,
the
Employer will pay the Executive his Salary through the remainder of the calendar
month during which such termination is effective and any right to receive
any
additional options for Parent Stock shall be cancelled.
(e) Benefits. The
Executive's accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of this Agreement, and
the
Executive will be entitled to accrued Benefits pursuant to such plans only
as
provided in such plans. The Executive will only receive, as part of
his termination pay pursuant to this Section 6, any payment or other
compensation for any vacation, holiday, sick leave, or other leave unused
on the
date the notice of termination is given under this Agreement if the termination
is due to the death or disability of Executive or termination by the Executive
for Good Reason per Section 6.3.
6.6 TERMINATION
DAMAGES PAYABLE BY EXECUTIVE
The
Executive and the Employer agree that it is impossible to determine with
any
reasonable accuracy the amount of the prospective damages to the Employer
if the
Executive's employment is terminated for any reason other than death, disability
or for good reason (as defined in Section 6.3) by the Executive (such
termination referred to in this paragraph as "Executive Termination Without
Cause"). In the event of any Executive Termination Without Cause, the
Executive agrees to pay as liquidated damages to the Employer an amount equal
as
follows:
(a) If
the
Executive Termination Without Cause occurs during Employment Year 1, then
the
Executive shall immediately pay to the Employer an amount equal to
$487,680.00.
(b) If
the
Executive Termination Without Cause occurs during Employment Year 2, then
the
Executive shall immediately pay to the Employer an amount equal to
$390,144.00.
(c) If
the
Executive Termination Without Cause occurs during Employment Year 3, then
the
Executive shall immediately pay to the Employer an amount equal to
$292,608.00.
(d) If
the
Executive Termination Without Cause occurs during Employment Year 4, then
the
Executive shall immediately pay to the Employer an amount equal to
$195,072.00.
(e) If
the
Executive Termination Without Cause occurs during Employment Year 5, then
the
Executive shall immediately pay to the Employer an amount equal to
$97,536.00.
7. NON-DISCLOSURE
COVENANT; EXECUTIVE INVENTIONS; NON-COMPETE
7.1 ACKNOWLEDGMENTS
BY THE EXECUTIVE
The
Executive acknowledges that (a) during the Employment Period and his prior
employment period with the Employer and as a part of his employment with
the
Employer, the Executive was and will continue to be afforded access to
Confidential Information; (b) public disclosure of such Confidential
Information could have an adverse effect on the Employer and its business;
(c) because the Executive possesses substantial technical expertise and
skill with respect to the Employer's business, the Employer desires to obtain
exclusive ownership of each Executive Invention, and the Employer will be
at a
substantial competitive disadvantage if it fails to acquire exclusive ownership
of each Executive Invention; (d) Employer has required that the Executive
make the covenants in this Section 7 as a condition to the stock purchase
pursuant to the Stock Purchase Agreement and the continued employment of
the
Executive under this Employment Agreement; and (e) the provisions of this
Section 7 are reasonable and necessary to prevent the improper use or disclosure
of Confidential Information and to provide the Employer with exclusive ownership
of all Executive Inventions.
7.2 AGREEMENTS
OF THE EXECUTIVE
In
consideration of the compensation and benefits to be paid or provided to
the
Executive by the Employer under this Agreement, the Executive covenants as
follows:
(a) Confidentiality.
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(i)
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During
and following the Employment Period, the Executive will hold in
confidence
the Confidential Information and will not disclose it to any person
except
with the specific prior written consent of the Employer or except
as
otherwise expressly permitted by the terms of this
Agreement.
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(ii)
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Any
trade secrets of the Employer will be entitled to all of the protections
and benefits under any applicable federal or state trade secret
law and
any other applicable law. If any information that the Employer
deems to be
a trade secret is found by a court of competent jurisdiction not
to be a
trade secret for purposes of this Agreement, such information will,
nevertheless, be considered Confidential Information for purposes
of this
Agreement. The Executive hereby waives any requirement that the
Employer
submits proof of the economic value of any trade secret or posts
a bond or
other security.
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(iii)
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None
of the foregoing obligations and restrictions applies to any part
of the
Confidential Information that the Executive demonstrates was or
became
generally available to the public other than as a result of a disclosure
by the Executive.
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(iv)
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The
Executive will not remove from the Employer's premises (except
to the
extent such removal is for purposes of the performance of the Executive's
duties at home or while traveling, or except as otherwise specifically
authorized by the Employer) any document, record, notebook, plan,
model,
component, device, or computer software or code, whether embodied
in a
disk or in any other form (collectively, the "Proprietary Items").
The
Executive recognizes that, as between the Employer and the Executive,
all
of the Proprietary Items, whether or not developed by the Executive,
are
the exclusive property of the Employer. Upon termination of this
Agreement
by either party, or upon the request of the Employer during the
Employment
Period, the Executive will return to the Employer all of the Proprietary
Items in the Executive's possession or subject to the Executive's
control,
and the Executive shall not retain any copies, abstracts, sketches,
or
other physical embodiment of any of the Proprietary
Items.
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(b) Executive
Inventions. Each Executive Invention will belong exclusively to
the Employer. The Executive acknowledges that all of the Executive's
writing, works of authorship, and other Executive Inventions are works made
for
hire and the property of the Employer, including any copyrights, patents,
or
other intellectual property rights pertaining thereto. If it is determined
that
any such works are not works made for hire, the Executive hereby assigns
to the
Employer all of the Executive's right, title, and interest, including all
rights
of copyright, patent, and other intellectual property rights, to or in such
Executive Inventions. The Executive covenants that he will
promptly:
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(i)
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disclose
to the Employer in writing any Executive
Invention;
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(ii)
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assign
to the Employer or to a party designated by the Employer, at the
Employer's request and without additional compensation, all of
the
Executive's right to the Executive Invention for the United States
and all
foreign jurisdictions;
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(iii)
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execute
and deliver to the Employer such applications, assignments, and
other
documents as the Employer may request in order to apply for and
obtain
patents or other registrations with respect to any Executive Invention
in
the United States and any foreign
jurisdictions;
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(iv)
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sign
all other papers necessary to carry out the above obligations;
and
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(v)
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give
testimony and render any other assistance in support of the Employer's
rights to any Executive Invention.
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7.3 DISPUTES
OR CONTROVERSIES
The
Executive recognizes that should a dispute or controversy arising from or
relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy
of
Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained
in
secrecy and will be available for inspection by the Employer, the Executive,
and
their respective attorneys and experts, who will agree, in advance and in
writing, to receive and maintain all such information in secrecy, except
as may
be limited by them in writing.
8. NON-COMPETITION
AND NON-INTERFERENCE
8.1 ACKNOWLEDGMENTS
BY THE EXECUTIVE
The
Executive acknowledges that: (a) the services to be performed by
him under this Agreement are of a special, unique, unusual, extraordinary,
and
intellectual character; (b) the Employer's business is currently regional
in scope and its products are marketed or may be marketed throughout the
States
of Mississippi, Alabama, Georgia, Tennessee, Florida, Kentucky, Louisiana,
North
Carolina, South Carolina, Texas, Arizona, Colorado, Kansas, New Mexico and
Oklahoma (the "Restricted Area"); (c) the Employer competes with other
businesses that are or could be located in any part of the Restricted Area;
(d) the Employer has required that the Executive make the covenants set
forth in this Section 8 as a condition to the stock purchase under the Stock
Purchase Agreement and the continued employment of the Executive under this
Agreement; and (e) the provisions of this Section 8 are reasonable and
necessary to protect the Employer's business.
8.2 COVENANTS
OF THE EXECUTIVE
In
consideration of the acknowledgments by the Executive, and in consideration
of
the compensation and benefits to be paid or provided to the Executive by
the
Employer, as a material inducement to the Employer to enter into and perform
its
obligations under this Agreement, and in order to preserve and protect the
trade
secrets and proprietary, confidential information of the Employer and XFone
Companies, the Executive covenants as follows:
(a) For
the
greater of (i) 5 years from the date of this Agreement or (ii) the Employment
Period and for a period of two (2) years following the date that the employment
by the Employer (or an affiliate thereof) of the Executive ends (the
"Noncompetition Period"), the Executive will not, directly or indirectly,
either for himself or for any partnership, limited liability company,
individual, corporation, joint venture or any other entity "participate in"
(as
defined below) any business (including, without limitation, any division,
group
or franchise of a larger organization) which engages in the "Telecommunications
Business" in the States of Mississippi, Alabama, Georgia, Tennessee, Florida,
Kentucky, Louisiana, North Carolina, South Carolina, Texas, Arizona, Colorado,
Kansas, New Mexico and Oklahoma (the "Restricted Area"). For purposes
of this Agreement, "Telecommunications Business" shall mean the business
of providing any type of telecommunication services or internet access services
to any person or customer within the Restricted Area, including, without
limitation, local, long distance, broadband, dial up data services, wireless,
DSL, Voice-over-Internet Protocol (VoIP) and any other service or product
being
offered or provided by the Employer or any of the XFone
Companies. For purposes of this Agreement, the term "participate in"
shall include, without limitation, having any direct or indirect interest
in any
corporation, partnership, limited liability company, joint venture or other
entity, whether as a sole proprietor, owner, shareholder, partner, member,
manager, joint venturer, creditor or otherwise, or rendering any direct or
indirect service or assistance to any individual corporation, partnership,
limited liability company, joint venture and other business entity (whether
as a
director, officer, manager, supervisor, employee, agent, consultant or
otherwise). Notwithstanding the foregoing, nothing in this Section
8.2 shall prohibit the Executive from owning not more than five percent (5%)
of
the debt or equity securities of a publicly traded corporation which may
compete
with the Employer or XFone Companies.
(b) During
the Noncompetition Period, and in order to preserve and protect the trade
secrets and proprietary, confidential information of the Employer or XFone
Companies after the Effective Date, neither the Executive shall not (i) induce
or attempt to induce any employee of the Employer or XFone Companies to leave
the employ of the Employer or XFone Companies, or in any way interfere with
the
relationship between the Employer or XFone Companies and any employee thereof,
(ii) hire directly or through another entity any individual employed by the
Employer or XFone Companies, or (iii) induce or attempt to induce any customer,
supplier, licensee, distributor or other business relation of the Employer
or
XFone Companies to cease doing business with the Employer or XFone Companies,
or
in any way interfere with the relationship between any such customer, supplier,
licensee, distributor or business relation and the Employer or XFone Companies
(including, without limitation, making any negative statements or communications
concerning the Employer or XFone Companies).
(c) If,
at
the time of enforcement of this Section 8.2, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for
the
stated duration, scope or area and that the court shall be allowed to revise
the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. The Executive agrees that the restrictions
contained in this Section 8.2 are reasonable.
(d) If
at any
time during the Noncompetition Period the Executive desires to participate
in an
activity that he or he believes might be prohibited by this Section 8.2,
such
person may request in writing (a "Clarification Request") a determination
by Employer as to whether such proposed activity would violate this Section
8.2. The Employer shall respond in writing to such Clarification
Request (a "Clarification Response") within thirty (30) days of receipt
thereof from the requesting person.
If
any
covenant in this Section 8.2 is held to be unreasonable, arbitrary, or against
public policy, such covenant will be considered to be divisible with respect
to
scope, time, and geographic area, and such lesser scope, time, or geographic
area, or all of them, as a court of competent jurisdiction may determine
to be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against the Executive.
The
period of time applicable to any covenant in this Section 8.2 will be extended
by the duration of any violation by the Executive of such covenant.
The
Executive will, while the covenant under this Section 8.2 is in effect, give
notice to the Employer, within ten days after accepting any other employment,
of
the identity of the Executive's employer. The Employer may notify such employer
that the Executive is bound by this Agreement and, at the Employer's election,
furnish such employer with a copy of this Agreement or relevant portions
thereof.
9. GENERAL
PROVISIONS
9.1 INJUNCTIVE
RELIEF AND ADDITIONAL REMEDY
The
Executive acknowledges that the injury that would be suffered by the Employer
as
a result of a breach of the provisions of this Agreement (including any
provision of Sections 7 and 8) would be irreparable and that an award
of monetary damages to the Employer for such a breach would be an inadequate
remedy. Consequently, the Employer will have the right, in addition to any
other
rights it may have, to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provision of this
Agreement, and the Employer will not be obligated to post bond or other security
in seeking such relief. Without limiting the Employer's rights under
this Section 9 or any other remedies of the Employer, if the Executive breaches
any of the provisions of Section 7 or 8, the Employer will have the right
to
cease making any payments otherwise due to the Executive under this
Agreement.
9.2 COVENANTS
OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT COVENANTS
The
covenants by the Executive in Sections 7 and 8 are essential elements of
this
Agreement, and without the Executive's agreement to comply with such covenants,
the Employer would not have consummated the stock purchase under the Stock
Purchase Agreement and the Employer would not have entered into this Agreement
or employed or continued the employment of the Executive. The Employer and
the
Executive have independently consulted their respective counsel and have
been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by
the
Employer.
The
Executive's covenants in Sections 7 and 8 are independent covenants and the
existence of any claim by the Executive against the Employer under this
Agreement or otherwise, or against the Employer, will not excuse the Executive's
breach of any covenant in Section 7 or 8.
If
the
Executive's employment hereunder expires or is terminated, this Agreement
will
continue in full force and effect as is necessary or appropriate to enforce
the
covenants and agreements of the Executive in Sections 7 and 8.
9.3 REPRESENTATIONS
AND WARRANTIES BY THE EXECUTIVE
(a) The
Executive represents and warrants to the Employer that the execution and
delivery by the Executive of this Agreement do not, and the performance by
the
Executive of the Executive's obligations hereunder will not, with or without
the
giving of notice or the passage of time, or both: (a) violate any judgment,
writ, injunction, or order of any court, arbitrator, or governmental agency
applicable to the Executive; or (b) conflict with, result in the breach of
any provisions of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is
or may
be bound.
(b) The
Employer represents and warrants to the Executive that the execution and
delivery by the Employer of this Agreement do not, and the performance by
the
Employer of the Employer's obligations hereunder will not, with or without
the
giving of notice or the passage of time, or both: (a) violate any judgment,
writ, injunction, or order of any court, arbitrator, or governmental agency
applicable to the Employer; or (b) conflict with, result in the breach of
any provisions of or the termination of, or constitute a default under, any
agreement to which the Employer is a party or by which the Employer is or
may be
bound.
9.4 OBLIGATIONS
CONTINGENT ON PERFORMANCE
The
obligations of the Employer hereunder, including its obligation to pay the
compensation provided for herein, are contingent upon the Executive's
performance of the Executive's obligations hereunder.
9.5 WAIVER
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising
any
right, power, or privilege under this Agreement will operate as a waiver
of such
right, power, or privilege, and no single or partial exercise of any such
right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party, in whole or
in
part, by a waiver or renunciation of the claim or right unless in writing
signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of
any obligation of such party or of the right of the party giving such notice
or
demand to take further action without notice or demand as provided in this
Agreement.
9.6 BINDING
EFFECT; DELEGATION OF DUTIES PROHIBITED
This
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of the Executive under this Agreement,
being personal, may not be delegated.
9.7 NOTICES
All
notices, consents, waivers, and other communications under this Agreement
must
be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if
sent by a nationally recognized overnight delivery service (receipt requested),
in each case to the appropriate addresses and facsimile numbers set forth
below
(or to such other addresses and facsimile numbers as a party may designate
by
notice to the other parties):
If
to Employer:
| c/o XFone, Inc. | |
|
Xxxxxxxxx
Xxxxx
|
|
|
000
Xxxx Xxxx
|
|
|
Xxxxxx,
X000XX
|
|
|
Xxxxxx
Xxxxxxx
|
|
|
Attention:
|
Xxx
Xxxxxxxxx
|
|
|
Telephone:
|
x00
000-000-0000
|
|
|
Facsimile:
|
x00
000-000-0000
|
|
|
Email:
|
xxx@xxxxx.xxx
|
with
a copy to:
| Xxxxxxx Xxxxxx Winter & Stennis, P.A. | |
|
000
Xxxxx Xxxxx Xxxxxx (39202)
|
|
|
P.
O. Xxx 000
|
|
|
Xxxxxxx,
XX 00000-0000
|
|
|
Attention:
|
Xxxx
X. Xxxxxx
|
|
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
601-949-4804
|
|
|
Email:
|
xxxxxxx@xxxxxxxxxxxxx.xxx
|
If
to the Executive:
| Xxxx Xxxxxxxxxxx | |
|
0000
000xx Xxxxxx
|
|
|
Xxxxxxx,
Xxxxx 00000
|
|
|
Telephone:
|
000-000-0000
|
|
|
Facsimile:
|
000-000-0000
|
|
|
Email:
|
xxx@xxx-xxxxxx.xxx
|
9.8 ENTIRE
AGREEMENT; AMENDMENTS
This
Agreement, the Stock Purchase Agreement, and the documents executed in
connection with the Stock Purchase Agreement, contain the entire agreement
between the parties with respect to the subject matter hereof and supersede
all
prior agreements and understandings, oral or written, between the parties
hereto
with respect to the subject matter hereof. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties
hereto.
9.9 GOVERNING
LAW
This
Agreement will be governed by the laws of the State of Texas without regard
to
conflicts of laws principles.
9.10 JURISDICTION
Any
action or proceeding seeking to enforce any provision of, or based on any
right
arising out of, this Agreement may be brought against either of the parties
in
the courts of the State of Texas, or, if it has or can acquire jurisdiction,
in
any of the United States District Courts in Texas, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid
therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the
world.
9.11 SECTION
HEADINGS, CONSTRUCTION
The
headings of Sections in this Agreement are provided for convenience only
and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words
or
terms.
9.12 SEVERABILITY
If
any
provision of this Agreement is held invalid or unenforceable by any court
of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect
to the
extent not held invalid or unenforceable.
9.13 COUNTERPARTS
This
Agreement may be executed in one or more counterparts, each of which will
be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
9.14 WAIVER
OF
JURY TRIAL
THE
PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH RESPECT TO
THIS
AGREEMENT.
9.15 PIGGYBACK
REGISTRATION RIGHTS
On
or
after the Effective Date, and continuing until this Agreement expires or
is
earlier terminated, whenever the Parent proposes to file a registration
statement under the Securities Act of 1933, as amended, to register any shares
of the Parent Common Stock for sale in a secondary offering, and the
registration form to be used may be used for the registration of the restricted
Parent Common Stock the Executive may hold as a result of exercising any
options
granted hereunder or the Parent Common Stock underlying the options which
the
Executive holds (a "Piggyback Registration"), the Company will give prompt
written notice to the Executive of its intention to effect such a registration
and will include in such registration such of the Employee’s registerable
securities of the Parent as the Executive has requested be included in such
Piggyback Registration by notice to the Parent within 15 days after the receipt
of the Parent’s notice. The Parent will pay the registration expenses
with respect to such Piggyback Registrations. The Executive shall
fully cooperate by giving such information as is required for such Piggyback
Registration.
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date above first written above.
|
EMPLOYER:
NTS
Communications, Inc.
|
EXECUTIVE:
|
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|
By:
|
|
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|
Xxx
Xxxxxxxxx, Chairman
|
Xxxx
Xxxxxxxxxxx, Individually
|
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|
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