EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 1, 1998 between Frontline
Communications Corporation, Inc., a New Jersey corporation (the "Employer" or
the "Company"), and Xxxxxxxx X. XxXxxxxx (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee in an
executive capacity as its Vice President of Sales and Marketing and to be
assured of her services as such on the terms and conditions hereinafter set
forth; and
WHEREAS, the Employee is willing to accept such
employment on such terms and conditions; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Employer and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and
Employee hereby agrees to serve Employer for a three-year period commencing as
of the date of this Agreement (the "Effective Date") (any year commencing on the
Effective Date or any anniversary of the Effective Date being hereinafter
referred to as an "Employment Year") unless earlier terminated pursuant to
Section 7. The term of this Agreement shall automatically renew for successive
one-year periods unless either party hereto gives notice to the other, no less
than ninety (90) days in advance of the expiration of the then current term, of
such party's intention not to renew.
2. Employee Duties.
(a) During the term of this Agreement, the
Employee shall, in her executive capacity, have the duties and responsibilities
of Vice President of Sales and Marketing of the Employer, reporting directly to
the Chief Executive Officer and the Board of Directors of the Employer (the
"Board"). It is understood that such duties and responsibilities shall be
reasonably related to the Employee's position.
(b) The Employee shall devote substantially all
of her business time, attention, knowledge and skills faithfully, diligently and
to the best of her ability in furtherance of the business and activities of the
Company. The principal place of performance by the Employee of her duties
hereunder shall be the Company's principal executive offices or such other place
as the Board shall determine, although the Employee may be required to travel
outside of the area where the Company's principal
executive offices are located in connection with the business operations of the
Company.
3. Compensation.
(a) During the term of this Agreement, the
Employer shall pay the Employee a salary (the "Salary") at a rate of $82,000 per
annum in respect of the first Employment Year and $98,000 per annum in respect
of the second Employment Year, payable in equal installments bi-weekly, or at
such other times as may mutually be agreed upon between the Employer and the
Employee. Commencing the third Employment Year and any subsequent Employment
Year thereafter, the Salary may be increased from time to time at the discretion
of the Board; provided, however, that the Salary shall be increased during any
given Employment Year during such time by no less than the dollar amount of any
increase in salary granted to the Chairman of the Board or Chief Executive
Officer or Chief Financial Officer of the Parent, whichever is least.
(b) In addition to the foregoing, the Employee
shall be paid (i) a one-time signing bonus of $25,000 payable upon the execution
of this Agreement and (ii) such additional bonuses from time to time at the
discretion of the Board; provided, however, that the Employee shall be entitled
to bonuses from time to time no less than the dollar amount of any bonuses
granted to the Chairman of the Board or Chief Executive Officer or Chief
Financial Officer of the Company, whichever is least.
4. Benefits.
(a) During the term of this Agreement, the
Employee shall have the right to receive or participate in all benefits and
plans which the Company may from time to time institute during such period for
its employees and for which the Employee is eligible, including, but not limited
to, the Company's Pension Plan, qualified Profit Sharing Plan, Group Term Life
Insurance Plan, Employee Health Plan, and any other employee benefit plan
currently in place or that may be established by the Company. Notwithstanding
the foregoing, it is acknowledged and agreed that the Employee may elect to
substitute medical benefit allowances for any of the other benefits described
herein, on terms and conditions as may be agreed upon by the Company and the
Employee. In all events, however, any such allowances shall have an aggregate
value at least equivalent to the value of the benefits for which they are
substituted, and a value of no less than $500.00 per month. Nothing paid to the
Employee under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of the salary payable to the Employee
pursuant to this Agreement.
(b) During the term of this Agreement, the
Employee shall also be entitled to receive an automobile
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allowance of $400.00 per month payable in accordance with Section 3(a) above.
(c) During each Employment Year, the Employee
will be entitled to twenty (20) vacation days and the number of paid holidays,
personal days off and sick leave days in each calendar year as are determined
pursuant to the Company's Vacation Policies as in effect from time to time. Such
vacation may be taken in the Employee's discretion with the prior approval of
the Employer, and at such time or times as are not inconsistent with the
reasonable business needs of the Company.
5. Travel Expenses. All travel and other expenses incident to
the rendering of services reasonably incurred on behalf of the Company by the
Employee during the term of this Agreement shall be paid by the Employer in
accordance with the Policy and Procedure Manual of the Company (the "Manual").
Except as otherwise provided for in the Manual, if any such expenses are paid in
the first instance by the Employee, the Employer shall reimburse her therefor on
presentation of appropriate receipts for any such expenses.
6. Stock Options. Subject to the terms and conditions of the
Company's incentive stock option plan, a copy of which is annexed hereto and
made a part hereof and the receipt of which is hereby acknowledged by the
Employee, the Company hereby grants to the Employee as a matter of separate
agreement and not in lieu of salary, or any other compensation for services, the
right and option (the "Option") to purchase all or any part of an aggregate of
thirty thousand (30,000) shares of the authorized but unissued common stock of
the Company (the "Shares"), at the exercise price of $2.50 per Share,
exercisable during the three year (3) period commencing as of the date hereof
and terminating on the close of business on October 1, 2001, as follows: (i)
10,000 of the Shares are immediately vested and may be purchased as of the date
hereof; (ii) an additional 10,000 of the Shares may be purchased commencing on
the first anniversary hereof; and (iii) an additional 10,000 of the Shares may
be purchased commencing on the second anniversary hereof, and then, only
provided that the Employee is employed at the date of vesting by the Company or
any subsidiary of the Company. Notwithstanding the foregoing, in the event that
the Employee's employment hereunder is terminated "without cause", as defined in
Section 7(d) below, or as the result of a "change in control" as defined in
Section 7(e) below, or the Employee resigns as a result of a material reduction
of her title or responsibility, all unvested or unexercised options shall be
immediately vested and exercisable by Employee. In the event the Employee's
employment hereunder is terminated by reason of death or disability (as defined
in Section 7(b) below) all vested but unexercised options shall be exercisable
by the Employee's estate, or guardian, as the case may be, in accordance with
the terms and conditions of the Company's incentive stock option plan.
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7. Termination. Notwithstanding the provisions of
Section 1 hereof, the Employee's employment with the Employer may
be earlier terminated as follows:
(a) By action taken by the Board, the Employee
may be discharged for cause (as hereinafter defined), effective as of such time
as the Board shall determine. Upon discharge of the Employee pursuant to this
Section 7(a), the Employer shall have no further obligation or duties to the
Employee, except for payment of Salary and such incentive compensation, if any,
having accrued to the Employee pursuant to Section 3 hereof through the
effective date of termination, and as provided in Section 5 hereof, and the
Employee shall have no further obligations or duties to the Employer, except as
provided in Section 8 hereof.
(b) In the event of (i) the death of the Employee
or (ii) by action of the Board and the inability of the Employee, by reason of
physical or mental disability, to continue substantially to perform her duties
hereunder for a period of 90 consecutive days (the "Disability Period"), during
which Disability Period Salary and any other benefits hereunder shall not be
suspended or diminished. Upon any termination of the Employee's employment under
this Section 7(b), the Employer shall have no further obligations or duties to
the Employee, except payment of Salary and such incentive compensation, if any,
having accrued to the Employee as provided in Section 3 hereof through the date
of death or the expiration of the Disability Period, as applicable, and as
provided in Section 5 hereof.
(c) Except as otherwise set forth in Section 7(e)
below, in the event that Employee's employment with the Employer is terminated
by action taken by the Board without cause, then the Employer shall have no
further obligation or duties to Employee, except for payment of Salary and such
incentive compensation, if any, having accrued to the Employee as provided in
Section 3 hereof through the date of termination and as provided in Section 5
hereof, and Employee shall have no further obligations or duties to the
Employer, except as provided in Section 8 hereof.
(d) For purposes of this Agreement, the Company
shall have "cause" to terminate the Employee's employment under this Agreement
upon (i) the failure by the Employee to substantially perform her duties under
this Agreement, (ii) the engaging by the Employee in criminal misconduct
(including embezzlement and criminal fraud) which is materially injurious to the
Company, monetarily or otherwise, (iii) the conviction of the Employee of a
felony, (iv) gross negligence on the part of the Employee or (v) other willful
misconduct of the Employee in the performance of her duties hereunder which is
materially injurious to the Company, monetarily or otherwise. Prior to any
termination by the Company under the provisions of (i) or (iv) herein, the
Company shall provide written notice to Employee, and Employee
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shall have thirty (30) days to correct the situation to the reasonable
satisfaction of the Company.
(e) If the Company terminates the Employee's
employment hereunder other than for cause, or if the Employee resigns as a
result of a material reduction in her title or responsibility, or if there is a
"change in control" of the Company, the Company will be obligated to pay to the
Employee, in addition to any payments due and owing under the terms of Section
7(c) above, an amount equal to (i) two times the Employee's base salary at the
rate then in effect in the event of any such termination during the first
Employment Year or (ii) balance of the Employee's base salary becoming due and
owing during the remainder of the term in the event of any such termination
during any subsequent Employment Year. For the purposes of this Agreement,
"change in control" shall mean the acquisition of thirty-five percent (35%) or
more of the issued and outstanding securities of the Company, or of
substantially all of the assets of the Company by an individual or entity, or
the merger or consolidation of the Company into or with another entity (other
than the Parent or affiliate of the Company). To the extent that the Employee
receives any payments upon a change in control of the Company which are subject
to the excise tax of Section 4999 of the Internal Revenue Code of 1986, as
amended, the Company shall pay to Employee an amount equivalent to such tax.
8. Confidentiality; Noncompetition. In addition to and
supplementing the covenants contained in Sections 6.1 and 6.2 of the Stock
Purchase Agreement (the "Purchase Agreement"), dated October 1, 1998, among the
Company, WOWFactor, Inc. ("WOW") and Employee, the Employer and Employee agree
as follows:
(a) The Employer and the Employee acknowledge
that the services to be performed by the Employee under this Agreement are
unique and extraordinary and, as a result of such employment, the Employee will
be in possession of confidential information relating to the business practices
of the Company and WOW. The term "confidential information" shall mean any and
all information (verbal and written) relating to the Company, WOW or any of
their respective affiliates, or any of their respective activities, other than
such information which can be shown by the Employee to be in the public domain
(such information not being deemed to be in the public domain merely because it
is embraced by more general information which is in the public domain) other
than as the result of breach of the provisions of this Section 8(a), including,
but not limited to, information relating to: existing and proposed projects,
source codes, object codes, forecasts, assumptions, trade secrets, personnel
lists, financial information, research projects, services, pricing, customers,
customer lists and prospects, product sourcing, marketing and selling and
servicing. The Employee agrees that she will not, at any time during or after
the termination of her employment, directly or indirectly, use, communicate,
disclose or disseminate
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to any person, firm or corporation any confidential information regarding the
clients, customers or business practices of the Company or WOW and that Employee
agrees that all confidential information shall be the sole property of the
Company.
(b) The Employee hereby agrees that she shall
not, during the period of her employment and for a period of two (2) years
following the termination of such employment either pursuant to Section 7(a)
hereof or as a result of a voluntary termination by the Employee other than
pursuant to Section 7(e) hereof, directly or indirectly, within any State within
the United States or territory outside the United States in which the Company or
Parent is engaged in business during the period of the Employee's employment or
on the date of termination of the Employee's employment, engage, have an
interest in or render any services to any business (whether as owner, manager,
operator, licensor, licensee, lender, partner, stockholder, joint venturer,
employee, consultant or otherwise) competitive with the Company's and WOW's
Business Activities (as defined herein). For the purposes of this Agreement, the
"Company's and WOW's Business Activities" shall be defined as the promotion of
goods and services of others through online marketplaces; the provision of
traffic, tools and services required for e-commerce to merchants; and publishing
advertisements and other content in online marketplaces. Nothing herein shall
prohibit the Employee from being a holder of five (5%) percent or less of the
securities of a Corporation whose securities are listed on a national securities
exchange.
(c) The Employee hereby agrees that she shall
not, during the period of her employment and for a period of two (2) years
following such employment, directly or indirectly, take any action which
constitutes an interference with or a disruption of any of the Company's or
WOW's Business Activities, including, without limitation, the solicitations of
the Company's or WOW's customers, or persons listed on the personnel lists of
the Company or WOW. At no time during the term of this Agreement, or thereafter
shall the Employee directly or indirectly, disparage the commercial, business or
financial reputation of the Company or WOW.
(d) For purposes of clarification, but not of
limitation, the Employee hereby acknowledges and agrees that the provisions of
subparagraphs 8(b) and (c) above shall serve as a prohibition against her,
during the period referred to therein, directly or indirectly, hiring, offering
to hire, enticing, soliciting or in any other manner persuading or attempting to
persuade any officer, employee, agent, lessor, lessee, licensor, licensee or
customer who has been previously contacted by either a representative of the
Company or WOW, including the Employee, to discontinue or alter her or its
relationship with the Company or WOW.
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(e) Upon the termination of the Employee's
employment for any reason whatsoever, all documents, records, notebooks,
equipment, price lists, specifications, programs, customer and prospective
customer lists and other materials which refer or relate to any aspect of the
business of the Company or Parent which are in the possession of the Employee
including all copies thereof, shall be promptly returned to the Company.
(f) (i) The Employee agrees that all processes,
intellectual property rights, technologies and inventions ("Inventions"),
including new contributions, improvements, ideas and discoveries, whether
patentable or not, relating to the business of the Company or WOW, or conceived,
developed, invented or made by her during her employment by Employer shall
belong to the Company. The Employee shall further: (a) promptly disclose such
Inventions to the Company; (b) assign to the Company, without additional
compensation, all patent, copyright, trademark and other rights to such
Inventions for the United States and foreign countries; (c) sign all papers
necessary to carry out the foregoing; and (d) give testimony in support of her
inventorship;
(ii) If any Invention is described in a
patent or copyright application or is disclosed to third parties, directly or
indirectly, by the Employee within one (1) year after the termination of her
employment by the Company, it is to be presumed that the Invention was conceived
or made during the period of the Employee's employment by the Company; and
(iii) The Employee agrees that she will not
assert any rights to any Invention as having been made or acquired by her prior
to the date of this Agreement.
(g) The Company shall be the sole owner of all
products and proceeds of the Employee's services hereunder, including, but not
limited to, all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Employee may acquire, obtain, develop or create in connection with and during
the term of the Employee's employment hereunder, free and clear of any claims by
the Employee (or anyone claiming under the Employee) of any kind or character
whatsoever (other than the Employee's right to receive payments hereunder). The
Employee shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company may from time to time deem
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its right, or title and interest in or to any such properties.
(h) The parties hereto hereby acknowledge and
agree that (i) the Company would be irreparably injured in the event of a breach
by the Employee of any of her obligations under this Section 8, (ii) monetary
damages would not be an adequate remedy for any such breach, and (iii) the
Company shall be
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entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach.
(i) The parties hereto hereby acknowledge that,
in addition to any other remedies the Company may have under Section 8(h)
hereof, the Company shall have the right and remedy to require the Employee to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively, "Benefits") derived or
received by the Employee as the result of any transactions constituting a breach
of any of the provisions of this Section 8, and the Employee hereby agrees to
account for any pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in
Section 8(h) and 8(i) shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
(k) It is the intent of the parties hereto that
the covenants contained in this Section 8 shall be enforced to the fullest
extent permissible under the laws and public policies of each jurisdiction in
which enforcement is sought (the Employee hereby acknowledging that said
restrictions are reasonably necessary for the protection of the Company).
Accordingly, it is hereby agreed that if any of the provisions of this Section 8
shall be adjudicated to be invalid or unenforceable for any reason whatsoever,
said provision shall be (only with respect to the operation thereof in the
particular jurisdiction in which such adjudication is made) construed by
limiting and reducing it so as to be enforceable to the extent permissible,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of said provision in any other jurisdiction.
9. General. This Agreement is further governed by the
following provisions:
(a) Notices. All notices relating to this
Agreement shall be in writing and shall be either personally delivered, sent by
telecopy (receipt confirmed) or mailed by certified mail, return receipt
requested, to be delivered at such address as is indicated below, or at such
other address or to the attention of such other person as the recipient has
specified by prior written notice to the sending party. Notice shall be
effective when so personally delivered, one business day after being sent by
telecopy or five days after being mailed.
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To the Employer:
Frontline Communications Corp.
Xxx Xxxx Xxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxxx-Xxxxxxxx
With copies to:
Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
To the Employee:
Xxxxxxxx X. XxXxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
With a copy to:
Xxxx Xxxxx Xxxx & XxXxxx, LLP
Princeton Xxxxxxxxx Village
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
(b) Parties in Interest. Employee may not
delegate her duties or assign her rights hereunder. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.
(c) Entire Agreement. This Agreement supersedes
any and all other agreements, either oral or in writing, between the parties
hereto with respect to the employment of the Employee by the Employer and
contains all of the covenants and agreements between the parties with respect to
such employment in any manner whatsoever; provided that the provisions of
Sections 6.1 and 6.2 of the Purchase Agreement shall also apply to Employee. Any
modification or termination of this Agreement will be effective only if it is in
writing signed by the party to be charged.
(d) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Employee agrees to and hereby does submit to jurisdiction before any state or
federal court of record in New York City, New York, or in the state and county
in which such violation may occur, at Employer's election.
(e) Warranty. Employee hereby warrants and
represents as follows:
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(i) That the execution of this Agreement
and the discharge of Employee's obligations hereunder will not breach or
conflict with any other contract, agreement, or understanding between Employee
and any other party or parties.
(ii) Employee has ideas, information and
know-how relating to the type of business conducted by Employer, and Employee's
disclosure of such ideas, information and know-how to Employer will not conflict
with or violate the rights of any third party or parties.
(f) Severability. In the event that any term or
condition in this Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein.
(g) Execution in Counterparts. This Agreement
may be executed by the parties in one or more counterparts, each of which shall
be deemed to be an original but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other
parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
Frontline Communications Corporation
By:/s/ Xxxxxxx X. Xxxx-Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx-Xxxxxxxx
Title: President/CEO
/s/ Xxxxxxxx X. XxXxxxxx
-------------------------------------
Xxxxxxxx X. XxXxxxxx
