EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of
January 19, 1999, by and between INCOMNET, INC., a California corporation (the
"Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual (the "Executive").
WHEREAS, the Company desires to employ the Executive as its Executive
Vice- President and Chief Financial Officer and the Executive is willing to
serve in each capacity; and
WHEREAS, the Company and the Executive wish to set forth the terms and
conditions of such employment.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section 1 and as
provided elsewhere herein. For the purposes of this Agreement, the following
definitions apply:
"Beneficially Owns" or "Beneficial Ownership" has the meaning specified
under Rule 13d-3 promulgated under the Exchange Act.
"Change in Control" means (a) a sale of all or substantially all the
assets of the Company; (b) any merger or consolidation of the Company pursuant
to which the holders of all of the shares of the Company's outstanding capital
stock immediately prior to such transaction beneficially own, as a group, less
than sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of
capital stock of the surviving entity immediately following such transaction;
(c) the issuance of securities by the Company for cash, securities or other
property in a transaction immediately after which the party or parties acquiring
such securities beneficially own fifty percent (50%) or more of the outstanding
shares of capital stock of the Company; (d) the acquisition by an individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act (collectively, a "Person") of beneficial ownership of
any capital stock of the Company if, after such acquisition, such Person
beneficially owns fifty percent (50%) or more of either (i) the then outstanding
shares of Common Stock (the "Outstanding Company Common Stock"), or (ii) the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (d) only,
any acquisition of Outstanding Company Voting Securities by ▇▇▇▇ ▇. ▇▇▇▇▇, who
is a current shareholder of the Company, or his spouse or issue or trusts for
the benefit of ▇▇▇▇ ▇. ▇▇▇▇▇ or his spouse or issue or other entities formed
primarily for the benefit of
▇▇▇▇ ▇. ▇▇▇▇▇ or his spouse or issue or such trusts shall not constitute a
change in control; or (e) a change in the members of the Company's Board of
Directors such that the Continuing Directors do not constitute a majority of the
Company's Board of Directors (or, if applicable, the Board of Directors of a
successor corporation to the Company).
"Competition" means: (a) participating, directly or indirectly, as an
individual proprietor, partner, stockholder, officer, employee, director, joint
venturer, investor, lender, consultant or in any capacity whatsoever within the
United States of America, in a business in competition with any business
conducted by the Company or its affiliates, provided, however, that such
participation shall not include (i) ownership of mutual fund shares or the mere
ownership of not more than four percent (4%) of the total outstanding stock of a
publicly held company; (ii) the performance of services for any enterprise to
the extent no portion of such services are performed, directly or indirectly,
for the portion of the enterprise in the aforesaid competition; or (iii) any
activity engaged in with the prior written approval of the Company's Board.
"Confidential Information" means any and all information of the Company
and its affiliates that is not generally known by others with whom it competes
or does business, or with whom it plans to compete or do business. Confidential
Information includes without limitation such information relating to: (i) the
development, financial, manufacturing, marketing, research, and testing
activities of the Company and its affiliates, (ii) the products and services of
the Company and its affiliates, (iii) the costs, financial performance,
revenues, sources of supply and strategic plans of the Company and its
affiliates, (iv) the identity and special needs of clients and customers of the
Company and its affiliates, (v) the individuals and organizations with whom the
Company and its affiliates have business relationships and the nature of such
relationships. Confidential Information also includes and all information that
the Company and its affiliates have received from customers or others with any
agreement or understanding, express or implied, that it would not be disclosed.
Notwithstanding the foregoing, the term "Confidential Information" shall not for
the purposes of this Agreement include information that at the time of
disclosure is generally available to and known by the public.
"Continuing Director" means at any date a member of the Company's Board of
Directors (i) who was a member of the Board on the date of this Agreement, or
(ii) who was nominated or elected subsequent to such date by at least a majority
of the directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from
clause (ii) above any individual whose initial assumption of office occurred as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation or
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proxies or consents, by or on behalf of a person other than the then current
members of the Company's Board of Directors.
"Disabled" or "Disability" means unable because of a physical or mental
impairment(s) (as defined in 29 C.F.R. ss. 1630.2(h)) to perform the essential
functions of the job with or without reasonable accommodation.
"Employment Term" means the period commencing on January 19, 1999 (the
"Commencement Date") and terminating on December 31, 2001.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Securities Act" means the Securities Act of 1933, as amended.
"Solicitation" means recruiting, soliciting or inducing, of any
non-clerical employee or employees of the Company or its subsidiaries to
terminate their employment with, or otherwise cease their relationship with, the
Company or its subsidiaries who within six (6) months before had been a
non-clerical employee of the Company or its subsidiaries, provided, however,
that solicitation shall not include any of the foregoing activities engaged in
with the prior written approval of the Company's Board.
"Subsidiary" means any corporation, general partnership, limited
partnership, limited liability company, trust or other entity in which the
Company beneficially owns fifty percent (50%) or more of the outstanding
securities, economic interests or combined voting power in the election of
directors, general partners, trustees or members of the governing body of such
entity, as applicable.
"Termination for Cause" means the termination of the Executive's
employment by reason of (i) willful misconduct by Executive with regard to the
Company, its affiliates, their businesses or employees, provided that the
Company gives written notice to Executive at least thirty (30) days prior to
such termination with reasonable details of the facts and circumstances claimed
as the basis of termination; (ii) the knowing refusal of Executive to follow the
lawful direction of the Chief Executive Officer of the Company, provided that
the foregoing refusal shall not be "Cause" if Executive in good faith believes
that such direction is illegal, unethical or immoral and promptly so notifies
the Chief Executive Officer or Chairman of the Board, (iii) continuing willful
refusal by Executive to perform the duties required of him hereunder (other than
any such failure resulting from Disability) after a written demand for
performance is delivered to Executive by the Chief Executive Officer of the
Company which specifically identifies the manner in which it is believed that
Executive has continually refused to attempt to perform his duties hereunder;
(iv) Executive being convicted of a felony (other than a felony involving a
traffic violation); (v) the breach by Executive of any fiduciary duty owed by
Executive to the Company or its affiliates; or (vi) Executive's act of
embezzlement, defalcation or fraud with regard the Company or its affiliates
(other than
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good faith expense account disputes); or (vii) the Executive's failure to
perform his lawful material duties as required by this Agreement; provided,
however, that as to subclause (vii) above, the Company shall have given
Executive written notice of such failure to perform, with reasonable detail of
the facts and circumstances claimed as a basis of termination (referred to
herein as a "material breach"), and Executive shall have failed to (a) correct
such material breach within thirty (30) days after receipt of the notice
(excluding any period Executive is on vacation) and (b) Executive shall have
diligently performed his lawful material duties thereafter.
"Termination for Good Reason" means a termination by the Executive by
written notice given within ninety (90) days after the occurrence of the Good
Reason event. For purposes of this Agreement, "Good Reason" shall mean the
occurrence or failure to cause the occurrence, as the case may be, without
Executive's express written consent, of any of the following circumstances,
unless such circumstances are fully corrected prior to the date of termination
specified in the Notice of Termination for Good Reason: (i) any material
diminution of Executive's responsibilities hereunder as Executive Vice-President
and Chief Financial Officer of the Company (except in each case in connection
with the termination of Executive's employment for Cause or Disability or as a
result of Executive's death; (ii) the assignment to Executive of duties
inconsistent with duties of a chief financial officer of comparable companies;
or (iii) at the election of Executive, upon a "Change in Control" of Company
provided that notice of such termination is given after such Change in Control;
provided, however, that if ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be the President and Chief
Executive Officer of the Company upon the occurrence of such Change in Control,
then Executive may elect to terminate his employment because of such Change in
Control only if the employment of ▇▇▇▇▇ ▇▇▇▇▇▇▇ with the Company shall be
terminated after such Change in Control, it being understood that even if ▇▇.
▇▇▇▇▇▇▇ shall be employed by the Company nothing herein shall prevent Executive
from electing to terminate his employment for Good Reason due to any reason
other than a Change in Control.
2. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers to employ the Executive for the Employment
Term and the Executive hereby accepts such employment.
2.1. Position. During the Employment Term, the Executive shall serve
as Executive Vice-President and Chief Financial Officer of the Company.
2.2. Duties. The Executive shall report directly to the President
and Chief Executive Officer of the Company and shall perform such duties as are
intrinsic to his position and such other duties and responsibilities on behalf
of the Company as may reasonably be assigned to him from time to time.
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2.3. Full Time Employment. During the Employment Term, Executive
shall devote substantially all of his business time and efforts to the
performance of his duties hereunder and use his best efforts in such endeavors;
provided, however that Executive shall be allowed, to the extent that such
activities do not materially interfere with the performance of his duties and
responsibilities hereunder, to manage his passive personal investments and to
serve on corporate, civic, or charitable boards or committees. Notwithstanding
the foregoing, Executive shall not serve on any corporate board of directors if
such service would be inconsistent with his fiduciary responsibilities to the
Company and in no event shall Executive serve on any such board unless
previously approved by the Chief Executive Officer of the Company.
2.4. Affiliates. Upon request of the Company's Board, the Executive
shall also serve as an officer of affiliates of the Company with no additional
compensation. Any compensation paid to Executive by any such affiliate shall
reduce the Company's compensation obligations hereunder.
3. Compensation and other Benefits. As compensation for all services
performed by the Executive under and during the Employment Term and subject to
performance of the Executive's duties and obligations to the Company, the
following remuneration shall be provided to the Executive by the Company.
3.1. Signing Bonus. The Company shall pay the Executive a signing
bonus equal to one hundred thousand dollars ($100,000) (the "Signing Bonus")
within thirty (30) days after the Commencement Date. Notwithstanding anything
else herein, if Executive voluntarily terminates his employment with the Company
without Good Reason within one (1) year following the date of payment of the
Signing Bonus, the Executive shall repay to the Company a percentage of the
Signing Bonus equal to the percentage of the year remaining after the date of
termination, calculated on the basis of actual days. The repayment shall occur
within sixty (60) days of the date of such termination.
3.2. Base Salary. During the Employment Term, Executive shall be
paid a base salary at the annual rate of not less than two hundred and fifty
thousand dollars ($250,000). Base salary shall be payable by the Company in
accordance with its usual payroll practices but not less frequently than once
every two weeks. The Executive's Base Salary shall be subject to annual review
by the Company's Board, and may be increased, but not decreased, from time to
time. The base salary as determined as aforesaid from time to time shall
constitute "Base Salary" for purposes of this Agreement.
3.3. Annual Bonus. For each fiscal year or portion thereof during
the Employment Term, the Executive shall be eligible to participate in an annual
bonus plan of the Company in accordance with, and subject to the terms of, such
plan as determined by the Company's Board and the President and Chief Executive
Officer; provided,
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however, that Executive shall be entitled to minimum annual bonus for fiscal
year 1999 of at least thirty percent (30%) of Base Salary (the "Guaranteed
Bonus") and thereafter Executive's bonus will be determined at the discretion of
the Board and the President and Chief Executive Officer of the Company and in
accordance with the annual bonus plan available to senior executives of the
Company.
3.4. Long Term Incentive Plan. For each fiscal year or portion
thereof during the Employment Term, the Executive shall be eligible to
participate in any stock option plan made available to executives of the Company
in accordance with, and subject to the terms of, such plan. The Company hereby
acknowledges that it intends to adopt a stock option plan for use in connection
with the recruitment of other senior executives.
3.5. Other Compensation. The Company may, upon recommendation of the
Compensation Committee of the Company's Board, award to the Executive such other
bonuses and compensation as, in its absolute discretion, it deems appropriate
and reasonable.
3.6. Employee Benefit Plans. During the Employment Term, the
Executive shall be entitled to participate in all pension, retirement, savings,
and welfare benefit plans and arrangements and shall be eligible to receive all
fringe benefits and perquisites generally maintained or provided by the Company
from time to time for the benefit of senior executives of the Company, in
accordance with their respective terms as in effect from time to time (other
than any special arrangement entered into by contract with another executive).
3.7. Automobile. During the Employment Term, the Company will
provide a car allowance of one thousand two hundred dollars ($1,200) per month.
The Company shall in addition pay for the cost of insurance and fuel for such
automobile. The Executive shall be responsible for any income tax consequences
arising from the use of the automobile under this arrangement.
3.8. Vacation and Sick Leave. During the Employment Term, except as
otherwise provided in this Agreement, the Executive shall be entitled to paid
vacation each year in accordance with the Company's policies in effect from time
to time, and will accrue paid vacation time at the rate four weeks per calendar
year, up to a maximum of five weeks. Paid vacation time will continue to accrue
until the amount accrued reaches the five-week maximum. When Executive has
reached the five-week accrual cap, no additional vacation will be accrued until
Executive has taken vacation time to reduce the accrued vacation below the cap.
After he has taken vacation, Executive will resume accruing vacation until he
once again reaches the five-week accrual cap. No retroactive accruals will be
made for the period in which vacation accrual stopped. Executive shall also be
entitled to such periods of sick leave as is customarily provided by the Company
for its senior executive officers.
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3.9. Business Expenses. Upon submission of appropriate
documentation, the Executive shall be reimbursed for the travel, entertainment
and other business expenses incurred by Executive in the performance of his
duties hereunder, in accordance with the applicable policies as in effect from
time to time.
3.10. Liability Insurance. Both during his employment hereunder, and
for a three year period commencing after the Executive ceases to be an employee
of the Company, the Company shall maintain commercially reasonable directors'
and officers' liability insurance policies covering the Executive with respect
to his service as an officer and/or director of the Company or any of its
affiliates and to the maximum extent permitted by law and the applicable
Articles of Incorporation and By-laws, shall indemnify the Executive from
liability, loss or expense (including reasonable attorney's fees) arising out of
such service.
3.11. Relocation. The Company agrees to reimburse Executive up to
seventy-five thousand dollars ($75,000) for all reasonable expenses (including
broker's fees, closing costs, all transaction costs and physical relocation
costs incurred by Executive in moving from Los Angeles to Orange County,
California). Executive shall be responsible for any income tax consequences
arising from the payments made under this Section 5(c).
3.12. Withholding Taxes. The Company may withhold from any and all
amounts payable under this Agreement such federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.
3.13. Legal Fees. The Company will reimburse the Executive for
reasonable legal fees incurred in negotiating this Agreement, up to a maximum of
$2,500.00.
4. Stock Options. The Company hereby grants Executive an option (the
"Option") to purchase Five Hundred Thousand (500,000) shares of Company Common
Stock (voting) (the "Shares"), with an Option price ("Option Price") equal to
the fair market value of the Shares as of the first day of the Employment Term,
in accordance with the terms and conditions of the Company's 1996 Stock Option
Plan or any successor plan and upon the following terms and conditions:
4.1. Vesting. The Shares issued pursuant to the Option shall vest as
follows: 125,000 Shares on June 30, 1999, and 20,834 at the end of each month
thereafter until November 30, 2000, with a final vesting of 20,822 on December
31, 2000. In accordance with this vesting schedule, the Option shall be fully
vested at December 31, 2000.
4.2. Expiration. The Option shall expire on December 31, 2008.
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4.3. Exercise. The Option shall be exercised in accordance with the
terms of the Company's existing stock option plan.
4.4. Effect on Option.
(a) Upon the occurrence of a Change in Control, the entire Option
shall automatically become vested in full and immediately exercisable in full.
(b) Without limiting the foregoing, in the event of a Termination
for Good Reason or Termination Without Cause, the entire Option shall
automatically become vested in full and immediately exercisable in full.
(c) In the event of termination of employment for any reason other
than death, Executive shall have ninety (90) days from the date of termination
to exercise his Option to the extent the Option was exercisable by him at the
date of such termination.
(d) In the event of the Executive's death, Executive's estate shall
have one hundred eighty (180) days from the date of death to exercise
Executive's Option to the extent the Option was exercisable by him on the date
of his death.
5. Termination of Employment. The employment of Executive under this
Agreement shall terminate prior to the expiration of the Employment Term upon
the occurrence of any of the following events:
5.1. Death. In the event of the Executive's death during the
Employment Term, the Executive's employment shall immediately and automatically
terminate without further obligations to Executive's legal representatives under
this Agreement (except for its obligations to recognize his rights under Section
4.4(c) of this Agreement) or otherwise except for: (i) any compensation earned
but not yet paid, including without limitation, any declared but unpaid bonus
for the prior fiscal year, any unpaid Signing Bonus, any amount of Base Salary
or deferred compensation, if any, accrued or earned but unpaid, any accrued
vacation pay payable pursuant to the Company's policies, any unreimbursed
business expenses, which amounts shall be promptly paid in a lump sum to
Executive's estate; and (ii) any other amounts or benefits owing to Executive or
his designated beneficiaries under the then-applicable employee benefit or
equity plans of the Company or its affiliates, which shall be paid in accordance
with such plans.
5.2. Disability. If Executive becomes Disabled for six (6) or more
consecutive months, the Company may terminate the Executive's employment for
Disability upon thirty (30) days prior written notice. Such termination shall
not be effective if Executive ceases to be Disabled and returns to the full-time
performance of his material duties within such 30-day notice period. If the
Executive is eligible for disability payments prior to said termination under
any disability plan sponsored by the
8
Company, his Base Salary shall be reduced by the amount of such disability
payments. If his employment is terminated by reason of Disability, Executive
shall be entitled to receive: (i) any compensation earned but not yet paid,
including without limitation, any declared but unpaid bonus for the prior fiscal
year, any unpaid Signing Bonus, any amount of Base Salary or deferred
compensation, if any, accrued or earned but unpaid, any accrued vacation pay
payable pursuant to the Company's policies, any unreimbursed business expenses,
which amounts shall be promptly paid to Executive in a lump sum; and (ii) any
other amounts or benefits owing to Executive under the then-applicable employee
benefit or equity plans of the Company or its affiliates, which shall be paid in
accordance with such plans. Notwithstanding anything to the contrary, Company
shall pay Executive, an amount, paid monthly, equal to the monthly cost incurred
by Executive for continuing group medical and/or dental coverage, if any, under
COBRA until the first anniversary of the date of termination for Disability. If
at the time of termination for Disability, the Company is providing life
insurance coverage for Executive under its group life policy, the Company shall,
to the extent permissible, continue to cover Executive under its group life
policy at a cost not to exceed the monthly premium cost being paid by Company
for Executive's life insurance coverage immediately prior to the time of
termination for Disability ("Monthly Life Insurance Premium") until the first
anniversary of the date of Executive's employment was terminated, or if
Executive shall not be eligible for continued coverage under the Company's group
life policy, pay to Executive, on a monthly basis, an amount equal to the
Monthly Life Insurance Premium until the first anniversary of the date
Executive's employment was terminated.
5.3. Termination for Cause. The Executive's employment hereunder may
be terminated at any time by the Company for Cause (subject to applicable notice
and cure periods) by providing the Executive with a written Notice of
Termination for Cause, which shall set forth in reasonable detail the facts and
circumstances which provide the basis for Termination for Cause and the
effective date of such action. The Company's failure to set forth in the Notice
of Termination for Cause any facts or circumstances which contribute to the
showing of Cause shall not waive any right of the Company hereunder or preclude
the Company from asserting such fact or circumstance in enforcing its rights
hereunder. Any purported Termination for Cause which is held by a court not to
have been based on the grounds set forth in this Agreement or not to have
followed the procedures set forth in this Agreement shall be deemed a
Termination Without Cause.
5.4. Termination Without Cause. The Executives' employment hereunder
may be terminated by the Company at any time after June 30, 2000 for any or no
reason and without advance notice.
5.5. Termination for Good Reason. The Executive's employment
hereunder may be terminated at any time by the Executive for Good Reason
(subject to applicable notice and cure periods) by providing the Company with a
written Notice of
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Termination for Good Reason, which shall set forth in reasonable detail the
facts and circumstances that provide a basis for his Termination for Good Reason
and the effective date of such action. The failure by Executive to set forth in
the Notice of Termination for Good Reason any facts or circumstances which
contribute to the showing of Good Reason shall not waive any right of Executive
hereunder or preclude Executive from asserting such fact or circumstance in
enforcing his rights hereunder. The Notice of Termination for Good Reason shall
provide for a date of termination not less than thirty (30) nor more than sixty
(60) days after the date such Notice of Termination for Good Reason is given.
5.6. Payments Due. If the Executive's employment hereunder is
terminated by the Company for Cause, by the Executive without Good Reason, or
due to the completion of the Employment Term, the Executive shall be entitled to
receive only his Base Salary through the effective date of termination, any
unreimbursed business expenses, and any accrued vacation pay payable pursuant to
applicable policies of the Company. The Executive's rights under any benefit
plan or any equity plan following such termination of employment shall be
determined in accordance with the provisions of the applicable benefit or equity
plan.
5.7. Termination for Good Reason Severance Compensation. If the
Executive terminates his employment hereunder for Good Reason during the
Employment Term, the Company shall have no further obligations to Executive
under this Agreement (except for its obligations to recognize his rights under
Section 4.4(b) and (c) of this Agreement) or otherwise, except that the
Executive shall receive: (i) any compensation earned but not yet paid, including
without limitation, any declared but unpaid bonus for the prior fiscal year, any
unpaid Signing Bonus, any amount of Base Salary or deferred compensation, if
any, accrued or earned but unpaid, any accrued vacation pay payable pursuant to
the Company's policies, any unreimbursed business expenses, which amounts shall
be promptly paid to Executive in a lump sum; (ii) equal monthly payments, in
accordance with the Company's normal payroll practices, of an amount equal to
the monthly payments of Executive's then Base Salary for a period of eighteen
(18) months following the date of his termination or until December 31, 2001,
whichever is earlier; (iii) reimbursement for the cost of Executive's continued
participation in the Company's health insurance plan until the expiration of the
maximum period permitted by COBRA or until December 31, 2001, whichever shall
occur first; and (iv) any other amounts or benefits owing to Executive under the
then-applicable employee benefit or equity plans of the Company or its
affiliates, which shall be paid in accordance with such plans.
5.8. Termination Without Cause Severance Compensation. If the
Executive's employment is terminated by the Company Without Cause during the
Employment Term in accordance with Section 5.4, the Company shall have no
further obligations to Executive under this Agreement (except for its
obligations to recognize his
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rights under Section 4.4(b) and (c) of this Agreement) or otherwise, except that
the Executive shall receive: (i) any compensation earned but not yet paid,
including without limitation, any declared but unpaid bonus for the prior fiscal
year, any unpaid Signing Bonus, any amount of Base Salary or deferred
compensation, if any, accrued or earned but unpaid, any accrued vacation pay
payable pursuant to the Company's policies, any unreimbursed business expenses,
which amounts shall be promptly paid to Executive in a lump sum; (ii) an amount
equal to three monthly payments of Executive's then Base Salary paid in a lump
sum not later than 30 days from the date of employment termination; (iii) equal
monthly payments, in accordance with the Company's normal payroll practices, of
an amount equal to the monthly payments of Executive's then Base Salary for a
period from the date of employment termination through September 30, 2001; (iv)
reimbursement for the cost of Executive's continued participation in the
Company's health insurance plan until the expiration of the maximum period
permitted by COBRA or until December 31, 2001, whichever shall occur first; and
(v) any other amounts or benefits owing to Executive under the then-applicable
employee benefit or equity plans of the Company or its affiliates, which shall
be paid in accordance with such plans.
5.9. No Mitigation: Set-Off. In the event of any termination of
employment, the Executive shall be under no obligation to seek other employment
and, subject to Section 5 below, there shall be no offset against any amounts
due Executive under this Agreement on account of any remuneration attributable
to any subsequent employment that Executive may obtain. Any amounts due under
Section 5.7 are in the nature of severance payments, or liquidated damages, or
both, and are not in the nature of a penalty. Such amounts are inclusive, and in
lieu of any amounts payable under any other salary continuation or cash
severance arrangement of the Company and to the extent paid or provided under
any other such arrangement shall be offset from the amount due hereunder. The
Company shall have no obligations to Executive upon a termination of employment
except as specified in this Agreement. If Executive dies while receiving
payments under Section 5.7, any remaining payments shall be paid to Executive's
estate.
6. Confidentiality, Non-Competition, and No Solicitation. As a condition
of his employment or continued employment by the Company, Executive will sign
the Company's standard form Confidentiality Agreement.
7. Executive's Representations. The Executive represents and warrants to
the Company that, as of the date hereof, there is no legal impediment to his
performing his obligations under this Agreement and neither entering into this
Agreement nor performing his contemplated service hereunder will violate any
agreement to which he is a party on the date hereof any other legal restriction.
8. Company's Representations. The Company represents and warrants to the
Executive that, as of the date hereof, there are no legal impediments on its
performance of
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its obligations under the Agreement and that neither the entering into of this
Agreement nor the performing of its obligations hereunder will violate any
agreement in which it is a party as the date hereof or any other legal
restriction.
9. Entire Agreement/Amendments. This Agreement and the instruments
contemplated herein, contain the entire understanding of the parties with
respect to the employment of Executive by the Company and supersede any policy
of the Company with regard to severance payments and any prior agreements
between the Company and the Executive with regard to employment or severance.
There are no restrictions, agreements, promises, warranties, covenants,
representations or undertakings between the parties with respect to the subject
matter herein other than those expressly set forth herein and therein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
10. Non-Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any such
waiver must be in writing and signed by Executive or an authorized officer of
the Company.
11. Interpretation and Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees legatees and permitted
assignees of the parties hereto.
11.1. Non-Assignment. This Agreement shall not be assignable by any
of the parties hereto except by operation of law.
11.2. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to the agreed preservation of such rights and obligations.
11.3. Communications. For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (i) when faxed or delivered, or (ii)
five (5) business days after being mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
appropriate address set forth on Schedule A to this Agreement, provided that all
notices to the Company shall be directed to the attention of the Secretary of
the Company, or to such other address as any party may have furnished to the
other in writing in accordance herewith. Notice of change of address shall be
effective only upon receipt.
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11.4. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
11.5. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
11.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
INCOMNET, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
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