EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of the
15th day of April, 1997, by and between INTELLIPHONE, INC., a Minnesota
corporation (the "Company"), and XXXXXXX X. XXXXXX, a resident of Minnesota
("Employee").
RECITALS:
WHEREAS, Employee is currently employed by the Company;
WHEREAS, Employee desires to continue his employment with the Company, and
the Company desires to continue employing Employee, on the terms and conditions
set forth below;
WHEREAS, Employee and the Company acknowledge that it is in their best
interests to establish formal severance arrangements for the benefit of
Employee, in partial consideration for which Employee has agreed to observe
certain nondisclosure and non-competition restrictions with respect to the
Company, as set forth herein.
NOW, THEREFORE, in consideration of the foregoing recital and the mutual
promises and agreements contained in this Agreement, the parties agree as
follows:
1. EMPLOYMENT. The Company hereby employs Employee as President, and
Employee hereby accepts such employment with the Company on the terms and
conditions set forth in this Agreement. Employee hereby acknowledges and agrees
that the Company has no obligation to retain Employee in such position during
the term of this Agreement, and that it may place Employee in another position
and/or reassign him different duties as the Board of Directors may determine in
its sole discretion.
2. TERM AND RENEWAL. Employee's employment by the Company shall commence
under the terms hereof as of April 15, 1997, and shall continue for a period of
two (2) years, unless such employment is terminated earlier as provided herein.
The term of this Agreement shall renew automatically for successive one (1) year
terms unless a party gives notice to the other not less than thirty (30) days
prior to the end of a term that this Agreement is not to be renewed, or unless
this Agreement is otherwise terminated as provided herein.
3. DUTIES. Employee agrees to perform faithfully and to the best of his
abilities such duties as are reasonably assigned to him from time to time by the
Company's Board of Directors. Employee agrees to devote his entire business
time, and to apply his best efforts, energy and skills, to properly discharge
the duties of such employment, to promote the Company's interests, and to
participate in the active management of the Company while employed hereunder.
Employee shall report directly to the Company's Board of Directors or to such
other officer of the Company as the Board of Directors may determine in its sole
discretion.
4. COMPENSATION.
(a) Employee's compensation for the services performed under this
Agreement and for Employee's covenants and agreements hereinafter set forth
shall be a salary of Six Thousand Four Hundred Forty-Eight Dollars and 33/100
($6,448.33) per month.
(b) As additional compensation, Employee shall be entitled to the fringe
benefits described in Paragraph 5 below and may, in the sole discretion of the
Company's Board of Directors, receive such additional compensation, salary,
bonus or other benefits as the Company's Board of Directors shall determine.
5. FRINGE BENEFITS. Employee shall have the right to participate in the
fringe benefit plans generally provided by the Company to its officers, subject,
however, to Employee's qualification for participation in such benefit plans
pursuant to the terms and conditions under which such benefit plans are offered.
6. VACATION. Employee shall be entitled during each calendar year in
which this Agreement remains in effect such paid vacation time as the Company's
Board of Directors shall determine in its sole discretion. Employee may carry
over into the next calendar year not more than one (1) week of vacation. Any
vacation time in excess of that which may be carried forward which is not used
during any such calendar year may not be carried forward to any succeeding
calendar year and shall be forfeited. No vacation may be taken in advance.
Employee shall not be entitled to receive any payment in cash for vacation time
remaining unused at the end of any year or upon termination of this Agreement.
7. NONCOMPETITION. The parties also acknowledge and agree that the
Company's customer contacts and relations are established and maintained at
great expense and that Employee, by virtue of his employment under this
Agreement, will have unique and extensive exposure to, and personal contact
with, the Company's customers and that Employee will be able to establish a
unique relationship with those individuals that will enable him, both during and
after employment, to unfairly compete with the Company. In consideration of the
continued employment by the Company of Employee, and in consideration of the
compensation and newly established severance arrangement provided to Employee by
the Company under this Agreement, Employee agrees that he shall not at any time
during the term of this Agreement, nor for a period of one (1) year after
Employee ceases to be employed by the Company do the following:
(a) directly or indirectly, become a stockholder, partner, member or other
owner in any business or entity that is a business competitor of the Company,
provided, however, that Employee shall not be prohibited from, and the foregoing
restriction shall not apply to, Employee's ownership of less than a ten percent
(10%) interest in any company whose shares of stock are traded in a recognized
stock exchange or traded in the over-the-counter market; and/or
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(b) in any manner induce, attempt to induce or assist others to induce any
customer, client, employee or other person or entity having a business or
employment relationship with the Company to terminate such relationship, or do
anything to interfere with the relationship of the Company with such person or
entity.
(c) communicate with any party with whom the Company has a Site Contract in
place until six (6) months following the expiration of any such Contract.
Employee expressly agrees that in the event of a breach of the subparagraph (c),
in addition to any other remedies provided hereunder or by law, the Company will
be entitled to recover from Employee as liquidated damages, an amount equal to
Five Thousand Dollars ($5,000) for each phone located on any site where a
communication has been made in violation of this subparagraph (c).
8. CONFIDENTIAL INFORMATION. The parties agree that the Company's
customers, business connections, agreements, customer lists, procedures,
operations, business software and computer programs and printouts, techniques,
financial information and other aspects of the business are established at great
expense and protected as confidential information and provide the Company with a
substantial competitive advantage in conducting its business. The parties
further agree that by virtue of Employee's employment with the Company, Employee
will have access to, and be entrusted with, secret, confidential and proprietary
information, and that the Company would suffer great loss and injury if Employee
would disclose this information or use it to compete with the Company.
Therefore, in consideration of the compensation and other benefits to be
provided to Employee under this Agreement, including the severance arrangement
established herein, Employee agrees that during the term of his employment, and
for a period of one (1) year after the termination of Employee's employment with
the Company, Employee shall not, directly or indirectly, either individually or
as an employee, agent, partner, shareholder, consultant or in any other
capacity, use or disclose, or cause to be used or disclosed, any secret,
confidential or proprietary information acquired by Employee during his
employment with the Company, whether owned by the Company prior to or discovered
and developed by the Company subsequent to Employee's employment, even though
Employee may have participated in the discovery or development of such
information.
9. RELIEF FOR VIOLATIONS. Employee covenants and agrees that if he shall
violate any of the covenants and agreements under Paragraph 7 and/or Paragraph 8
or both, the Company shall be entitled to an accounting and repayment of all
profits, compensation, commissions, remuneration or benefits which Employee
directly or indirectly has realized and/or may realize as the result of, arising
out of, or in connection with, any such violation. Employee acknowledges that
an irreparable injury may result to the Company and its business in the event of
a breach of Employee's covenants contained in Paragraph 7 and/or Paragraph 8 of
this Agreement. Employee also acknowledges and agrees that the damages or
injuries which the Company may sustain as a result of Employee's breach of
Paragraphs 7 and/or Paragraph 8 of this Agreement are difficult to ascertain and
money damages alone may not be an adequate remedy to the Company. Employee,
therefore, agrees that if a controversy arises concerning the rights or
obligations of a party under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance and the
Company shall also be entitled to any injunctive relief
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necessary to prevent or restrain any violation by Employee or any persons
directly or indirectly acting for or with Employee of the provisions of
Paragraphs 7 and/or Paragraph 8 of this Agreement. Such remedies, however,
shall be cumulative and non-exclusive and shall be in addition to any other
remedy to which the parties may be entitled.
10. REASONABLE RESTRICTIONS. Employee agrees that the terms and
conditions of Paragraphs 7, 8 and 9 of this Agreement are reasonable and
necessary for the protection of the Company's business, trade secrets and
confidential information and to prevent damage or loss to the Company as the
result of action taken by Employee. Employee acknowledges that the
consideration provided for herein is sufficient to fully and adequately
compensate Employee for agreeing to the restrictions set forth in Paragraphs 7,
8 and 9 of this Agreement. Employee acknowledges that he could continue to
actively pursue his career and earn sufficient compensation in business without
breaching any of the restrictions contained in this Agreement.
11. TERMINATION; SEVERANCE ARRANGEMENT.
(a) Except as otherwise set forth herein, if either party desires to
terminate Employee's employment with the Company, such party shall give written
notice of termination to the other party not less than thirty (30) days prior to
the effective date of termination.
(b) In the event of any termination of Employee's employment with the
Company except that "for cause" (as defined in Section 11(c) below), Employee
shall be entitled to continue receiving the full compensation and benefits set
forth in Section 4 above for a period of six (6) months following such
termination. If such termination is occasioned by Employee's death or
"disability," the continued compensation to which Employee is entitled shall be
paid to Employee's estate or personal representative, as the case may be. For
purposes of this Agreement, "disability" shall mean that Employee is unable to
perform substantially all of his duties for a period of one (1) year or for a
total of twelve (12) months in any two (2) year period. If there is any dispute
as to whether the termination of Employee's employment was due to Employee's
physical or mental illness or incapacity, such question shall be submitted to a
licensed physician for the purpose of making such determination. An examination
of Employee shall be made within thirty (30) days after written notice by the
Company or Employee to the other by a licensed physician agreeable to Employee
and the Company. Employee shall submit to such examination and provide such
information that such physician may request and the determination of such
physician as to the question of Employee's physical or mental condition shall be
binding and conclusive on all parties concerned for purposes of this Agreement.
(c) The Company shall have the right to terminate the employment of
Employee immediately "for cause" without notice upon the happening of any of the
following events:
(i) The breach by Employee of any provisions of Paragraph 7 or
Paragraph 8 of this Agreement;
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(ii) The commission by Employee of any act of gross misconduct or
malfeasance with respect to the Company or its business; or
(iii) The conviction of Employee of a felony or misdemeanor which, in
the reasonable judgment of the Company's Board of Directors, is likely to
have a material adverse effect upon the business or reputation of Employee
or the Company or which substantially impairs Employee's ability to perform
his duties for the Company.
(d) Upon notice of termination of employment or at any time thereafter as
directed by the Company, Employee shall return to the Company any and all
property of the Company in Employee's possession or control. The agreements of
Employee pursuant to Paragraphs 7, 8, 9 and 10 shall survive the termination of
employment under this Agreement.
12. REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall reimburse
Employee for the amount of expenses reasonably and necessarily incurred by
Employee in connection with the Company's business; provided, however, that no
single expenditure in excess of $100 shall be made without the Company's prior
approval. Employee shall submit an itemized accounting for all expenses for
which reimbursement is sought at such time and in such detail as the Company
shall reasonably require. The Company shall not be obligated to pay or reimburse
expenses for which adequate documentation is not furnished in the manner
directed by the Company.
13. WAIVER. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
14. SEVERABILITY. In the event any provision of this Agreement is held to
be invalid or unenforceable for any reason whatsoever, such invalidity or
unenforceability shall not affect any other provision of this Agreement and the
remaining covenants, restrictions and provisions hereof shall remain in full
force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
FURTHERMORE, THE PARTIES SPECIFICALLY ACKNOWLEDGE THE ABOVE COVENANT NOT TO
COMPETE AND COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION ARE SEPARATE AND
INDEPENDENT AGREEMENTS.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
16. BENEFIT. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against the Company, its successors
and assigns, and Employee, his heirs, beneficiaries and legal representatives.
Employee's rights and obligations under this Agreement may not be delegated or
assigned except as specifically set forth herein.
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17. NOTICES. Any notice to be given hereunder shall be deemed sufficient
if addressed in writing, and delivered by registered or certified mail or
delivered personally, in the case of the Company to its principal business
office, and in the case of Employee, to his address appearing on the Company's
records, or to such other address as he may designate in writing to the Company.
18. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement and understanding between the parties hereto in reference to all of
the matters herein agreed upon, and no representations, promises, agreements or
understandings, whether written or oral, not herein contained shall be of any
force or effect. This Agreement may only be amended by an agreement in writing
signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day, month and year first above written.
EMPLOYEE COMPANY:
INTELLIPHONE, INC.,
/s/ Xxxxxxx X. Xxxxxx a Minnesota corporation
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Xxxxxxx X. Xxxxxx
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: Chief Financial Officer
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