Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 6th day of
November, 1998, effective as of August 15, 1998, by and between ALLIN
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and XXX XXXX
("Employee"), a resident of Florida.
W I T N E S E T H:
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WHEREAS, Employee is currently employed by Kent Consulting Group, Inc., a
California corporation and a wholly-owned subsidiary of Employer ("KCG"), as
KCG's president; and
WHEREAS, Employee has also been serving as President of Employer; and
WHEREAS, Employer desires to employ Employee on a full-time and exclusive
basis and Employee is willing to serve on a full-time and exclusive basis, all
upon the terms and conditions hereinafter set forth; and
WHEREAS, the parties intend that this Employment Agreement will replace the
Employment Agreement dated November 6, 1996, by and between KCG and Employee
(the "KCG Employment Agreement").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and intending to be legally bound hereby, the parties agree as
follows:
Section 1. Employment. Subject to the terms and conditions of this
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Agreement, Employer agrees to employ Employee as President of Employer, and
Employee accepts such employment. Employee will diligently and faithfully and in
conformity with the directions of the Board of Directors of Employer perform the
duties of his employment hereunder, and he will devote his best efforts and
attention on a full-time basis to the performance of said duties. This Agreement
replaces the KCG Employment Agreement, and the KCG Employment Agreement is
hereby terminated without any liability of any nature to KCG or Employer.
Without limiting the foregoing, Employee acknowledges that Employee is not
entitled to any severance pay in connection with the termination of the KCG
Employment Agreement.
Section 2. Employment Period. The term of Employee's employment hereunder
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shall commence effective August 15, 1998 and shall continue until December 31,
2001, unless sooner terminated in accordance with the terms of this Section 2
("Employment Period"). The Employment Period shall terminate upon (i)
Employee's death or, unless waived by Employer, his disability, either physical
or mental (as determined by Employer's physician) which may reasonably be
anticipated to render him unable, for a period of at least three (3) months,
effectively to perform the obligations, duties and responsibilities of
Employee's employment with Employer; or (ii) the termination of Employee's
employment by the Board of Directors with cause (as hereinafter defined); or
(iii) the passage of thirty (30) days from the date of delivery by either party
to the other of his or its election to terminate this Agreement. As used
herein, "cause" shall mean (i) dishonest, fraudulent or illegal conduct; (ii)
misappropriation of Employer funds; (iii) conviction of a felony; (iv) excessive
use of alcohol, (v) use of controlled substances or other addictive behavior;
(vi) unethical business conduct; (vii) breach of any statutory or common law
duty of loyalty to Employer; and (viii) action by Employee which is prejudicial
or injurious to the business or goodwill of Employer or a material breach of
this Agreement.
Section 3. Employment Compensation and Other Benefits.
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(a) Salary. For services performed by Employee during the Employment
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Period, Employer will pay to Employee, effective August 15, 1998, a base salary
of Two Hundred Thousand Dollars ($200,000) per annum, payable in equal monthly
installments of $16,666.67, prorated for any partial period of employment.
(b) Benefits. During the Employment Period, Employee will be entitled to
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such benefits as are available to other employees of Employer generally.
(c) Business Expenses. Employer will reimburse Employee for reasonable
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out-of-pocket expenses incurred by him, in accordance with Employer's policies
as in effect from time to time, for entertainment, travel, lodging and similar
items in connection with the business of Employer, provided that Employee
properly accounts for and promptly submits appropriate supporting documentation
with respect to all such expenses.
(d) Discretionary Bonus. During the Employment Period, the Employee shall
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have the opportunity to earn an annual bonus in accordance with an annual bonus
program to be established by the Compensation Committee and approved by the
Board of Directors of Employer. The payment of any annual bonus under any such
program shall be contingent upon the achievement of certain corporate and/or
individual performance goals established by the Board in its sole discretion. In
general, annual bonuses shall be based on goals which enhance shareholder value.
One or more of the following may be established as acceptable performance goals:
Employer revenues, pre-tax income, earnings before income taxes, interest,
depreciation and amortization, return on equity, total shareholder return, or
other measures of corporate performance which would be in the best interests of
the shareholders.
(e) Stock Option Plan. Employee will be entitled to participate in
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Employer's 1996 and 1997 Stock Option Plans and any future plans established by
Employer (the "Stock Option Plans"). Employee will be granted incentive stock
options ("Incentive Stock Options") for 60,000 shares of Employer's common stock
("Common Stock") upon signing of this Agreement. The exercise price will be the
closing price of Employer's Common Stock on August 15, 1998. Such Incentive
Stock Options shall vest at a rate of 12,000 shares per year, beginning on
August 15, 1999, and continuing on each August 15 thereafter, provided that if
Employee is still employed by Employer on December 31, 2001 but Employer elects
not to renew this Agreement, Employee's remaining options for 24,000 shares
shall vest on December 31, 2001. Further provided, that all Incentive Stock
Options shall immediately vest upon the earlier to occur of the date on which
(i) the termination of this Agreement without cause occurs, (ii) the Employer
sells all or substantially all of its assets, (iii) Employer merges with another
entity in a transaction in which the Employer is not the surviving corporation,
or (iv) any person (as that term is used in Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) other than the
shareholders of Employer (as existing on the date hereof) becomes the Beneficial
Owner (as that term is used in Section 13(d) of the Exchange Act) directly or
indirectly of 50% or more of the Common Stock of Employer. Notwithstanding the
foregoing, vested options will be immediately forfeited, and will no longer be
exercisable, upon the termination of the Employee for "cause," as defined in
Section 2.
(f) Annual Merit Review. Annually, on or before August 15 of each year,
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Employer will conduct an annual review of Employee's performance under this
Agreement and, if deemed appropriate, implement adjustments to this Section 3
for such year.
(g) Severance Pay. If Employee's employment is terminated for any
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reason other than with cause or at Employee's election, during the Employment
Period, Employee shall receive a severance payment of Two Hundred Thousand
Dollars ($200,000), payable over the course of one (1) year, in equal monthly
installments of $16,666.67. If Employee's employment is terminated with cause or
at Employee's election, Employee shall not be entitled to any severance payment.
Section 4. Conditions of Employment. As conditions of his employment
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and in consideration of his employment, Employee covenants and agrees as
follows:
(a) that, during the Employment Period, he will devote his full time,
services and attention and best efforts to the performance of his duties and to
the promotion of the business and interests of Employer;
(b) that, during the Employment Period, and for a period of two (2) years
thereafter, he will not, without the prior written consent of the Board of
Directors of Employer, directly or indirectly, as a stockholder (except as a
stockholder owning beneficially or of record less than five percent (5%) of the
outstanding shares of any class of stock of any issuer listed on a national
securities exchange), or as an officer, director, manager, member, employee,
partner, joint venturer, proprietor or otherwise, engage in, become interested
in, consult with, lend to or borrow from, advise or negotiate for or on behalf
of, any business which is of the type in which Employer or any affiliate or
subsidiary of Employer (each an "Allin Entity") engages during the Employment
Period; provided that the prohibition contained in this subsection 4(b) shall
not apply to any business in which Employer or any other Allin Entity was
engaged during the Employment Period if, during the two year period thereafter,
Employer or such other Allin Entity permanently ceases to be engaged in such
business; further provided that if Employer defaults in the payment of amounts
due to Employee under the Promissory Note described in Section 2.1 of the Merger
Agreement, as amended by that certain Amendment to Merger Agreement dated
October __, 1998, and Employee is no longer employed by Employer at the time
that such default occurs, Employee shall be released from the provisions of this
Section 4(b);
(c) that, during the Employment Period, and for a period of two (2) years
thereafter, he will not solicit any customer of Employer or any customer of any
other Allin Entity, directly or indirectly, for the purpose of enticing such
customers to do business with anyone other than Employer or such other Allin
Entity;
(d) that, during the Employment Period, and for a period of two (2) years
thereafter, he will not solicit (or employ or cause to be employed other than by
Employer) other employees of Employer or any other Allin Entity, directly or
indirectly, for the purpose of enticing them to leave their employment with
Employer or any other Allin Entity;
(e) that, during the Employment Period and for a period of two (2) years
thereafter, he will not request or advise any individual or entity which is a
supplier or vendor of Employer or any other Allin Entity at any time during the
Employment Period, to withdraw, curtail or cancel any such supplier's or
vendor's business with Employer or such other Allin Entity;
(f) that, during the Employment Period and for a period of two (2) years
thereafter, he will make full and complete disclosure of the existence of this
Agreement and the content of this Section 4 to all prospective employers with
whom he may discuss possible employment;
(g) that, he will refrain from directly or indirectly disclosing, making
available or using or causing to be used in any manner whatsoever, any
information of Employer or any other Allin Entity of a proprietary or
confidential nature (including, without limitation, information regarding
inventions, processes, formulas, systems, plans, programs, studies, techniques,
"know-how," trade secrets, income or earnings, tax data, customer lists and
contracts to which Employer or any other Allin Entity is a party, but excluding
any such information which may be in the public domain through proper means)
and, upon termination of his employment, such information, to the extent that it
has been reduced to writing (including any and all copies thereof), together
with all copies of all forms, documents and materials of every kind, whether
confidential or otherwise, shall forthwith be returned to the Employer and shall
not be retained by Employee or furnished to any third party, either by sample,
facsimile or by verbal communication;
(h) that, he will refrain from any disparagement, direct or indirect,
through innuendo or otherwise, of Employer, any other Allin Entity, or any of
the employees, agents, officers, directors, shareholders or affiliates of
Employer or any other Allin Entity;
(i) that, during the Employment Period, he will not, without the prior
written consent in each case of the Board of Directors of Employer: (i)
participate actively in any other business interests or investments which would
conflict with his responsibilities under this Agreement, or (ii) borrow money
from, or lend to, customers (except those commercial institutions whose business
it is to lend money) or individuals or firms from which Employer or any other
Allin Entity buys services, materials, equipment or supplies, or with whom
Employer or any other Allin Entity does business;
(j) that, during the Employment Period, he will not, without the prior
written consent of the Board of Directors of Employer: (i) exchange goods,
products or services of Employer or any other Allin Entity in return for goods,
products or services of any individual or firm or (ii) accept gifts or favors
from any outside organization or agency which, individually or collectively, may
cause undue influence in his selection of goods, products or services for
Employer or any other Allin Entity;
(k) that, after the termination of his employment, he will not secure, or
attempt to secure, from any employee or former employee of Employer or any
affiliate or subsidiary of Employer, any information relating to Employer or any
affiliate or subsidiary of Employer or their business operations; and
(l) that he will promptly and voluntarily advise the Board of Directors of
Employer of any activities which might result in a conflict of interest with his
duties to Employer hereunder, and, further, will make such other and further
disclosures as Employer may reasonably request from time to time.
Employee represents and warrants to Employer that, notwithstanding the
operation of the covenants contained in this Section 4, upon the termination of
his employment hereunder, Employee will be able to obtain employment for the
purpose of earning a livelihood.
Section 5. Injunctive Relief. Because the services to be performed by
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Employee hereunder are of a special, unique, unusual, confidential,
extraordinary and intellectual character which character renders such services
unique and because Employee will acquire by reason of his employment and
association with Employer an extensive knowledge of the trade secrets,
customers, procedures, and other confidential information of Employer and the
other Allin Entities, the parties hereto recognize and acknowledge that, in the
event of a breach or threat of breach by Employee of any of the terms and
provisions contained in Section 4 or Section 7 of this Agreement, monetary
damages alone to Employer or another Allin Entity would not be an adequate
remedy for a breach of any of such terms and provisions. Therefore, it is
agreed that in the event of a breach or threat of a breach of any of the
provisions of Section 4 or Section 7 of this Agreement by Employee, Employer and
the other Allin Entities shall be entitled to an immediate injunction from any
court of competent jurisdiction restraining Employee, as well as any third
parties including successor employers of Employee whose joinder may be necessary
to effect full and complete relief, from committing or continuing to commit a
breach of such provisions without the showing or proving of actual damages. Any
preliminary injunction or restraining order shall continue in full force and
effect until any and all disputes between the parties to such injunction or
order regarding this Agreement have been finally resolved. Employee hereby
agrees to pay all costs of suit incurred by Employer or any other Allin Entity,
including but not limited to reasonable attorneys' fees, in obtaining any such
injunction or order. Employee hereby waives any right he may have to require
Employer or any other Allin Entity to post a bond or other security with respect
to obtaining or continuing any such injunction or temporary restraining order
and, further, hereby releases Employer, the other Allin Entities and the
officers, directors, employees and agents of any of the foregoing from, and
waives any claim for damages against them which he might have with respect to
Employer or any other Allin Entity obtaining in good faith any injunction or
restraining order pursuant to this Agreement.
Section 6. Absence of Restrictions. Employee hereby represents and
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warrants that he has full power, authority and legal right to enter into this
Agreement and to carry out his obligations and duties hereunder and that the
execution, delivery and performance by Employee of this Agreement will not
violate or conflict with, or constitute a default under, any agreements or other
understandings to which Employee is a party or by which he may be bound or
affected, including, but not limited to, any order, judgment or decree of any
court or governmental agency.
Section 7. Patents and Inventions. Employee will promptly submit to
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Employer written disclosures of all inventions, improvements, discoveries and
new ideas, relating to the business of Employer or any other Allin Entity,
whether or not patentable (hereinafter called "Inventions"), which are made or
conceived by Employee, alone or jointly with others, during the Employment
Period. Title to all such Inventions that shall be within the existing or
contemplated scope of the business of Employee or another Allin Entity at the
time such Inventions are made or conceived or which result from or are suggested
by any work Employee or others may do for or on behalf of Employer or any other
Allin Entity, together with such patent, patents or other legal protection as
may be obtained thereon in the United States of America and all foreign
countries, shall belong to Employer. Employee will assign any rights or interest
in such title to Employer, and upon the request of Employer, will at any time
during the Employment Period and after termination of Employee's employment for
any reason, execute all proper papers for use in applying for, obtaining,
maintaining and enforcing such patents or other legal protection as Employer may
desire and will execute and deliver all proper assignments thereof, when so
requested, without remuneration but at the expense of Employer.
Section 8. General.
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(a) Interpretation. If the provisions of Section 4 of this Agreement
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should be held to be invalid, illegal or unenforceable by a court of competent
jurisdiction because of the time limitation or geographical area therein
provided, such provisions shall nevertheless be effective and enforceable for
such period of time and/or such geographical area as may be held to be
reasonable by such court. Any provision of this Agreement that is invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without invalidating or rendering unenforceable the remaining provisions of this
Agreement, and any such invalidity, illegality or unenforceability shall not, of
itself, affect the validity, legality or enforceability of such provision in any
other jurisdiction.
(b) Notices. In any case where any notice or other communication is to be
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given or made pursuant to any provision of this Agreement, such notice or
communication shall be deemed to be delivered when actually received on the date
specified in the return receipt for a notice or communication mailed by
registered or certified mail, postage prepaid, addressed as follows:
If to Employer:
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Allin Communications Corporation
000 Xxxxxxxxx Xxxxxxx
000 Xxxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
with copies to:
Xxxxx X. Xxxxxxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
If to Employee:
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Xx. Xxx Xxxx
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or such other address or addresses as any party may specify by notice to the
other party given as herein provided.
(c) Headings. The headings in this Agreement are inserted for
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convenience and identification and in no way describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof.
(d) No Presumption on Interpretation. Nothing herein shall be construed
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more strongly against or more favorably toward either party by reason of either
party having drafted this Agreement or any portion hereof.
(e) Binding Effect. This Agreement shall be binding upon, and inure to
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the benefit of, the parties hereto and their respective heirs, beneficiaries,
executors, administrators, personal representatives, successors and permissible
assigns.
(f) Integration. This Agreement constitutes and contains the entire
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Agreement and understanding between the parties with respect to the subject
matter hereof and supersedes any and all prior agreements, if any,
understandings and negotiations relating thereto. No promise, understanding,
representation, inducement, condition or warranty not set forth herein has been
made or relied upon by any party hereto.
(g) Waivers; Modification. This Agreement, or any provision hereof, may
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be amended, supplemented or modified only by a writing signed by both parties
and may be waived only by a writing signed by the party to be bound thereby. A
written waiver of any provision shall be valid only in the instance for which
given and shall not be deemed to be a continuing waiver or construed as a waiver
of any other provisions.
(h) Governing Law. This Agreement shall be construed in accordance with
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and governed in all respects by the laws of the Commonwealth of Pennsylvania
(without giving effect to the conflicts of laws provisions thereof).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ALLIN COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name Printed: Xxxxxxx X. Xxxxxxxx
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Title: Chairman of the Board and
Chief Executive Officer
/s/ Xxx Xxxx
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Xxx Xxxx