Exhibit 10.3
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I-LINK INCORPORATED
EMPLOYMENT AGREEMENT
Xxxx X. Xxxx, Senior Vice President
Chief Operating Officer and
Acting Chief Financial Officer
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between I-LINK INCORPORATED, a Florida corporation with its principal place of
business located at 00000 Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx,
Xxxx 00000 (the "Company"), and XXXX X. XXXX ("Employee"), effective this 3rdth
day of January, 2000;
RECITALS
WHEREAS, the Company, itself and through its subsidiaries, is in the
business of developing, marketing and providing telephony and communications
products and services; and
WHEREAS, Employee has acknowledged skills and experience in managing
corporate operations and corporate finances; and
WHEREAS, the Company desires to obtain the benefit of Employee's
knowledge, skills, and experience and assure itself of the ongoing right to
Employee's services from and after the date hereof, and is willing to do so on
the terms and conditions set forth in this Agreement; and
WHEREAS, Employee is willing and able to render services to the
Company, from and after the date hereof, on the terms and conditions set forth
in this Agreement;
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions, and covenants contained in this Agreement, the Company
and Employee hereby agree as follows:
1. Employment.
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(a) Title and Duties of Employee. Subject to all of the terms and
conditions herein provided, the Company hereby employs Employee in the position
of Senior Vice President, Chief Operating Officer, and Acting Chief Financial
Officer, and Employee hereby
accepts such employment with the Company. Employee's duties shall consist of
those generally associated with his title, as well as those duties assigned to
him from time-to-time by the Company, consistent with Employee's position and
qualifications and the best interests of the Company. Employee shall at all
times be subject to and shall observe and carry out such reasonable rules,
regulations, policies, directions, and restrictions as may be established from
time-to-time by the Company.
(b) Performance. Throughout the Employment Term, Employee shall
devote his full business time, attention, knowledge, and skills, faithfully
diligently, and to the best of his ability, to the active performance of his
duties and responsibilities hereunder, and do such traveling as may reasonably
be required in connection with the performance of such duties and
responsibilities.
2. Term of Employment. Unless terminated as provided in Section
5 hereof, the term of this Agreement shall be for a period of three (3) years,
commencing on the date hereof and continuing through and including the day
immediately preceding the second anniversary of the date hereof (the "Initial
Period"), and thereafter shall automatically continue on a year-to-year basis
(including the Initial Period, the "Employment Term") unless either party shall
deliver written notice to the other party not more than sixty (60), nor less
than thirty (30), days preceding the expiration of the Initial Period or any
one-year extension thereof of its intention not to extend the term of this
Agreement.
3. Compensation and Benefits.
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(a) Salary. For services rendered by Employee to the Company and
upon the conditions that Employee fully and faithfully performs all of his
duties and obligations owed during the Employment Term under this Agreement, the
Company shall pay Employee an annual base salary equal to $165,000, payable in
equal semi-monthly installments, less income tax withholdings and other normal
employee deductions. This base salary set forth herein shall be reviewed
annually by the Company at the end of each fiscal year of the Company (hereafter
"Fiscal Year") (with the first such review to occur after the Fiscal Year ending
December 31, 2000, with respect to base salary for the Fiscal Year ending
December 31, 2001), or at such other times as deemed appropriate by the Company,
and may at the sole discretion of the Company, be adjusted by an amount which it
deems appropriate, provided that said base salary shall not be less than
$165,000.
(b) Bonus Compensation. Employee shall be eligible to receive such
bonus compensation, if any, as and when determined by the Company's board of
directors commensurate with Employee's position as a Senior Vice President.
(c) Stock Options. The Company grants to Employee non-qualified
options to purchase 300,000 shares of its common stock at an exercise price of
$2.750 per common
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share, which is equal to the closing price of the Company's publicly traded
shares as of the effective date of this Agreement (the "Options"). To the extent
any number of the Options are required to be subject to the vote of the
Company's shareholders under applicable law, rule or regulation, such number of
Options are granted subject to ratification by the Company's shareholders at its
next annual shareholders' meeting. The Options shall vest in twelve equal
quarterly increments over a three-year period, with the first quarterly vesting
to occur on the effective date of this Agreement for that partial quarter ended
March 31, 2000, the second quarterly vesting to occur on April 1, 2000, and
similarly on the first day of each subsequent calendar quarter with the final
quarterly vesting to occur October 1, 2002. A change of control of the Company
shall not accelerate vesting of the Options, except in the event of a change of
control pursuant to which the Company's stock is exchanged for the stock of
another entity and the Options are not rolled-over or otherwise exchanged for
similar options of such entity (with like terms and conditions). In such event
all of Employee's then unvested Options shall vest and be exercisable
immediately prior to the consummation of such transaction. It is the intent of
the parties that the Options continue to vest on a quarterly basis according to
their terms notwithstanding a change of control, without being subject to loss
or forfeiture by virtue of a change of control. The Option grant shall be
evidenced by a written Option Agreement, the terms of which shall be consistent
with the terms of this Agreement. The Company's Board of Directors, at their
sole discretion, shall determine what number of additional stock options, if
any, shall be granted to Employee, and upon what terms.
(d) Benefits. During the Employment Term, Employee shall be
eligible to participate in and receive coverage and benefits under all group
insurance, executive life insurance, pension, profit-sharing, bonus, stock
option, stock ownership, and other employee benefit plans, programs, and
arrangements of the Company which are now or hereafter adopted by the Company
for the benefit of its employees, subject to and on a basis consistent with the
terms, conditions, and overall administration of such plans, programs, and
arrangements.
(e) Expense Reimbursement. The Company shall reimburse Employee
for the business expenses reasonably incurred by Employee within the scope of
his employment, pursuant to standard employee expense reimbursement policy and
procedure as established by the Company.
(f) Severance. In the event this Agreement is terminated by the
Company prior to the expiration of the full term of this Agreement for any
reason other than for cause pursuant to Section 5(b) below, Employee shall be
entitled to receive upon such termination a lump sum equal to Employee's salary
payable over twelve (12) months, together with the immediate accelerated vesting
of all the Options.
4. Compensation Upon Termination or During Disability.
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(a) Compensation Upon Termination. If Employee's employment
hereunder is terminated under Section 5 hereof, Employee shall be entitled to
exercise, pursuant to the
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terms and conditions of the Option Agreement, the Options that shall have vested
as of the date of such termination, and the Company shall have no further
liability under this Agreement except (i) to pay Employee within ten days of the
Date of Termination any accrued salary or other compensation due under this
Agreement on the Date of Termination (or in the event of Employee's subsequent
death, to his estate or devisee, legatee, or other designee, as applicable), and
(ii) provide Employee, or his estate, or devisee, legatee, or other designee,
with any benefits payable (including any death benefit, if applicable) under all
employee benefit plans, programs, or arrangements of the Company in which
Employee is a participant on the Date of Termination.
(b) Compensation Upon Disability. During any period that Employee
fails to perform his duties hereunder as a result of incapacity due to a
"disabled condition," as such term is defined in Section 5(c) hereof (the
"disability period"), Employee shall continue to receive his full base salary at
the rate then in effect for the disability period until Employee's employment
hereunder is terminated pursuant to Section 5(c) hereof; provided, however, that
such salary payments so made to Employee during the first 180 days of the
disability period shall be reduced by the sum of the amounts, if any, actually
received by Employee prior to or during this period, as the result of such
incapacity, under any disability benefit plan of the Company in which Employee
participates.
5. Termination.
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(a) By Employee. This Agreement may be terminated by Employee at
any time upon sixty (60) days written notice to the Company. In the event of
such termination by Employee, Employee shall be entitled to exercise, pursuant
to the terms of this Agreement and the Option Agreement, the Options that shall
have vested as of the date of such termination, and the Company shall have no
further obligation to Employee beyond the timely payment of all salary and bonus
(if any) accrued through the date of such termination.
(b) Cause. This Agreement may be terminated at any time at the
option of the Company for cause. As used herein, the term "cause" shall mean and
be limited to: (i) any felony conviction of Employee; (ii) Employee's willful
misconduct or failure to reasonably perform in connection with the performance
of Employee's duties, responsibilities, agreements, and covenants hereunder, or
Employee's refusal to comply with the reasonable rules, regulations, policies,
directions, and restrictions as may be established from time-to-time by the
Company, which misconduct, non-performance, or refusal to so comply shall
continue after written notice from the Company, such notice to specify the
respects in which Employee is in violation; (iii) Employee's breach of the
provisions of Sections 6 and 8 hereof; (iv) any illegal use by Employee of
narcotics or other controlled substances; or (v) Employee's inability to perform
his duties and responsibilities hereunder due to the issuance of an injunction
or restraining order, which is not rescinded within 45 days of issuance.
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(c) Death. This Agreement shall terminate automatically upon the
death of Employee.
(d) Disability. In the event Employee becomes mentally or
physically disabled during the Employment Term, Employee's employment hereunder
shall terminate as of the date such disability is "established." As used in this
Subsection, the term "disabled" means suffering from any mental or physical
condition, other than that resulting from the use of alcohol or illegal use of
narcotics or other controlled substances, which renders Employee unable to
substantially perform all of his duties and services under this Agreement in a
satisfactory manner substantially similar to his previous performance (a
"disabled condition") for a period of one hundred twenty (120) consecutive days
or for more than one hundred twenty (120) days in any 12-month period. For
purposes of this Subsection, the date that Employee's disability is
"established" shall be, in the case of a disabled condition which exists for a
period of 120 consecutive days, the 121st day on which such disabled condition
exists, and, in the case of a disabled condition existing for more than 120 days
in any 12-month period, the 121st day on which such disabled condition exists.
(e) Impaired Health. Employee may terminate his employment
hereunder if his health should become impaired to an extent that makes his
continued performance of his duties and obligations hereunder hazardous to his
physical or mental health or his life ("impaired health"), provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and, provided further, that, at the Company's
request, Employee shall submit to an examination by a doctor selected by the
Company and such doctor shall have concurred in the conclusion of Employee's
doctor.
(f) Reassignment, Relocation. This Agreement shall, at the option
of the Employee, be deemed to have been terminated by the Company in the event
of any of the following (i) without Employee's express written consent, the
assignment to Employee of any duties or the significant reduction of Employee's
duties, title, authority, or responsibilities, which is inconsistent with
Employee's duties, title, authority, or responsibilities in effect immediately
prior to such assignment, or the removal of Employee from such duties, title,
authority, or responsibilities; excepting, however, from the provisions of this
Subsection (f)(i) Employee's current title, authority and responsibilities as
Acting Chief Financial Officer, which the Company may at its discretion reassign
away from Employee without such being deemed a termination; or (ii) without
Employee's express written consent, the relocation of Employee to a facility or
a location more than forty-five (45) miles from Employee's then-present
location.
(g) Notice of Termination. Any termination of Employee's
employment hereunder by the Company or by Employee (other than termination
pursuant to Section 5(b) (death)) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment hereunder under the Section and Subsection
so indicated.
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(h) Date of Termination. "Date of Termination" shall mean the
following: if Employee's employment hereunder is terminated by (i) Sections 5(a)
(Employee), 5(b) (cause), 5(d) (disability), or 5(e) (impaired health), the date
specified in the Notice of Termination; (ii) 5(c) (death), the date of
Employee's death; and (iii) Section 5(f) (Reassignment, Relocation) 30 days
after delivery of the Notice of Termination; and (iv) for any other reason, the
date on which the Notice of Termination is given.
6. Confidential Information.
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(a) Disclosure and Use. Employee shall not disclose or use at any
time, either during or subsequent to the Employment Term, any trade secrets or
other confidential information, whether or not patentable, of the Company or any
other direct or indirect parent or subsidiary of the Company (collectively
referred to herein as the "Company"), including but not limited to, information
and lists relating to customers, suppliers, or independent sales
representatives, compensation of employees or independent sales representatives,
products and product pricing, technical or non-technical data, programs,
devices, methods, techniques, drawings, processes, or financial data, of which
Employee is or becomes informed or aware during the Employment Term, whether or
not developed by Employee, except (i) as may be required for Employee to perform
Employee's employment duties with the Company, (ii) to the extent such
information has been disclosed to Employee by a third party who is not subject
to restriction on the dissemination of such information or becomes generally
available to the public through no wrongful act of Employee, (iii) information
which must be disclosed as a result of a subpoena or other legal process, after
the Company has had the opportunity to request a suitable protective order for
such information, or (iv) unless Employee shall first secure the Company's prior
written authorization. This covenant shall survive the termination of Employee's
employment hereunder, and shall remain in effect and be enforceable against
Employee for so long as any such Company secret or confidential information
retains economic value, whether actual or potential, from not being generally
known to other persons who can obtain economic value from its disclosure or use.
Employee shall execute such reasonable further agreements and/or confirmations
of Employee's obligations to the Company concerning non-disclosure of Company
trade secrets and confidential information as the Company may reasonably require
from time-to-time.
(b) Return of Materials. Upon termination of Employee's employment
hereunder, Employee shall promptly deliver to the Company all customers lists,
specifications, drawings, listings, documentation, manuals, letters, notes,
notebooks, reports, and copies thereof, and all other materials of a secret or
confidential nature relating to the Company's business, which are in the
possession or under the control of Employee.
7. Inventions and Discoveries.
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(a) Disclosure of Employment Invention. Employee agrees for
himself and his heirs, executors, and administrators that Employee will, without
further consideration, disclose immediately to a person designated by the
Company as its agent to receive such disclosures each and every discovery,
invention, part thereof or improvement thereon, or works of authorship, as
defined below ("Employment Invention") which Employee may conceive, develop,
reduce to practice, or create, either solely or jointly with others, which is:
(i) conceived, developed, reduced to practice or created (a)
within the scope of Employee's employment, or (b) on the Company's
time, or (c) with the aid, assistance, or use of any of the Company's
property, equipment, facilities, supplies, resources, or intellectual
property; or
(ii) the result of any work, services, or duties performed by
Employee for the Company; or
(iii) related to the current or demonstrably anticipated
business, research, or development of the Company.
(b) Assignment of Employee Invention. Employee hereby irrevocably
assigns to the Company all of Employee's entire rights, title, interest, and
Intellectual Property in and to the Employment Inventions referred to in Section
7(a), and will upon request and without further consideration do everything
reasonably necessary or required to vest in the Company Employee's entire right,
title, interest, and Intellectual Property in and to such Employment Inventions
including executing all instruments and documents and performing all acts
reasonably necessary or required for making, filing, or presenting any
applicable for the benefit of the Company for Letters Patent or Copyrights in
the United States or throughout the world for such Employment Inventions and
executing assignments of such patents or applications thereof for the Company.
(c) Definitions. As used herein, "Intellectual Property" means any
and all patents, trade secrets, know-how, technology, confidential information,
ideas, copyrights, trademarks, and service marks and any and all rights,
applications, and registrations relating to them. "Works of authorship" mean any
original work of authorship within the purview of the copyright laws of the
United States, and both parties agree that all works of authorship created by
Employee under Section 7(a) shall be works for hire within the meaning and
purview of such copyright laws.
(d) Exclusions. The foregoing provisions of Sections 7(a) and 8(b)
do not apply to any invention not included in Section 7(a) as an Employment
Invention and created by Employee entirely on his own time and with his own
resources.
(e) Recordkeeping. Employee agrees to keep and maintain, or assist
in keeping and maintaining, such records (such as laboratory notebooks properly
and periodically witnessed and understood) as will show the conception,
reduction to practice and operation of
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all Employment Inventions, as well as such other records as the Company may
request, which records shall be and remain the property of and available to, the
Company.
8. Restrictive Covenant.
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(a) Restriction on Competition During Employment Term. So long as
Employee is employed by the Company, Employee shall not, without the prior
written authorization of the Company, directly or indirectly render services of
a business, professional or commercial nature (whether for compensation or
otherwise) to any person or entity engaged in any business which competes either
directly or indirectly with the Company (a "Competitive Business") during the
Employment Term, or engage in any activity whether along, as a partner, or as an
officer, director, employee, consultant independent contractor, or stockholder
in any Competitive Business. Notwithstanding the foregoing, this section shall
not prevent Employee from purchasing an equity interest in any Competitive
Business as a strictly passive investment and which does not comprise more than
Five Percent (5%) of such Competitive Business's then-outstanding stock.
(b) Restriction on Competition Following Termination. During the
twelve-month period following the applicable Date of Termination (the
"Non-Compete Period"), Employee shall not:
(i) engage in business as, or own an interest in, directly or
indirectly, any individual proprietorship, partnership, corporation,
joint venture, trust, or any other form of business entity that is a
Competitive Business, whether as an individual proprietor, partner,
shareholder, joint venturer, officer, director, consultant, finder,
broker, employee, trustee, or in any other manner whatsoever if such
entity, within any state, province, country or other jurisdiction in
which the Company markets and sells its products and services, develops
and/or markets products and/or services that either directly or
indirectly compete with the Company's products and/or services in
existence or that Employee has actual knowledge are being actively
developed by the Company at the commencement of the Non-Compete Period;
or
(ii) attempt in any manner to solicit from any customer
business of the type performed by the Company or to persuade any
customer of the Company to cease doing business or to reduce the amount
of business which any such customer has customarily done or
contemplates doing with the Company, whether or not the relationship
between the Company and such customer was originally established in
whole or in part through Employee's efforts; or employ or attempt to
employ or assist anyone else to employ an person who is at such time,
or at any time during the preceding six months was, an employee or
independent sales representative of or consultant to the Company,
provided that this clause shall not restrict Employee from employing a
third-party vendor who supplies generic services to the industry.
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As used in this Section 8, the verb "employ" shall include its variations, for
example, retain, engage, or conduct business with; the term the "Company" shall
include subsidiaries, a parent, or affiliates, if any, of the Company; and the
term "customer" shall mean anyone who is a customer of the Company as of the
date immediately prior to or at any time during the Non-Compete Period.
Notwithstanding the foregoing, nothing in this Section 8 shall limit Employee's
ability during the Non-Compete Period to seek employment by a Competitive
Business if Employee refrains from providing services of any kind to said
Competitive Business until the expiration of the Non-Compete Period. So long as
Employee fulfills the performance obligations contained in Section 1(b), nothing
in this Agreement shall limit or prevent Employee, during the Employment Term
and thereafter during the Non-Compete Period, from engaging in business as, or
own an interest in, directly or indirectly, any individual proprietorship,
partnership, corporation, joint venture, trust, or any other form of business
entity, whether as an individual proprietor, partner shareholder, joint
venturer, officer, director, consultant, finder, broker, employee, trustee, or
in any other manner whatsoever if such entity does not market products and/or
services performing substantially the same functions as the Company's products
and/or services in existence or that Employee has actual knowledge are being
actively developed by the Company both during the Employment Term and at the
commencement of the Non-Compete Period.
(c) Acknowledgment. The parties acknowledge that the time, scope,
geographic area, and other provisions of this Agreement have been specifically
negotiated by the parties and agree that all such provisions are reasonable
under the circumstances and are given as an integral and essential part of
Employee's employment hereunder. In the event that any covenant contained in
this Agreement shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period of time or over
too great a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over a maximum period of
time for which it may be enforceable and/or over the maximum geographical area
as to which it may be enforceable and/or to the maximum intent in all other
respects as to which it may be enforceable, all as determined by such court in
such action.
9. Severability. If any provision of this Agreement is held invalid
or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render same valid, or not applicable to
given circumstances, or excised from this Agreement, as the situation may
require, and this Agreement shall be construed and enforced as if such provision
had been included herein as so modified in scope or application, or had not been
included herein, as the case may be. Should this Agreement, or any one or more
of its provisions hereof, be held to be invalid, illegal, or unenforceable
within any governmental jurisdiction or subdivision thereof, the Agreement or
any such provision or provisions shall not as a consequence thereof be deemed to
be invalid, illegal, or unenforceable in any other governmental jurisdiction or
subdivision thereof.
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10. Enforcement. The Company will be entitled to institute proceedings
and avail itself of all remedies at law or in equity to recover damages
occasioned by a breach or threatened breach by the other party of any of the
provisions herein and shall have the right to pursue one or more of such
proceedings and remedies simultaneously or from time-to-time. Employee hereby
acknowledges that the Company would suffer irreparable injury if the provisions
of Sections 6 through 8 above, which shall survive the termination of the
Agreement, were breached and that the Company's remedies at law would be
inadequate in the event of such breach. Accordingly, Employee hereby agrees that
any such breach or threatened breach may, in addition to any and all other
available remedies, be preliminarily enjoined by the Company.
11. Legal Fees and Expenses. In the event of litigation under this
Agreement, each of the Company and Employee shall pay its own attorneys' fees
and expenses.
12. Non-Assignability. In light of the unique personal services to be
performed by Employee hereunder, it is acknowledged and agreed that any
purported or attempted assignment or transfer by either party of this Agreement
or any of Employee's duties, responsibilities, or obligations hereunder shall be
void, and if purported or attempted by the Company, shall be considered a
termination without cause by the Company under Paragraph 5(c).
13. Notices. Any notice, request, demand, or other communication
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally or when mailed by certified
mail, return-receipt requested, addressed as follows:
To the Company: I-Link Incorporated
13751 So. Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, CEO
To Employee: Xxxx X. Xxxx
0000 X. Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address or addresses as may be specified from time-to-time by
notice; provided, however, that any notice of change of address shall not be
effective until its receipt by the party to be charged therewith.
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14. General.
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(a) Amendments. neither this Agreement nor any of the terms or
conditions hereof may be waived, amended, or modified except by means of a
written instrument duly executed by the party to be charged therewith.
(b) Captions and Headings. The captions and paragraph headings
used in this Agreement are for convenience of reference only, and shall not
affect the construction or interpretation of this Agreement or any of the
provisions hereof.
(c) Successors and Assigns. This Agreement and Employee's duties
and rights hereunder shall not be assignable by Employee. This Agreement and the
Company's duties and rights hereunder shall be assignable in the event of a
merger, acquisition or other bona fide business reorganization to which the
Company is a party. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors, and permitted assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(e) Entire Agreement. Except as otherwise set forth or referred to
in this Agreement, this Agreement constitutes the sole and entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior discussions, agreements, and understandings of every kind
and nature between them as to such subject matter.
(f) Reliance by Third Parties. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors, and permitted
assigns, and no other person or entity shall have any right to rely on this
Agreement or to claim or derive any benefit therefrom absent the express written
consent of the party to be charged with such reliance or benefit.
(g) Governing Law. This Agreement shall be construed in accordance
with governed by the laws of the State of Utah.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the date first set forth above.
I-LINK INCORPORATED
By:
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Xxxx X. Xxxxxxx, CEO
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XXXX X. XXXX
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