Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
1st day of December 1998, by and between, XxxxxxxXxxxxx.xxx, Inc., a Delaware
corporation (the "Company") and S. Xxxxx Xxxxxx, an individual with a mailing
address at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
INTRODUCTION
The Company is in the business of acquiring internet service provider
businesses. Employee possesses skills and knowledge advantageous to the Company.
The Company desires to employ Employee and Employee desires to accept such
employment on the terms and conditions set forth herein.
AGREEMENT
In consideration of the premises and mutual promises hereinbelow set
forth, the parties hereby agree as follows:
1. EMPLOYMENT; TITLE. Subject to the terms and conditions set
forth herein, the Company hereby employs Employee, on a full-time basis, to act
as Executive Vice President of the Company during the Employment Period (as
defined below), and to perform such acts and duties and furnish such services to
the Company in connection with and related to that position as is customary for
persons with similar positions in like companies, as the Company's President
shall from time to time reasonably direct. Employee hereby accepts such
employment and agrees to perform such acts, duties and services for the Company
diligently, competently, and in good faith manner.
2. EMPLOYMENT PERIOD. Subject to earlier termination pursuable to
SECTION 4 and SECTION 5 below, this Agreement shall commence on the date hereof
and continue for a one (1) year period (the "Employment Period"). Thereafter,
this Agreement shall automatically renew for additional one (1) year periods
unless the Company gives the Employee ninety (90) days written notice of its
intention not to renew prior to the end of the then current one (1) year term.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. During the Employment Period, the Company agrees
to pay Employee at the rate of $80,000 per annum ("Base Salary"). Employee's
salary shall be subject to customary withholdings and be payable to Employee on
the regularly occurring pay period established time to time by the Company.
3.2 HEALTH BENEFITS. During the Employment Period, the
Company shall provide Employee with family health care coverage, as provided by
health care provider(s) selected by the Company from time to time.
3.3 RETIREMENT PLAN. During the Employment Period, Employee
shall be entitled to participate in any 401(k) or similar profit sharing plan
hereafter adopted by the Company for the benefit of its employees. The Company
reserves the right to modify, terminate or withdraw any such plan (if so
adopted) at any time in its sole discretion.
3.4 VACATION. Employee may take up to three (3) weeks paid
vacation in each calendar year during the Employment Period.
3.5 AUTOMOBILE. During the Employment Period, the Company
will reimburse Employee for all reasonable expenses related to business use of
Employee's automobile by Employee at the applicable Internal Revenue Service
mileage allowance rate.
3.6 REIMBURSEMENT OF EXPENSES. The Company shall reimburse
Employee for all other reasonable expenses in connection with Employee's duties
hereunder and the promotion of the Company's business in general, upon
presentation by Employee of appropriate supporting documentation.
3.7 [Intentionally omitted]
3.8 SEVERANCE PAYMENTS.
3.8.1 TERMINATION BY THE COMPANY. In the event the
Company terminates this Agreement pursuant to Section 5 (Termination Without
Cause), the Company shall, prior to the effective date of the termination, pay
Employee, in one lump sum, an amount equal to (a) 1.0 times Employee's Base
Salary, at his then current rate, less applicable taxes, if termination shall
occur prior to a "Change in Control" or an "Approved Change in Control" (both as
hereinafter defined) or subsequent to an Approved Change in Control, or (b) 1.5
times Employee's annual salary, at his then current rate, less applicable taxes,
if termination shall occur after a Change in Control. The Company shall also pay
Employee's health insurance benefits at described in SECTION 3.2 for a period of
one year in the event of termination pursuant to SECTION 5, and in the event of
a Change in Control, any options granted to Employee shall become fully vested
as of such date of termination in connection with such Change of Control.
3.8.2 DEFINITIONS.
(a) CHANGE IN CONTROL. A "Change in Control"
shall be deemed to have occurred in any of the following events:
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(i) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than (a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" or group (as such terms are defined in Section 13(d)(3) of
the Securities Exchange Act of 1934) acquires more than 30% of the combined
voting power of the Company's then outstanding securities, or (c) a
reorganization pursuant to which the Company creates a holding company for
itself in which the stockholders of the Company immediately prior to the
reorganization (other than those exercising dissenters' rights) become the
stockholders of the holding company immediately after the reorganization; or
(ii) the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the Company's
assets; or
(iii) as a result of or in connection with
any cash tender offer, merger, or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who were
directors of the Company just prior to such event shall cease to constitute a
majority of the Board; or
(iv) when any "person" or "group" (as such
terms are defined in Section 13(d)(3) of the Securities Exchange Act of 1934)
becomes a "beneficial owner" (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities of the
Company representing forty percent (40%) or more of the total number of votes
that may be cast for the election of directors of the Company; or
(v) the closing of a transaction or series
of transactions in which more than 50% of the voting power of the Company is
transferred; or
(vi) a tender offer or exchange offer for
the common stock of the Company, other than one made by the Company or by a
person or group (as such terms are defined in Section 13(d)(3) of the Securities
Exchange Act of 1934) that on the date hereof holds more than 5% of the
outstanding shares of the Company entitled to vote for the election of
directors, where the offeror acquires more than 40% of the outstanding shares of
common stock of the Company.
(b) APPROVED CHANGE IN CONTROL. An "Approved
Change in Control" of the Company shall mean a Change in Control that is
approved by a majority of the Company's Board of Directors.
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4. TERMINATION FOR CAUSE; DISABILITY
4.1 TERMINATION FOR CAUSE. The Company may discharge
Employee and terminate his employment under this Agreement for cause without
further liability to the Company by a majority vote of the Board of Directors of
the Company, except that Employee, if a Director, shall not be entitled to vote
thereon. As used in this Section 4.1, "cause" shall mean any or all of the
following: (i) gross or willful misconduct of Employee during the course of his
employment; (ii) conviction of a felony or any criminal offense involving
dishonesty, breach of trust or moral turpitude during the Employment Period; or
(iii) Employee's breach of any of the material terms of this Agreement.
4.2 DISABILITY. If during the Employment Period, Employee
shall become ill, disabled or otherwise incapacitated so as to be unable to
perform his usual duties (a) for a period in excess of one hundred twenty (120)
consecutive days or (b) for more than one hundred eighty (180) days in any
consecutive twelve (12) month period, then the Company shall have the right to
terminate this Agreement without further liability on thirty (30) days' prior
notice to Employee.
5. TERMINATION WITHOUT CAUSE. Upon ninety (90) days prior written
notice, the Company may terminate this Agreement without cause and without
further liability to the Company except as set forth in SECTION 3.8 by a
majority vote of the Board of Directors except that Employee, if a Director,
shall not be entitled to vote thereon.
6. CONFIDENTIALITY AND NON-DISCLOSURE. Employee recognizes and
acknowledges that during the Employment Period he will have access to certain
confidential information relating to the Company and its affiliates, including,
but not limited to, operational policies, financial information, marketing
information, personnel information, trade secrets, customer information
(including customer lists), and pricing and cost policies, that are valuable,
special and unique assets of the Company (collectively, "Confidential
Information"). Employee agrees that he will not use or disclose such
Confidential Information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except as is required in the course
of performing his duties hereunder unless (i) such information becomes known to
the public generally through no breach by Employee of this covenant or (ii)
disclosure is required by law or any governmental authority or is required in
connection with the defense of a lawsuit against the disclosing party, provided,
that prior to disclosing any information pursuant to this clause (ii), Employee
shall give prior written notice thereof to the Company and provide the Company
with the opportunity to contest such disclosure. Employee agrees that, both
during the Employment Period and for a period of twelve (12) months after the
termination of this Agreement, Employee will hold in a fiduciary capacity for
the benefit of the Company, and shall not directly or indirectly use or
disclose, except as authorized by the Company in connection with the performance
of Employee's duties, any Confidential Information, that Employee may have or
may acquire (whether or not developed or compiled by Employee and whether or not
Employee has been authorized to have access to such Confidential Information)
during the
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term of this Agreement. The covenants contained in this SECTION 6 shall survive
for the Employment Period and for a period of twelve (12) months thereafter;
provided, however, that with respect to those items of Confidential Information
which constitute trade secrets under applicable law, Employee's obligations of
confidentiality and non-disclosure as set forth in this SECTION 6 shall continue
to survive after the applicable period above to the greatest extent permitted by
applicable law. These rights of the Company are in addition to those rights the
Company has under the common law or applicable statutes for the protection of
trade secrets.
7. NON-COMPETITION. Employee expressly covenants and agrees that
for the Employment Period and for a period of twelve (12) months thereafter, he
shall not, directly or indirectly, seek, obtain or accept a "Competitive
Position" in the "Restricted Territory" with a "Competitor" of the Company (as
such terms are hereafter defined). For purposes of this Agreement, a
"Competitor" of the Company means any business, individual, partnership, joint
venture, association, firm, corporation or other entity engaged, wholly or
partly, in the business of selling internet access service; the "Restricted
Territory" means each state of the United States of America in which the Company
and/or its affiliates transacts business during the Employment Period; a
"Competitive Position" means any employment with any Competitor of the Company
whereby Employee will use or is likely to use any Confidential Information, or
whereby Employee has duties for such Competitor that are the same or
substantially similar to those actually performed by Employee pursuant to the
terms hereof. Nothing contained in this SECTION 7 is intended to prevent
Employee from investing in stock or other securities listed on a national
securities exchange or actively traded on the over the counter market or any
corporation engaged, wholly or partly, in the sale of telecommunications
products or services; provided, however, that Employee and members of his
immediate family shall not, directly or indirectly, hold more than a total of
three percent (3%) of all issued and outstanding stock or other securities of
any such corporation.
8. NON-SOLICITATION.
8.1 NON-SOLICITATION OF CUSTOMERS. Employee agrees that he
will not take any customer lists of the Company after leaving his employ and
that he will, for the Employment Period and for a period of twelve (12) months
thereafter, refrain from soliciting or attempting to solicit directly or by
assisting others, any business from any of the Company's customers, including
actively sought prospective customers, with whom Employee had "material contact"
during the employment for purposes of providing products or services.
8.2 NON-SOLICITATION OF EMPLOYEES. Employee agrees that he
will, for the Employment Period and for a period of twelve (12) months
thereafter, refrain from recruiting or hiring, or attempting to recruit or hire,
directly or by assisting others, any other employee of the Company who is
employed by the Company or any successor or affiliate of the Company.
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9. TOLLING OF PERIOD OF RESTRAINT. Employee hereby expressly
acknowledges and agrees that in the event the enforceability of any of the terms
of this Agreement shall be challenged in court and Employee is not enjoined from
breaching any of the restraints set forth in SECTION 6 through SECTION 8, then
if a court of competent jurisdiction finds that the challenged restraint is
enforceable, the time period of the restraint shall be deemed tolled upon the
filing of the lawsuit challenging the enforceability of the restraint until the
dispute is finally resolved and all periods of appeal have expired.
10. ACKNOWLEDGEMENTS. Employee hereby acknowledges and agrees that
the restrictions contained in SECTION 6 through SECTION 9 are fair and
reasonable and necessary for the protection of the legitimate business interests
of the Company. Employee acknowledges that in the event Employee's employment
with the Company terminates for any reason, Employee will be able to earn a
livelihood without violating the restrictions contained in SECTION 6 through
SECTION 9 and that Employee's ability to earn a livelihood without violating
such restrictions is a material condition to Employee's employment and continued
employment with the Company. Employee expressly agrees that the character,
duration and geographical scope of the covenants contained in this SECTION 6
through SECTION 9 are reasonable in light of the circumstances as they exist at
the date upon which this Agreement has been executed. However, should a
determination nonetheless be made by a court of competent jurisdiction at a
later date that the character, duration or geographical scope of the covenants
contained herein are unreasonable in light of the circumstances as they then
exist, then it is the intention of both Employee and the Company that these
covenants shall be construed by the court in such a manner as to impose only
those restrictions on the conduct of Employee which are reasonable in light of
the circumstances as they then exist and necessary to assure the Company of the
intended benefit of these covenants.
11. RIGHTS TO MATERIALS; WORK FOR HIRE. All records, files,
memoranda, reports, price lists, customer lists, drawings, plans, sketches,
documents and the like (together with all copies thereof) relating to the
business of the Company, which Employee shall use or prepare or come in contact
with in the course of, or as a result of, his employment shall, as between the
parties hereto, remain the sole property of the Company. Upon the termination of
Employment or upon the prior demand of the Company, Employee shall immediately
return all such materials and shall not thereafter cause removal thereof from
the premises of the Company. Employee agrees to disclose and assign to the
Company as its exclusive property, all ideas, writings, inventions, discoveries,
improvements and technical or business innovations made or conceived by
Employee, whether or not patentable or copyrightable, either solely or jointly
with others during the Employment Period and for a period of twelve (12) months
thereafter whether or not made or conceived during regular hours of work or
otherwise, which are along the lines of the business, work or investigations of
the Company or its affiliates. Employee agrees to execute any and all documents
hereafter requested by the Company necessary to effectuate the foregoing.
12. REMEDIES. Without limiting the Company's right to claim
damages, Employee acknowledges that the Company will be irreparably harmed by a
breach of any
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provision of this Agreement and Employee agrees that the Company shall be
entitled to injunctive relief in the event of such breach.
13. GOVERNING LAW; ARBITRATION; JURISDICTION; VENUE; ATTORNEY'S
FEES. This Agreement is made and entered into in and shall be governed by and
interpreted in accordance with the laws of, the State of New Jersey. The Company
and Employee agree that any dispute regarding this Agreement shall be submitted
to arbitration to and shall be resolved in accordance with the rules of the
JAMS/Endispute for expedited cases then in effect. The arbitrator(s) shall be
mutually selected by the parties or in the event the parties cannot mutually
agree, then appointed by JAMS/Endispute. Any arbitration shall be held within a
forty-five (45) mile radius of Spring Lake, New Jersey and the arbitrator(s)
shall apply New Jersey law. Judgment upon any award rendered by the
arbitrator(s) shall be final and may be entered in any court of competent
jurisdiction. Notwithstanding the foregoing, the Company shall have the absolute
right to obtain equitable remedies in any state court of competent jurisdiction
in the State of New Jersey or in the United States District Court in the state
of New Jersey. By his execution and delivery of this agreement, Employee
irrevocably submits to and accepts the exclusive jurisdiction of each of such
courts and waives any objection (including any objection to venue or any
objection based upon the grounds of forum non conveniens) which might be
asserted against the bringing of any such action, suit or other legal proceeding
in such courts. The court and/or arbitrator(s) shall award costs and expenses
(including reasonable attorney's fees) to the prevailing party in any litigation
or arbitration.
14. MISCELLANEOUS.
14.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all previous agreements, written and oral, regarding the
subject matter hereof between the parties hereto. This Agreement shall not be
changed, altered, modified or amended, except by a written agreement signed by
both parties hereto.
14.2. NOTICES. All notices, requests, demands and other
communications required or permitted to be given or made under this Agreement
shall be in writing and shall be deemed to have been given if delivered by hand,
sent by generally recognized overnight courier service, telex or telecopy, or
mail,
(a) to the Company: With a copy to:
XxxxxxxXxxxxx.xxx, Inc. Xxxxx & Xxxxxxx, LLP
0000 Xxxxx Xxxxxx 000 Xxxxx Xxxx Xxxxxxxx
Xxxxxx Xxxx, XX 00000 Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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(b) to the Employee at:
S. Xxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
14.3 ASSIGNMENT. The Company may assign this Agreement to
any affiliate without the consent of Employee. For purposes of this section,
"affiliate" shall mean any individual, corporation, partnership or other
business entity that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company.
14.4. SEVERABILITY. If any term or provision of this
Agreement, or the application thereof to any person or under any circumstance,
shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms to the persons or under
circumstances other than those as to which it is invalid or unenforceable, shall
be considered severable and shall not be affected thereby, and each term of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
The invalid or unenforceable provisions shall, to the extent permitted by law,
be deemed amended and given such interpretation as to achieve the economic
intent of this Agreement.
14.5. WAIVER. The failure of any party to insist in any one
instance or more upon strict performance of any of the terms and conditions
hereof, or to exercise any right or privilege herein conferred, shall not be
construed as a waiver of such terms, conditions, rights or privileges, but same
shall continue to remain in full force and effect. Any waiver by any party of
any violation of, breach of or default under any provision of this Agreement by
the other party shall not be construed as, or constitute, a continuing waiver of
such provision, or waiver of any other violation of, breach of or default under
any other provision of this Agreement.
14.6 TITLES; GENDER. Section and subsection titles are for
convenience of reference only and are not to be considered in the interpretation
or construction of any of the provisions hereof. All pronouns or any variations
thereof contained in this Agreement refer to the masculine, feminine or neuter
as the identity of the person may require.
14.7 SURVIVAL. SECTION 6 through SECTION 14 hereof shall
survive any termination of this Agreement.
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14.8 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
ATTEST: XxxxxxxXxxxxx.xxx, Inc.
/s/Xxxxxxx X. Xxxxxxx By:/s/ Xxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxx, Assistant Secretary Xxxx X. Xxxxx, President
WITNESS: EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxxxx /s/ S. Xxxxx Xxxxxx
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S. Xxxxx Xxxxxx
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