EXHIBIT 10.7
EMPLOYMENT AGREEMENT
BY AND BETWEEN
Z-TEL COMMUNICATIONS, INC.
AND
J. XXXXX XXXXXXX
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of the date set forth on the signature page hereto by and between Z-TEL
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and J. XXXXX
XXXXXXX ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to assure the Company of the services of Employee and to set forth the
respective rights and duties of the parties hereto;
WHEREAS, the Company is a wholly-owned subsidiary corporation of Z-Tel
Technologies, Inc., a Delaware corporation;
WHEREAS, the Company is principally in the business of providing
local, long-distance and enhanced telecommunications services (such activities,
present and future, being hereinafter referred to as the "Business"); and
WHEREAS, the Company has developed and expects to develop trade
secrets, methods of doing business, business plans, computer software and other
items worthy of protection;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee
agree as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. The Company hereby employs Employee,
and Employee hereby accepts such employment, as Senior Vice President -
Enterprise Systems of the Company, all upon the terms and conditions set forth
herein.
1.2 SERVICES. During the Term (as hereinafter defined) hereof,
Employee agrees to perform diligently and in good faith the duties of Senior
Vice President - Enterprise Systems of the Company, under the direction of the
Board of Directors of the Company (the "Board of Directors") and the Company's
Chief Executive Officer. Employee agrees to devote his best efforts and all of
his full business time, energies and abilities to the services to be performed
hereunder and for the exclusive benefit of the Company. Employee shall be
vested with such authority as is generally commensurate with the position of
Senior Vice President - Enterprise Systems of the Company, as further outlined
below. Employee will report solely to the Board of Directors and the Company's
Chief Executive Officer.
1.3 LOCATION. The principal place of employment and the location
of Employee's principal office shall be in Charlotte, North Carolina; provided,
however, Employee shall, if he determines it to be reasonably necessary, engage
in reasonable travel in the performance of his duties under this Agreement.
1.4 REPRESENTATIONS. Both parties represent and warrant to the
other that they have full power and authority to enter into and perform this
Agreement and that their execution and
performance of this Agreement shall not constitute a default under or breach of
any of the terms of any agreement to which they are a party or under which they
are bound. Both parties represent that no consent or approval of any third
party is required for their execution, delivery and performance of this
Agreement or that all consents or approvals of any third party required for
their execution, delivery and performance of this Agreement have been obtained.
Employee further represents that his employment hereunder will not involve the
use of information or materials that belong to a former employer or another
person or entity and for which Employee has a duty of confidentiality.
ARTICLE II
TERM
2.1 TERM. The initial term of Employee's employment hereunder
shall commence as of the date hereof (the "Commencement Date") and shall
continue for a period of three years, unless earlier terminated pursuant to the
provisions of this Agreement. The initial term and every renewal term
thereafter shall automatically renew for an additional one-year term unless
either party delivers written notice of non-renewal to the other party at least
ninety (90) days before the expiration of the initial term or renewal term as
the case may be. The initial term and any renewal term are hereinafter
collectively referred to as the "Term." The date upon which the Term (including
any renewal term if applicable) is to expire is referred to as the "Scheduled
Termination Date."
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered
by Employee, the Company shall pay Employee, during the Term of this Agreement,
an annual base salary of not less than TWO HUNDRED ONE THOUSAND EIGHT HUNDRED
EIGHTY-FOUR DOLLARS ($201,884), which base salary shall accrue monthly
(prorated for periods less than a month) and shall be paid in accordance with
the Company's standard payroll practices. The base salary will be reviewed
annually, or, more frequently, as appropriate, by the Board of Directors for
upward, but not downward, adjustment in its sole discretion.
3.2 BONUS COMPENSATION. For every fiscal year ending during the
Term, Employee will be entitled to participate in an Executive Bonus Pool to be
established by the Company (the "Executive Bonus Pool"). Each fiscal year
ending during the Term, the Company will reserve for the Executive Bonus Pool
an amount equal to five percent (5%) the Adjusted EBITDA of Z-Tel Technologies,
Inc. For this purpose, "Adjusted EBITDA" means net income before deduction for
interest expense, income taxes, depreciation and amortization determined in
accordance with generally accepted accounting principles, consistently applied,
and adjusted to exclude the following items: (i) the amount of the Executive
Bonus Pool determined hereunder and any other bonuses or fees (whether payable
to Employee, other executives of the Company or any other person or entity)
that are based, without substantial discretion, primarily upon the Company's
net income, the net income of Z-Tel Technologies, Inc. or any substantially
similar measurement base; (ii) gains or losses arising from any material,
extraordinary, non-recurring transactions; (iii) gains or losses arising from
sales or dispositions of capital assets or the Company's capital stock; and
(iv) discharge of indebtedness income. The Board of Directors will allocate the
entire Executive Bonus Pool among the participants in the Executive Bonus Pool,
including Employee. Such amounts allocated will be due and payable to the
participants, including Employee, one hundred twenty days (120) after the
Company's fiscal year end. The Board of Directors shall have the sole
discretion (i) to determine the number of participants from time to time
(ii) to select the participants (without excluding Employee) from time to time,
and (iii) to determine the allocations (which may be -0- to a given
participant) among the participants. Employee shall be eligible to receive any
other bonus or incentive compensation, which may be granted from time to time
in the sole discretion of the Board of Directors in accordance with the
Company's compensation structure in effect from time to time.
3.3 EMPLOYEE'S LEGAL FEES. Employee may, and the Company has
encouraged the Employee to, engage competent independent legal counsel for
advice and guidance with respect to this Agreement, including advice as to the
federal income tax consequences of this ARTICLE III and ARTICLE VII. The
Company shall reimburse Employee for all reasonable legal fees incurred by
Employee in connection with the negotiation and execution of this Agreement.
3.4 BENEFITS. Employee shall be entitled, during the Term hereof,
to the same medical, hospital, dental and life insurance coverage and benefits
as are then available to the Company's most senior executive officers, together
with the following additional benefits:
(a) Comprehensive medical coverage, including dependent
coverage, paid fully by the Company;
(b) Life insurance in an amount equal to two times
Employee's base salary;
(c) Long-term disability insurance in an amount,
adjusted annually, equal to two-thirds of Employee's
prior year base salary and incentive compensation,
if any, excluding compensation earned through
Company stock options or other securities; and
(d) The Company's normal vacation allowance and other
paid time off for all employees who are executive
officers of the Company, but not less than three
weeks annually.
3.5 WITHHOLDING. Any and all amounts payable under this
Agreement, including amounts payable under this ARTICLE III and ARTICLE VII,
are subject to withholding for such federal, state and local taxes required
pursuant to any applicable law, rule or regulation.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished
with an office at the Employee's principal office as set forth in SECTION 1.3
hereof, or at such other location as agreed to by Employee and the Company, and
other working facilities and secretarial and other assistance suitable to his
position and reasonably required for the performance of his duties hereunder.
The Company shall reimburse Employee for all of Employee's reasonable expenses
incurred while employed and performing his duties under and in accordance with
the terms and conditions of this Agreement, subject to Employee's full and
appropriate documentation, including receipts for all such expenses in the
manner required pursuant to Company's policies and procedures and the Internal
Revenue Code of 1986, as amended (the "Code"), and applicable regulations in
effect from time to time.
4.2 INSURANCE. The Company may secure in its own name or
otherwise, and at its own expense, life, disability and other insurance
covering Employee or Employee and others, and
Employee shall not have any right, title or interest in or to such insurance
other than as expressly provided herein. Employee agrees to assist the Company
in procuring such insurance by submitting to the usual and customary medical
and other examinations to be conducted by such physicians(s) as the Company or
such insurance company may designate and by signing such applications and other
written instruments as may be required by any insurance company to which
application is made for such insurance. Any information provided by Employee to
such insurance company (the results of examinations being deemed part of such
information) will be provided on a confidential basis, and the Company shall
have no access thereto.
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. Except as provided by this Article and
notwithstanding anything else to the contrary contained in this Agreement, the
Company shall have no right to terminate Employee's employment hereunder during
any period that Employee suffers illness or incapacity. The Company shall have
the right to terminate Employee's employment hereunder by delivery of thirty
(30) days written notice of termination if Employee is unable to perform, with
reasonable accommodation, in all material respects the essential duties of his
employment hereunder for a period exceeding six (6) consecutive months by
reason of illness or incapacity. A termination of employment under this Article
will be deemed a termination "without good cause" as described in SECTION 7.1
hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or incapacity,
whether by physical or mental cause, renders him unable for a minimum period of
thirty (30) consecutive calendar days to carry out his duties and
responsibilities as set forth herein, the Company shall have the right to
designate a person to temporarily perform Employee's duties; provided, however,
that if Employee returns to work from such illness or incapacity within the six
(6) month period following his inability due to such illness or incapacity, he
shall be entitled to be reinstated in the capacity described in ARTICLE I
hereof with all rights, duties and privileges attendant thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to
his full base salary under SECTION 3.1 hereof and full benefits under SECTION
3.4 hereof during such illness or incapacity unless and until an election is
made by the Company to terminate Employee's employment in accordance with the
provisions of this ARTICLE V.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this
ARTICLE V, the term "illness or incapacity" shall mean Employee's inability to
perform his duties hereunder substantially on a full-time basis because of
physical or mental illness or physical injury as determined by the Board of
Directors, in its reasonable discretion based upon competent medical evidence.
Upon the Company's written request, Employee shall submit to reasonable medical
and other examinations to provide the evidence required hereunder.
ARTICLE VI
TRADE SECRETS
6.1 CONFIDENTIALITY. Employee will hold Confidential Information
in confidence and trust and limit disclosure of Confidential Information
strictly to persons who have a need to know such Confidential Information in
connection with the Business and who have agreed in writing with the Company to
maintain the confidentiality of such Confidential Information. Employee will
not disclose, use, or permit the use or disclosure of Confidential Information,
except in satisfying his obligations under this Agreement. Employee will use
reasonable care to protect Confidential Information from inappropriate
disclosure, whether inadvertent or intentional. Notwithstanding the foregoing,
Employee may disclose Confidential Information if such disclosure is required
by a court order or an order of a similar judicial or administrative body;
provided, however, that Employee notifies the Company of such requirement
immediately and in writing, and cooperates reasonably with the Company in
obtaining a protective or similar order with respect thereto.
6.2 CONFIDENTIAL INFORMATION. For the purposes of this Agreement,
the phrase "Confidential Information" means information or materials that, in
the Company's view, provide advantage to the Company over others not having
such information or materials and includes (i) customer information, supplier
information, sales channel and distributor information, material terms of any
contracts, marketing philosophies, strategies, techniques and objectives
(including service roll-out dates and volume estimates), legal and regulatory
positions and strategies, advertising and promotional copy, competitive
advantages and disadvantages, non-published financial data, network
configurations, product or service plans, designs, costs, prices and names,
inventions, discoveries, improvements, technological developments, know-how,
software code, business opportunities (including planned or proposed
financings, mergers, acquisitions, ventures and partnerships) and methodologies
and processes (including the look and feel of computer screens and reports) for
provisioning (whether in connection with interexchange carriers or incumbent
local exchange carriers), customer assistance, order acceptance and tracking,
repairs, and commissions; (ii) information designated in writing or
conspicuously marked as "confidential" or "proprietary" or likewise designated
or marked with words of similar import; (iii) information for which the Company
has an obligation of confidentiality so long as such obligation is known to
Employee; and (iv) information of a nature that a reasonable person would
conclude that it is confidential or proprietary.
6.3 NOTIFICATION OF THIRD PARTY DISCLOSURE REQUESTS. If Employee
receives any written or oral third party request, order, instruction or
solicitation for the disclosure of Confidential Information not in conformance
with this Agreement or if Employee becomes aware of any attempt by a third
party to improperly gain Confidential Information, Employee shall immediately
notify the Company's Chief Executive Officer or the Board of Directors of such
request, order, instruction or solicitation or of such attempt and fully
disclose the details surrounding such request, order, instruction or
solicitation or such attempt.
6.4 NON-REMOVAL OF RECORDS. All documents, files, records, data,
papers, materials, notes, books, correspondence, drawings and other written,
graphic or electronic records of the Business and all computer software of the
Company which Employee shall prepare or use, or come into contact with, shall
be and remain the exclusive property of the Company, in its discretion, and
shall not be physically, electronically, telephonically or otherwise removed
from the Company's premises without the Company's prior written consent.
6.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION.
Confidential Information gained, received or developed by Employee or in which
Employee participated in developing will remain the exclusive property of the
Company, in its sole discretion. Employee will promptly return to the Company
or destroy or erase all records, books, documents or any other materials
whatsoever (including all copies thereof) containing such Confidential
Information in his possession or control upon the earlier of (i) the receipt of
a written request from the Company for return or destruction of Confidential
Information or (ii) the termination of Employee's employment hereunder.
6.6 TRADE SECRETS OF OTHERS. In the course of his employment
hereunder, Employee will not use any information or materials that belong to
any former employer or any other person or entity and for which he has a duty
of confidentiality or use or allow the use of any illegally obtained
confidential or secret information or materials.
ARTICLE VII
TERMINATION
7.1 TERMINATION BY THE COMPANY. The Company may terminate the
Employee's employment hereunder without good cause anytime not fewer than 30
days nor more than 45 days after delivering written notice of termination to
the Employee. The Company may terminate the Employee's employment hereunder for
"good cause" anytime by delivery of written notice of termination. A
termination for good cause under this SECTION 7.1 shall be effective upon the
date set forth in a written notice of termination delivered to Employee. Good
cause will be limited to the following circumstances:
(a) Employee has committed any fraud, dishonesty,
misappropriation or similar act against the Company or an
Affiliate of the Company; or
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or duties
hereunder, including Employee's willfully disregarding the
written or oral instructions of the Company's Chief Executive
Officer concerning the conduct of his duties hereunder,
Employee's conduct which is materially inconsistent with the
published policies of the Company, as promulgated from time
to time and which are generally applicable to all employees
or senior executives, or Employee's breach of any other
material provision of this Agreement; or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties hereunder; or
(d) Employee has been adjudicated guilty by, or enters a plea of
guilty or no contest before, a court of competent
jurisdiction of illegal activities or found by a court of
competent jurisdiction to have engaged in other wrongful
conduct and such illegal activities or wrongful conduct,
individually or in the aggregate, has (or could be reasonably
expected to have) a material adverse effect on the Company,
its prospects, earnings or financial condition.
7.2 EFFECT OF TERMINATION FOR GOOD CAUSE. If Employee's
employment is terminated by the Company for good cause-
(a) Employee shall be entitled to accrued base salary under
SECTION 3.1 and accrued vacation pay and other paid time off,
each through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of SECTION 4.1 hereof; and
(c) Except as provided in ARTICLE XI, this Agreement shall
thereupon be of no further force and effect.
7.3 EFFECT OF TERMINATION WITHOUT GOOD CAUSE. If the Company
terminates Employee's employment without good cause-
(a) Employee shall be entitled to accrued base salary under
SECTION 3.1 and accrued vacation pay and other time off, each
through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of SECTION 4.1 hereof;
(c) Employee shall be entitled to receive all amounts of base
salary as would have been payable under SECTION 3.1 (provided
that Employee shall receive not less than twelve (12) months
of base salary) through the Scheduled Termination Date of the
applicable term hereof, which amounts shall be paid as and
when such base salary would have been paid under this
Agreement if employment had not been terminated;
(d) Employee shall be entitled to receive all bonuses and
benefits as would have been awarded or paid under SECTIONs
3.2 and 3.4 hereof through (or as a result of events
occurring through) the Scheduled Termination Date, which
benefits shall be awarded as and when the same would have
been awarded under the Agreement had employment not been
terminated;
(e) If the termination is within three years of a Change of
Control (as defined herein), the Employee shall be entitled
to receive a one-time, lump sum severance payment (due upon
termination) equal to two and nine-tenths (2.9) times the
total amount of the annual base salary payable under the
terms of SECTION 3.1 of this Agreement plus any incentive or
bonus paid in the prior year pursuant to SECTION 3.2 of this
Agreement; and
(e) Except as provided in THIS ARTICLE AND ARTICLE XI, this
Agreement shall thereupon be of no further force or effect.
7.4 DEEMED TERMINATION WITHOUT GOOD CAUSE. After the occurrence
of any of the following events, the Employee, at his sole option, may declare
by thirty days (30) written notice to the Company that his employment hereunder
has been terminated by the Company, and such termination will for all purposes
of this Agreement be deemed a termination by the Company without good cause:
(a) The Company removes the Employee from the office of Senior
Vice President - Enterprise Systems;
(b) The Company materially changes the Employee's reporting
requirements;
(c) The Company fails to afford Employee the power and authority
generally commensurate with the position of Senior Vice
President - Enterprise Systems
(d) The Company requires Employee to relocate his residence
outside of Charlotte, North Carolina; or
(e) The Company breaches any material provision of this
Agreement.
In addition, Employee's death will be deemed a termination without good cause
as of the date of death.
7.5 TERMINATION BY EMPLOYEE. Employee may terminate his
employment hereunder by giving not less than forty-five (45) days written
notice to the Company.
7.6 EFFECT OF TERMINATION BY EMPLOYEE. If Employee terminates his
employment pursuant to SECTION 7.5 hereof -
(a) Employee shall be entitled to accrued base salary under
SECTION 3.1 and accrued vacation pay and other paid time off,
each through the date of termination;
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with
the provisions of SECTION 4.1 hereof; and
(c) Except as provided in ARTICLE XI, this Agreement shall
thereupon be of no further force and effect.
7.7 CHANGE OF CONTROL. For purposes of SECTION 7.3 of this
Agreement, a "Change of Control" shall be deemed to have occurred in the event
of:
(a) The acquisition by any person or entity, or group thereof
acting in concert, of "beneficial" ownership (as such term is
defined in Securities and Exchange Commission ("SEC") Rule
13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), of securities of the Company or of
Z-Tel Technologies, Inc. which, together with securities
previously owned, confer upon such person, entity or group
the voting power, on any matters brought to a vote of
shareholders, of thirty percent (30%) or more of the then
outstanding shares of capital stock of the Company or capital
stock of Z-Tel Technologies, Inc.; or
(b) The sale, assignment or transfer of assets of the Company or
Z-Tel Technologies, Inc. in a transaction or series of
transactions, if the aggregate consideration received or to
be received by the Company or Z-Tel Technologies, Inc. in
connection with such sale, assignment or transfer is greater
than fifty percent (50%) of the book value, determined by the
Company or Z-Tel Technologies, Inc., as the case may be, in
accordance with generally accepted accounting principles, of
the Company's assets or the assets of Z-Tel Technologies,
Inc. determined on a consolidated basis immediately before
such transaction or the first of such transactions; or
(c) The merger, consolidation, share exchange or reorganization
of the Company or Z-Tel Technologies, Inc. as a result of
which the holders of all of the shares of capital stock of
the Company (or of Z-Tel Technologies, Inc. as the case may
be) as a group would receive less than fifty percent (50%) of
the voting power of the capital stock or other interests of
the surviving or resulting corporation or entity; or
(d) The adoption of a plan of liquidation or the approval of the
dissolution of the Company or of Z-Tel Technologies, Inc.; or
(e) The commencement (within the meaning of SEC Rule 14d-2 under
the Exchange Act) of a tender or exchange offer that, if
successful, would result in a Change of Control;
(f) A determination by the Board of Directors of the Company, in
view of then current circumstances or impending events, that
a Change of Control has occurred or is imminent, which
determination shall be made for the specific purpose of
triggering the operative provisions of this Agreement; or
(g) The Board of Directors of the Company or of Z-Tel
Technologies, Inc. is not comprised of a majority of
directors who were either directors as of the date of this
Agreement (the "Initial Directors") or whose nomination or
election was approved by at least a majority of the Initial
Directors or by a majority of directors whose nomination or
election was approved by the Initial Directors.
7.8 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) If it shall be determined that any payment, distribution or
benefit received or to be received by Employee from the
Company ("Payments") would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then
Employee shall be entitled to receive an additional payment
(the "Excise Tax Gross-Up Payment) in an amount such that the
net amount retained by Employee, after the calculation and
deduction of any Excise Tax on the Payments and any federal,
state and local income taxes and excise tax on the Excise Tax
Gross-Up Payment provided for in this SECTION 7.8, shall be
equal to the Payments. In determining this amount, the amount
of the Excise Tax Gross-Up Payment attributable to federal
income taxes shall be reduced by the maximum reduction in
federal income taxes that could be obtained by the deduction
of the portion of the Excise Tax Gross-Up Payment
attributable to state and local income taxes. Finally, the
Excise Tax Gross-Up Payment shall be reduced by income or
excise tax withholding payments made by the Company or any
affiliate of either to any federal, state or local taxing
authority with respect to the Excise Tax Gross-Up Payment
that was not deducted from compensation payable to Employee.
(b) All determinations required to be made under this SECTION
7.8, including whether and when an Excise Tax Gross-Up
Payment is required and the amount of such Excise Tax
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, except as specified in
SECTION 7.8(A) above, shall be made by the Company's
independent auditors (the
"Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Employee within 15
business days after Employee provides the Company with notice
that a Payment has been or will be made or such earlier time
as may be required by the Company. The determination of tax
liability made by the Accounting Firm shall be subject to
review by the Employee's tax advisor and, if Employee's tax
advisor does not agree with the determination reached by the
Accounting Firm, then the Accounting Firm and Employee's tax
advisor shall jointly designate a nationally recognized
public accounting firm, which shall make the determination.
All fees and expenses of the accountants and tax advisors
retained by either Employee or the Company shall be borne by
the Company. Any Excise Tax Gross-Up Payment, as determined
pursuant to this SECTION 7.8, with respect to a Payment shall
be paid by the Company to Employee at such time as Employee
is entitled to receive the Payment. Any determination by a
jointly designated public accounting firm shall be binding
upon the Company and Employee.
(c) As a result of the uncertainty in the application of
Subsection 4999 of the Code at the time of the initial
determination hereunder, it is possible that Excise Tax
Gross-Up Payments will not have been made by the Company that
should have been made consistent with the calculations
required to be made hereunder ("Underpayment"). In the event
that Employee thereafter is required to make a payment of any
Excise Tax, any such Underpayment calculated in accordance
with and in the same manner as the Excise Tax Gross-Up
Payment in SECTION 7.8(A) above shall be promptly paid by the
Company to or for the benefit of Employee. In the event that
the Excise Tax Gross-Up Payment exceeds the amount
subsequently determined to be due, such excess shall
constitute a loan from the Company to Employee payable on the
fifth day after demand by the Company (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code).
ARTICLE VIII
NON-COMPETITION AND NON-INTERFERENCE
8.1 NONCOMPETITION. Employee agrees that during the course of his
employment with the Company and (i) in the event of termination for Good Cause
or a termination by Employee of such employment, for a period of twenty-four
(24) months after termination of such employment; or (ii) in the event of a
termination of employment for any other reason, for a period of the lesser of
(x) twenty-four (24) months after termination of such employment; and (y) the
number of months after termination of such employment during which Employee
receives payments of base salary pursuant to SECTION 7.3(C), Employee will not,
directly or indirectly, as an employee, agent, independent contractor,
consultant, partner, joint venturer or otherwise, within any state in the
United States within which Employee has been involved with the provision of
services (or offers or plans to provide services) to customers or prospective
customers of the Company within the twelve (12) months preceding the date of
the termination of Employee's employment with the Company, enter into, engage
in, be employed by or consult with (or solicit to enter into, engage in, be
employed by or consult with) any business which competes with the Company by
providing services of the same nature or type as those provided by the Company
within the twelve (12) month period preceding the termination of the Employee's
employment with the Company, including (a) participating as an officer,
director,
stockholder, member, employee, agent, independent contractor, consultant,
representative or partner of, or having any direct or indirect financial
interest (including the interest of a creditor) in, any such competitor or (b)
assisting any other individual or business entity, of whatever type or
description, in providing any such competing services. The provisions of this
section shall not apply to the ownership by Employee of less than five percent
(5%) of any publicly traded corporation or other business entity solely as an
investor and under circumstances in which Employee neither provides services
nor assists anyone else to provide any services to or on behalf of any such
entity. Employee further agrees that upon a violation of this section of this
Agreement, the period during which Employee's covenants in this section apply
will be extended by the number of days equal to the period of such violation.
8.2 NON-SOLICITATION/NON-ACCEPTANCE. Employee agrees, during the
course of his employment with the Company and for a period of twenty-four (24)
months after termination of that employment, whether voluntarily or
involuntarily, with or without cause, that Employee will refrain from and will
not, directly or indirectly, as employee, agent, independent contractor,
consultant, partner, joint venturer or otherwise (a) solicit or counsel any
third person, partnership, joint venture, company, corporation, association, or
other organization that is or was a current or prospective customer of the
Company within the twelve (12) months preceding the termination of the
Employee's employment with the Company and with which Employee had a
substantial relationship within such preceding twelve (12) month period,
regardless of such person's or entity's location, to terminate any existing or
prospective business relationship with the Company or commence a similar
business relationship with any other individual or business entity; (b) accept,
with or without solicitation, any business from any third person, partnership,
joint venture, company, corporation, association or other organization that is
or was a current or prospective customer of the Company with which Employee had
a substantial relationship within the preceding twelve (12) month period,
regardless of such person's or entity's location; or (c) solicit any of the
employees, agents, independent contractors or consultants of the Company,
regardless of such person's or entity's location, to terminate any business
relationship with the Company. Employee further agrees that upon a violation of
this section of this Agreement, the period during which Employee's covenants in
this section apply will be extended by the number of days equal to the period
of such violation.
8.3 SEVERABILITY. Every provision of this Article is intended to
be severable. If any provision or portion of a provision is illegal or invalid,
then the remainder of this Article will not be affected. Moreover, any
provision of this Article which is determined to be unreasonable, arbitrary or
against public policy will be modified as necessary so that it is not
unreasonable, arbitrary or against public policy. An illegally long period of
time or illegally large geographic area, for example, should be reduced to a
shorter period of time or smaller geographic area.
8.4 ACKNOWLEDGEMENTS. Employee acknowledges that he has incurred
the obligations set forth in this Article solely in consideration of the
Company's execution of this Agreement and those obligations (as well as this
provision) will survive and continue notwithstanding the termination,
rescission or expiration of this Agreement or any provision of this Agreement.
Employee further acknowledges that the foregoing restrictive covenants are
reasonable and necessary in light of the circumstances, including the
Confidential Information to which he has been exposed, the business
relationships with the Company's customers and others he has developed and the
specialized training he has received during his employment by the Company.
8.5 COUNTERCLAIMS. The existence of any claim or cause of action
Employee may have against the Company will not at any time constitute a defense
to the enforcement by the Company of the restrictions or rights provided by
this Article.
ARTICLE IX
REMEDIES
9.1 EQUITABLE REMEDIES. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Employee to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Employee hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of ARTICLES
VI, VIII AND XII of this Agreement, both pendente lite and permanently, against
Employee, as such breach would cause irreparable injury to the Company and a
remedy at law would be inadequate and insufficient. Therefore, the Company may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction in the matter restraining any further violation.
9.2 RIGHTS AND REMEDIES PRESERVED. Nothing in this Agreement
except SECTION 10.11 shall limit any right or remedy the Company or Employee
may have under this Agreement or pursuant to law for any breach of this
Agreement by the other party. The rights granted to the parties herein are
cumulative and the election of one shall not constitute a waiver of such
party's right to assert all other legal remedies available under the
circumstances.
ARTICLE X
MISCELLANEOUS
10.1 NO WAIVERS. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of any such
provision, nor prevent such party thereafter from enforcing such provision or
any other provision of this Agreement.
10.2 NOTICES. Any notice to be given to the Company and Employee
under the terms of this Agreement may be delivered in person, by courier or
Federal Express, United Parcel Service, Airborne Express U.S express mail or
other similar nationally recognized overnight delivery service that that
obtains a confirmation of delivery, or by registered or certified mail, postage
prepaid, return receipt requested, and shall be addressed as follows:
IF TO THE COMPANY: Z-Tel Communications, Inc.
000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Corporate Counsel
IF TO EMPLOYEE: J. Xxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when delivered by courier or overnight delivery service or (iii) on the
third day after it is mailed by registered or certified mail, postage prepaid,
return receipt requested as provided herein.
10.3 SEVERABILITY. The provisions of this Agreement are severable
and if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, including the survivor upon any
merger, consolidation, share exchange or combination of the Company with any
other entity. Employee shall not have the right to assign, delegate or
otherwise transfer any duty or obligation to be performed by him hereunder to
any person or entity.
10.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification
(except as otherwise provided herein with respect to the modification of
provisions that are unreasonable, arbitrary or against public policy),
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding that involves the interpretation of any provisions of this
Agreement.
10.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 CONSTRUCTION. This Agreement was negotiated at arms'-length
and will not be construed more strongly against any party regardless of which
party was responsible for its preparation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural will include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender will include the other genders. The words "Agreement," "hereof,"
"herein" and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole, including Exhibits, and not to
any particular provision of this Agreement. Whenever the word "include,"
"includes" or "including" is used in this Agreement, it will be deemed to be
followed by the words "without limitation." The various headings contained in
this Agreement are inserted only as a matter of convenience and in no way
define, limit or extend the scope or intent of any of the provisions of this
Agreement.
10.8 FURTHER ASSURANCES. Each party hereto shall cooperate and
shall take such further action and shall execute and deliver such further
documents as may be reasonably requested by the other party in order to carry
out the provisions and purposes of this Agreement.
10.9 AFFILIATE. The term "Affiliate" with respect to a party to
this Agreement means (i) any person or entity directly or indirectly
controlling the party; (ii) any person or entity controlled by or under common
control with the party; (iii) any person or entity owning or controlling 10% or
more of the outstanding voting securities or interests of the party; (iv) any
officer, director, partner or employee of a person or entity described in (i),
(ii) or (iii) above; and (v) any entity for
which a person or entity described in (i), (ii) or (iii) above is an officer,
director, partner, or employee.
10.10 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which taken together shall be deemed one original.
10.11 CONFIDENTIAL ARBITRATION. The parties hereto agree that any
dispute concerning or arising out of the provisions of this Agreement,
Employee's employment or termination of Employee's employment shall be resolved
by confidential arbitration in accordance with the rules of the American
Arbitration Association. Such confidential arbitration shall be held in Tampa,
Florida, and the decision of the arbitrator(s) shall be conclusive and binding
on the parties and shall be enforceable in any court of competent jurisdiction.
The arbitrator may, in his or her discretion, award attorney's fees and costs
to such party as he or she sees fit in rendering his or her decision.
Notwithstanding the foregoing, if any dispute arises hereunder as to which the
Company desires to exercise any rights or remedies under SECTION 9.1 hereof,
the Company may, in its discretion, in lieu of submitting the matter to
arbitration, bring an action thereon in any court of competent jurisdiction in
Tampa, Florida, which court may grant any and all relief available in equity or
at law. In any such action, the prevailing party shall be entitled to
reasonable attorneys' fees and costs as may be awarded by the court.
10.12 PIRATED SOFTWARE. During the course of Employee's employment
by the Company, Employee will not utilize or allow the utilization of computer
software owned by another without permission of the owner.
ARTICLE XI
SURVIVAL
The provisions of ARTICLES VI, VII, VIII, IX AND X of this Agreement
and this ARTICLE shall survive the termination, rescission or expiration of
this Agreement whether upon, or prior to, the Scheduled Termination Date
hereof. The representations and warranties of the parties hereto shall survive
the execution of this Agreement and continue without limitation.
ARTICLE XII
INTELLECTUAL PROPERTY
All Confidential Information, computer software, video and sound
recordings, scripts, creations, inventions, improvements, designs and
discoveries conceived, created, invented, authored, developed, produced or
discovered by Employee while employed by the Company, whether alone or with
others, whether during or after regular work hours, are and will be the
Company's property exclusively, in its sole discretion. Employee hereby assigns
to the Company all copyrights, trademarks and other rights of authorship or
ownership he may have with respect to such items. Moreover, at any time,
without additional consideration, Employee will execute and deliver any
documents or instruments that the Company may request in order to effectively
convey and transfer good title and right to, and put the Company in possession
of, such items.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date set forth.
Z-TEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/
------------------------------------------------------
D. Xxxxxxx Xxxxx,
President and Chief Executive Officer
DATE: August 14, 2002
-----------------------------------------------------
/s/
------------------------------------------------------
J. Xxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxx, XX
