EMPLOYMENT AGREEMENT
Agreement made this 31st day of October, 1998, by and
between The Network Connection, Inc., with offices located
at 0000 Xxxxx Xxxx Xxxx, Xxxxxxxxxx, Xx. 00000 (the
"Company"), and Xxxxxx X. Xxxxx, residing at 000 Xxxxxxxxx
Xxxxx, Xxxxxxx, XX 00000 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is desirous of employing Employee
as Chairman of the Board, President and Chief Executive
Officer of Company and Employee is desirous of committing
himself to serve Company in such capacities, all upon the
terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties
hereto, intending to be legally bound, agree as follows:
1. Employment..
Company agrees to employ Employee, and employee agrees to be
employed by Company, upon the terms and subject to the
conditions of this Agreement.
2. Term.
The employment of Employee by Company as provided in
Section 1 will be for a period commencing on October 31,
1998, and ending on October 31, 2001, unless sooner
terminated as hereinafter set forth (the "Term").
3. Duties: Best Efforts: Indemnification.
Employee shall serve as Chairman of the Board,
President and Chief Executive Officer, subject only to the
directions from the Board of Directors of Company. Subject
only to the directions of those identified in the preceding
sentence, Employee shall have supervision and control over,
and sole responsibility for, all executive management of the
Company, and shall have such powers and duties as may be
from time to time prescribed by the Board of Directors of
the Company, provided that the nature of Employee's powers
and duties so prescribed shall not be inconsistent with
Employee's position and duties set forth herein.
Employee shall devote all of his business time,
attention and energies to the business and affairs of
Company, shall use his best efforts to advance the best
interests of Company and shall not during the Term be
actively engaged in any other business activity, whether or
not such business activity is pursued for gain, profit or
other pecuniary advantage. The Employee shall expend his
best efforts on behalf of the company and abide by all
reasonable Company policies now or hereafter existing.
Subject to the provisions of Company's Certificate of
Incorporation and Bylaws, each as amended from time to time,
Company shall indemnify Employee to the fullest extent
permitted by the General Corporation Law of the State of
Georgia, as amended from time to time, for all amounts (
including without limitation, judgments, fines, settlement
payments, expenses and attorney's fees) incurred or paid by
Employee in connection with any action, suit, investigation
or proceeding arising out of or relating to the performance
by Employee of services for, or the acting by Employee as a
director, officer or employee of, Company, or any other
person or enterprise in good faith at Company's request.
Company shall obtain and maintain in full force and effect
during the Term, directors' and officers' liability
insurance policies providing full and adequate protection
to Employee acting in good faith within his capacities for
the Company.
4. Place of Performance.
In connection with his employment of Company, Employee shall
be based at the principal manufacturing facility of Company
located at 0000 Xxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000
(the "Offices"), and Employee shall have discretion
regarding his absence therefrom on travel status or
otherwise during any calendar year. Employee shall not be
required to move his present residence in order to perform
the services contemplated hereby. Subject to the foregoing,
in connection with any relocation of the Offices or transfer
consented to by Employee, Company will promptly pay (or
reimburse Employee for) all reasonable moving and moving
related expenses incurred by Employee as consequence of a
change of his
principal residence in connection with any such transfer or
relocation of the Offices.
5. Compensation.
(a) Base Salary. Company shall pay to Employee a base
salary (the "Base Salary") at a rate of not less than One
Hundred and Fifty-Six Thousand ($156,000) per annum,
payable in equal semi-monthly installments during the Term.
The Board of Directors of the Company, at least annually,
will review the Base Salary and other compensation during
the Term with a view toward the increase thereof base upon
Employee's performance, the performance of Company,
inflation, then prevailing industry salary scales and other
relevant factors. The Base Salary provided hereunder, as
increased by the Board of Directors of Company from time to
time, shall not be reduced without Employee's consent.
(b) Out-of-Pocket Expenses. Company shall promptly
pay to Employee the reasonable expenses incurred by his in
the performance of his duties hereunder, including, without
limitation, those incurred in connection with business
related travel or entertainment, or, if such expenses are
paid directly by Employee, Company shall promptly reimburse
Employee for such payment, provided that Employee properly
accounts therefor in accordance with Company's written
policy.
(c) Participation in Benefit Plans. Subject to the
terms and provisions of each plan respectively, Employee
shall be entitled to participate in or receive benefits
under any pension plan, profit sharing plan, stock option
plan, stock purchase plan or arrangement, health and
accident plan or any other employee benefit plan or
arrangement made available by Company to its executives and
key management employees.
(d) Vacation. Employee shall be entitled to paid
vacation days in each calendar year as determined by Company
from time to time, but not less than four (4) weeks in any
calendar year, prorated in any calendar year during which
Employee is employed hereunder for less than entire year in
accordance with the number of days in such year during which
Employee is so employed. Employee shall also be entitled to
all paid holidays given by Company to its executives and key
management employees.
(e) Other Benefits. In addition to the other
benefits specified pursuant to this Section 5, Company shall
provide Employee with an automobile allowance of $450.00 per
month to be used to meet the costs of operating an
automobile for business use.
(f) Incentive Compensation. The Company may also
pay to Employee other incentive compensation as may be set
by the Board of Directors from time to time to reflect
Employee's contribution to the financial goals of the
Company.
6. Termination.
Employee's employment hereunder shall be terminated
upon Employee's death and may be terminated as follows:
(a) Effective upon the giving of written notice by the
Board of Directors of Company to Employee in the event that
Employee hereafter (i) shall willfully fail to comply with
any of the material terms of this Agreement, (ii) shall fail
to adequately perform his duties hereunder, (iii) shall be
diagnosed with chronic alcoholism or any other form of
addiction which substantially impairs the Employee's ability
to perform his duties hereunder, or (iv) shall willfully
engage, in his capacity as an executive or officer of
Company, in gross misconduct injurious to the Company, and a
vote to such effect shall have been adopted by not less than
a majority of the directors (including Employee) then in
office of Company, after reasonable notice to Employee and
an opportunity for his to be heard before such Board. For
purposes of this Section 6(a), no act, or failure to act, on
Employee's part shall be considered "willful" unless done,
or omitted to be done, by Employee not in good faith and
without reasonable belief that his action(s) or omission(s)
were in the best interests of Company.
(b) Upon not less than sixty (60) days' written notice
by the Board of Directors of Company to Employee in the
event that (i) the Board shall have received a written
statement from a reputable independent physician to the
effect the Employee shall have become so incapacitated as to
be unable to resume, within the ensuing twelve (12) months
his "essential functions" of employment after reasonable
accommodation and without undue hardship, hereunder by
reason of physical or mental illness or injury, or (ii)
employee shall not have substantially performed his
"essential functions" of employment after reasonable
accommodation and without undue hardship, hereunder for six
(6) consecutive months (exclusive of any vacation permitted
under Section 5 (d) hereof) by reason of any such physical
or mental illness.
(c) If, within thirty (30) days' after any notice of
termination pursuant to Sections 6(a) or 6(b) hereof is
given, Employee informs Company in writing that a dispute
exists concerning such termination, such termination shall
be deemed to have occurred only upon the date on which such
dispute is finally resolved. During the pendency of any
such dispute and until such dispute is finally resolved,
Company shall continue to pay Employee the Base Salary in
effect at the date of such notice of termination pursuant to
Section 6(a) or 6(b). If such dispute results in a final
determination to the effect that Company did not have a
proper basis for such termination, Company shall promptly
pay to Employee any other payments to which Employee would
have been entitled to receive had Employee's employment
hereunder not been improperly terminated, and if such
dispute results in a final determination to the effect that
Company did have a proper basis for such termination, the
Base Salary pursuant to the preceding sentence shall cease
and terminate upon the date of such final determination.
(d) In the event of the termination of Employee's
employment pursuant to Section 6(b) hereof, for the longer
of one year following any such termination or the balance of
the Term (as if such termination had not occurred), Company
shall (i) continue to pay Employee the Base Salary in effect
at the time of such
termination less the amount, if any, then payable to
Employee under any disability benefits of Company,
(ii) pay to Employee at the end of the fiscal year in which
his termination occurred, the amount which would have been
payable to Employee pursuant to Company's bonus pool for the
entire year in which such termination occurred pro-rated to
the effective date of termination and (iii) maintain at its
expense, all major medical and other health, accident, life
or other disability plans and programs in
which Employee was entitled to participate immediately prior
to such termination.
(e) In the event of the termination of Employee's
employment as a result of Employee's death, Company shall
(i) pay to Employee's estate his Base Salary through the
date of his death, (ii) pay to Employee's estate at the end
of the fiscal year in which Employee's death occurred, the
amount which would have been payable to Employee pursuant to
Company's bonus pool for the entire fiscal year in which his
death occurred pro-rated to the date of his death and (iii)
for the longer of one year following Employee's death or the
balance of the Term (as if such termination had not
occurred), maintain, at Company's expense, for the continued
benefit of Employee's family, all major medical and other
health, accident, life or other disability plans and
programs in which Employee was entitled to participate
immediately prior to his death. Company shall also pay to
Employee's heirs a lump-sum death benefit
equal to 50% of any key employee life insurance obtained by
Company on the life of Employee.
7. Severance.
Upon (i) the acquisition by any person (as such term is
defined in sections 13 (d) and 14 (d) (2) of the Securities
Exchange Act of 1934, as amended), directly or indirectly of
securities of Company representing 51% or more combined
voting power of Company's then outstanding securities, (ii)
the future disposition by Company (whether direct or
indirect, by sale of assets or stock, merger, consolidation
or otherwise) of all or substantially all of its business
and/or assets in a transaction to which Employee does not
consent, (iii) the occurrence of any circumstance which, in
the reasonable judgment of Employee, has the effect of
significantly reducing Employee's duties or authority
provided for or contemplated herein, including a material
change in Employee's reporting responsibility as defined in
section 3 ,(iv) the breach by Company of its material
obligations under this Agreement, (v) the termination of
this Agreement by Company for any reason other than (X) that
specified in Section 6 (a) hereof or (Y) by mutual agreement
of Company and Employee (such events being hereinafter
collectively referred to as a "Severance Event"), Employee
shall have the right to terminate this Agreement within ten
(10) days after the occurrence of such Severance Event.
Upon the effective date of such termination, Employee shall
be entitled to receive a lump sum severance amount equal to
the sum of (I) the greater of (x) the present value of his
Base Salary in effect at the time of Severance Event for one
year or (y) the present value of his Base Salary in effect
at the time of the Severance Event for the remainder of the
Term (as if such termination had not occurred) and (iii) the
estimated amount which would have been payable to Employee
pursuant to Company's bonus pool for the fiscal year during
which such termination occurred, as determined in good faith
by the Board of Directors of Company based upon Company's
results of operations for the fiscal year through the
effective date of the termination and its historical results
of operations and pro-rated to the effective date of
termination. In addition, for the longer of one year
following any such termination or the balance of the Term
(as if such termination had not occurred), Company shall
maintain, at Company's expense, major medical and other
health, accident, life or other disability plans or programs
in which Employee was entitled to participate immediately
prior to such termination. For purposes of the Agreement,
the present value of Employee's Base Salary shall be based
upon an interest rate of ten percent (10%) per annum. Upon
the effective date of such termination, all stock options
granted to Employee by Company (regardless of whether such
options were exercisable at the time of the Severance Event,
shall become immediately exercisable and may be exercised at
any time within three months following the effective date of
termination. Employee shall not be required to mitigate the
amount of the termination payment provided pursuant to this
Section 7, nor will such payment be reduced by reason of
Employee's securing other employment.
8. Covenant Regarding Inventions and Copyrights.
Employee shall disclose promptly to Company any and
all inventions, discoveries, improvements and patentable or
copyrightable works initiated, conceived or made by
Employee, either alone or in conjunction with others, during
the Term and related to the business or activities of
Company and he assigns all of his interest therein to
Company or its nominee. Whenever requested to do so by
Company, Employee shall execute any and all applications,
assignments or other instruments which Company shall deem
necessary to apply for and obtain letters patent or
copyrights of the United States or any foreign country, or
otherwise protect Company's interest therein. These
obligations shall continue beyond the conclusion of the Term
with respect to inventions, discoveries, improvements or
copyrightable works initiated, conceived or made by Employee
during the Term and shall be binding upon Employee's
assigns, executors, administrators and other legal
representatives.
9. Protection of Confidential Information.
Employee acknowledges that he has been provided with
information about, and his employment by Company will,
throughout the Term bring his into close contact with many
confidential affairs of Company and its subsidiaries,
including information about costs, profits, markets, sales,
products, key personnel, customers, projects, pricing
policies, operational methods, technical processes and other
business affairs and methods, plans for future developments
and other information not readily available to the public.
In recognition of the foregoing, Employee covenants and
agrees that during the Term:
(i) he will keep secret all confidential matters of
Company and not disclose them to anyone outside of Company
either during or for 2 years after the Term, except with
Company's prior written consent or in the performance of his
duties hereunder. Employee make a good faith determination
that it is in the best interest of Company to disclose such
matter;
(ii) he will not make use of any of such confidential
matters for his own purposes or for the benefit of anyone
other than Company; and
(iii) he will deliver promptly to Company on
termination of this Agreement, or at any time Company may so
request, all confidential memoranda, notes, records, reports
and other confidential documents (and all copies thereof)
relating to the business of Company, which he may then
possess or have under his control.
The Non-Solicitation Agreement and the Non-Disclosure
Agreement dated July 24, 1998 between Company and Employee
are incorporated herein by reference.
10. Specific Remedies.
If Employee commits a breach of any of the provisions
of Sections 8 or 9 hereof, such violation shall be deemed to
be grounds for termination pursuant to Section 6 (a) hereof
and Company shall have (I) the right to have such provisions
specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such
breach will cause irreparable injury to Company and that
money damages will not provide an adequate remedy to
Company, and (ii) the right to require Employee to account
for and pay over to Company all compensation, profits,
monies, accruals, increments and other benefits
(collectively "Benefits") derived or received by Employee as
a result of any transaction constituting a breach of any of
the provisions of Sections 8 or 9, and Employee hereby
agrees to account for and pay over such Benefits to Company.
11. Independence, Severability and Non-Exclusivity.
Each of the rights enumerated in Sections 8 or 9 hereof and
the remedies enumerated in Section 10 hereof shall be
independent of the others and shall be in addition to and
not in lieu of any other rights and remedies available to
Company at law or in equity. If any of the covenants
contained in Sections 8 or 9, or any part of any of them, is
hereinafter construed or adjudicated to be invalid or
unenforceable, the same shall not affect the remainder of
the covenant or covenants or rights or remedies which shall
be given full affect without regard to the invalid portions.
The parties intend to and do hereby confer jurisdiction to
enforce the covenants contained in Sections 8 or 9 and the
remedies enumerated in Section 10 upon the courts of any
state of the United States, and any other government
jurisdiction within the geographical scope of such
covenants. If any of the covenants contained in Sections 8
or 9 is held to be invalid or
unenforceable because of the duration of such provision or
the area covered thereby, the parties agree that
the court making such determination shall have the power to
reduce the duration and/or area of such provision and in its
reduced form said provision shall then be enforceable. No
such holding of invalidity or unenforceability in one
jurisdiction shall bar or in any way affect Company's
right to the relief provided in Section 10 or otherwise in
the courts of any other state or jurisdiction within the
geographical scope of such covenants as to breaches of such
covenants in such other respective states or jurisdictions,
such covenants being, for this purpose, severable into
diverse and independent covenants.
12. Disputes.
If Company or Employee shall dispute any termination of
Employee's employment hereunder or if a dispute concerning
any payment hereunder shall exist:
(a) either party shall have the right (but not the
obligation), in addition to all other rights and remedies
provided by law, to compel arbitration of the dispute in
Xxxxxx County, Georgia, under the rules of the American
Arbitration Association by giving written notice of
arbitration to the other party within thirty (30) days after
notice of such dispute has been received by the party to
whom notice has been given; and
(b) if such dispute (whether or not submitted to
arbitration pursuant to Section 12 (a) hereof) results in a
determination that (I) Company did not have the right to
terminate Employee's Employment under the provisions of this
Agreement or (ii) the position taken by Employee concerning
payments to Employee is correct, Company shall promptly pay,
or if theretofore paid by Employee, shall promptly reimburse
Employee for, all costs and expenses (including attorney's
fees) reasonably incurred by Employee in connection with
such dispute.
13. Successors; Binding Agreement.
In the event of a future disposition by Company
(whether direct or indirect, by sale of assets or stock
merger, consolidation or otherwise) of all or substantially
all of its business and/or assets in a transaction to which
Employee consents, Company will require any successor, by
agreement in form and substance satisfactory to Employee, to
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Company would be
required to perform if no such disposition had taken place.
This Agreement and all rights of Employee hereunder
shall inure to the benefit of, and be enforceable by,
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees
and legatees. If Employee should die while any amount would
still be payable to his hereunder if he had continued to
live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement
to Employee's estate.
14. Notices.
All notices, consents or other communications required
or permitted to be given by any party hereunder shall be in
writing (including telecopy or other similar writing) and
shall be given by personal delivery, certified or registered
mail, postage prepaid, or telecopy (or other similar
writing) as set forth in the first paragraph of this
Agreement, or at such other address or telecopy number (or
other similar number) as either party may from time to time
specify to the other. Any notice, consent or other
communication required or permitted to be given hereunder
shall have been deemed to be given on the date of mailing,
personal delivery or telecopy or other similar means
(provided the appropriate answer back is received) thereof
and shall be conclusively presumed to have been received on
the second business day following the date of mailing or, in
the case of personal delivery or telecopy or other similar
means, the day of delivery thereof, except that a change of
address shall not be effective unit actually received.
15. Modifications and Waivers.
No term, provision or condition of this Agreement may
be modified or discharged unless such modification or
discharge is authorized by the Board of Directors of
Company and is agreed to in writing and signed by Employee.
No waiver by either party hereto of any breach by the other
party hereto of any term, provision or condition of this
Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
16. Entire Agreement.
This Agreement constitutes the entire understanding between
the parties hereto relating to the subject matter hereof,
superseding all negotiations, prior discussions, preliminary
agreements and agreements relating to the subject matter
hereof made prior to the date hereof.
17. Governing Law.
Except as otherwise explicitly noted, this Agreement shall
be governed by and construed in accordance with the laws of
the State of Georgia (without giving effect to conflicts of
law).
18. Invalidity.
Except as otherwise specified herein, the invalidity or
unenforceability of any term or terms of this Agreement
shall not invalidate, make unenforceable or otherwise affect
any other term of this Agreement which shall remain in full
force and effect.
19. Headings.
The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year set forth above.
Company:
Employee:
By:_____________________________
By:_________________________________
