Exhibit 10.9
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 15, 1998, between C-PHONE CORPORATION,
a New York corporation having its executive office at 0000 Xxxxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 (the "Company"), and XXXXX X. XXXXXX residing
at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Employee").
The Company desires to employ the Employee on the terms and conditions
set forth herein, and the Employee desires to accept such employment.
In consideration of the undertakings set forth in this Agreement, and
intending to be legally bound, the parties agree as follows:
1. General Agreement for Services. The Company employs the
Employee and the Employee accepts employment, upon the terms and conditions of
this Agreement.
2. Term of Employment. This Agreement and the employment of
Employee by the Company shall commence on September 18, 1998 and shall continue
until terminated by either party as provided in Section 6.
3. Duties.
(a) The Employee shall devote all his attention and energies
to the business of the Company and its affiliates, if any, on a full-time basis,
and shall not, during the term of this Agreement, be engaged in any other
business activity, whether or not such business activity is pursued for gain,
profit or other pecuniary advantage; but this shall not be construed as
preventing the Employee from investing the Employee's assets in such manner as
will not require the Employee to expend any time or effort in regard thereto or
to perform any services in connection therewith. The Company understands and
accepts that Employee is involved with and will be required to address family
business matters from time to time, including family real estate and
agricultural interests. Such business matters are specifically excepted from
this section, provided, however, that the involvement in these matters do not
interfere or negatively impact the ability of Employee to fulfill his
obligations and duties to the Company.
(b) The Employee shall serve the Company and its affiliates
faithfully, diligently and in good faith.
(c) The Employee shall perform such services as may be
required of the Employee by the Company and its affiliates, under and subject to
the instructions, directions and control of the Board of Directors and the
senior executives of the Company, including without limitation the Company's
president, chief executive officer and chief operating officer. The Employee
shall serve initially as the Vice President of Sales & Marketing of the Company.
The Employee's primary responsibility shall be to perform those duties
reasonably required of, and related to, the Employee's position and such other
duties as may be assigned to the Employee from time to time which are not
inconsistent with those customarily assigned to senior employees of the Company.
If the Employee is elected as a director of the Company or is promoted to a more
senior position within the Company, during the term of this Agreement, the
Employee shall serve in such capacities without further remuneration, except as
otherwise agreed upon by the Employer and Employee.
(d) At all times during the term of this Agreement, the
Employee shall adhere to all rules and regulations that have been or that
hereafter may be established by the Company for the conduct of its employees.
(e) The Employee shall be based at the Company's principal
executive office. Travel and temporary work assignments at other locations may
be required, but shall be of a kind and frequency common for the Employee's
position or shall result from periodic assignment to tasks appropriate for the
Employee.
(f) The Employee affirms that the Employee, to the best of his
knowledge, is in good health, with no chronic or recurring illness, and is
insurable at normal rates. If requested by the Company, the Employee shall
cooperate in applying for and obtaining, at the Company's expense, key-man
insurance for the benefit of the Company.
4. Compensation. As and for full and complete compensation to the
Employee for the services the Employee agrees to render pursuant hereto, the
Company agrees to pay to the Employee and the Employee agrees to accept the
following:
(a) The Company shall pay the Employee during the term of this
Agreement a salary at the annual rate of $150,000 (the "Base Salary") payable in
equal bi-weekly installments, or as otherwise may be the practice of the Company
in making salary payments.
(b) The Employee shall be granted stock options to purchase
shares of the Company's stock under the Company's 1994 Stock Option Plan as set
forth on Schedule A - Employee Stock Options (which schedule is hereby made a
part of this Agreement).
(c) The Employee shall be entitled to receive cash bonus in
such amounts and based upon such criteria as shall be determined in good faith
by the Compensation Committee of the Board of Directors of the Company in
consultation with the Employee. Said criteria shall be determined and set forth
as soon as possible and in any event no later than 120 days from Employee's
commencement of employment.
(d) In consideration for the Employee's relocation to the
Wilmington area, the Employee shall receive a non-accountable relocation expense
payment as set forth on Schedule B - Relocation Package (which schedule is
hereby made a part of this Agreement).
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(e) The Company, in its sole and absolute discretion, at any
time and from time to time, may increase the Base Salary to be paid to the
Employee, either permanently or for a limited period, or pay to the Employee
such additional bonus compensation as the Company may determine in its sole
discretion.
(f) All compensation paid to the Employee shall be subject to
withholding and deductions to the extent required by applicable law.
(g) The Employee shall be eligible to participate in and to be
covered by each life insurance, accident insurance, health insurance and
hospitalization, or other plan or benefit, if any, effective generally (and not
only with respect to a specific individual or individuals) with respect to
employees of the Company, if the Employee shall be eligible under the terms of
such plan, without restriction or limitation by reason of this Agreement.
Nothing contained herein, however, shall be construed to require the Company to
establish any plans not in existence on the date hereof, to continue any plans
in existence on the date hereof, or to prevent the Company from modifying and/or
terminating any of the plans in existence on the date hereof, and no such act or
omission shall be deemed to affect this Agreement or any of the provisions
contained herein.
(h) The Employee shall be entitled to a vacation of two weeks
with full compensation for each full year of this Agreement. The Employee also
shall be entitled to all paid holidays given by the Company to its senior
employees. Vacation days not taken shall not accumulate and shall not be
available to the Employee in subsequent years of this Agreement, unless the
Employee is restricted from taking any planned vacation at the written request
of the Company or as otherwise agreed upon from time to time. Vacations shall be
coordinated with the president, chief executive officer or chief operating
officer of the Company, shall be scheduled by the Employee with due regard to
the Employee's activities and responsibilities for the Company and shall not be
for a continuous period of more than two weeks.
(i) The Employee shall be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred in performing the Employee's services
hereunder, within the limits of authority which may be established by the
Company from time to time, provided that the Employee properly accounts for such
expenses in accordance with the Company policy.
5. Confidentiality; Non-Competition.
(a) The Employee shall treat as confidential any proprietary,
confidential or non-public information relating to the business or interests of
the Company or any affiliate of the Company, including, without limitation,
business plans or technical projects of the Company or any affiliate, and any
research datum or result, invention, customer list, process or other work
product developed by or for the Company or any affiliate, whether on the
premises of the Company or elsewhere ("Confidential Information"). The Employee
shall not disclose, utilize or make accessible in any manner or in any form any
Confidential Information other than in connection with performing the services
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required of the Employee under this Agreement, without the prior consent of the
Company. Notwithstanding the foregoing, the provisions of this Section 5(a)
shall not apply to any Confidential Information which is, or at some later date
becomes, publicly known under circumstances not involving a breach of any
confidentiality agreement with the Company or which is required to be disclosed
pursuant to order or requirement of a court, administrative agency or other
governmental body, provided that the Company has been given appropriate notice
of such proceeding and an opportunity to contest such disclosure.
(b) All business and technical records, information relating
to the business of the Company and its affiliates, papers, documents,
correspondence, or studies containing information relating to the Company and
its affiliates, in all cases irrespective of the manner in which such
information is kept or stored ("business records"), made or kept by the Employee
or under the Employee's possession or control shall be and remain the property
of the Company, and shall be surrendered to the Company upon the termination of
the Employee's employment. Upon such termination, the Employee shall not take
with him, publish, or disclose, or otherwise use, without the consent of the
president or chief executive officer of the Company, any business records.
(c) The Employee agrees that, during the period of the
Employee's employment with the Company or any affiliate thereof and for a period
of two years following the date upon which such employment shall terminate, the
Employee shall not, in any capacity, compete or attempt to compete with the
business of the Company; and the Employee acknowledges that a portion of the
payments being made to the Employee hereunder are being made, in part, as
consideration for such noncompetition agreement. The Employee represents and
agrees that, in the event of the termination of the Employee's employment with
the Company or any affiliate thereof, the Employee's experiences and
capabilities are such that the Employee can obtain employment in a non-competing
business, and that the enforcement of a remedy by way of injunction will not
prevent the Employee from earning a livelihood. The Employee further represents
and agrees that the covenants contained in this Section 5(c) are necessary for
the protection of the Company's legitimate business interests and are reasonable
in scope and content.
(d) The provisions of this Section 5 on the part of the
Employee shall be construed as an agreement independent of any other provision
contained in this Agreement and shall be enforceable in both law and equity,
including by temporary or permanent restraining order, notwithstanding the
existence of any claim or cause of action of the Employee against the Company or
any affiliate of the Company, whether predicated on this Section 5 or otherwise.
(e) The Employee agrees that all processes, technologies and
inventions, including new contributions, improvements, ideas or discoveries,
whether patentable or not, conceived, developed, invented or made by or under
the supervision of the Employee (collectively, "Inventions" ) during the period
of the Employee's employment by the Company, shall belong to the Company,
provided that the Inventions grow out of the Employee's work with the Company or
are related in any manner to any business (commercial or experimental) of the
Company. The Employee agrees that the Employee shall promptly (i) disclose all
Inventions to the Company, (ii) assign to the Company, without additional
compensation, all patents and other rights to all Inventions for the United
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States and all foreign countries, (iii) sign all papers necessary to carry out
the above, and (iv) give testimony (but without expense to the Employee) in
support of the Employee's inventorship. In the event that any Invention is
described in a patent application or is disclosed to third parties by the
Employee, directly or indirectly, within one year after leaving the employ of
the Company, it is to be presumed that the Invention was conceived or made
during the period of the Employee's employment by the Company. The Employee
agrees that the Company shall be entitled to shop rights with respect to any
Invention conceived or made by the Employee during the period of the Employee's
employment by the Company that is not related in any manner to any business
(commercial or experimental) of the Company but which was conceived or made on
the Company's time or with the use of the Company's facilities or materials.
Attached as an exhibit to this Agreement is a complete list of the Inventions,
patented or unpatented (including a brief description thereof), if any, which
the Employee conceived or made prior to the Employee's employment by the
Company, and which the Employee desires to exclude from this Agreement. There is
no other contract to assign Inventions that is now in existence between the
Employee and any other person, firm or corporation, unless indicated on the
exhibit, if any, attached to this Agreement, and unless a copy of any such other
contract is attached to such exhibit.
6. Termination.
(a) General. The Employee reaffirms that he is considered to
be employed by the Company "at will", which means that the Employee has the
right to terminate his employment with the Company whenever the Employee so
chooses, for any reason or for no reason; and that the Company has reserved to
itself the same right to terminate the Employee; provided, however, that the
Employee shall give the Company at least 30 days' prior notice of his intention
to terminate his employment; and provided further, that the Company upon receipt
of such notice of termination may elect to change the effective date of such
termination to such earlier date as it shall, in its sole discretion, determine
(which change in the effective date shall not be deemed to be a termination of
Employee's employment by the Company).
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(b) Termination Without Good Cause.
(i) Irrespective of the provisions set out in
section 6 (a) above In the event that the Company terminates the Employee
without good cause, the Company shall then make the following payments to the
Employee, in addition to any termination payments then required to be made by
applicable law to an employee who was employed on an "at will" basis:
(A) (1) If the Employee is terminated on or
before November 13, 1998, the Company shall pay the
Employee the sum of $5,000, (2) if the Employee is terminated on or after
November 14, 1998 and on or before January 12, 1999, the Company shall pay the
Employee the sum of $10,000, (3) if the Employee is terminated on or after
January 13, 1999 and on or before March 13, 1999, the Company shall pay the
Employee the sum of $15,000, and (4) if the Employee is terminated on or after
March 14, 1999, the Company shall pay the Employee the sum of $25,000.
(B) If the Employee is terminated within 60
days following a change in control of the Company (as
such term is used in Section 6.3 of the Company's 1994 Stock Option Plan, as
currently in effect), the Company shall pay the Employee, in lieu of and not in
addition to any payment required by clause (A) above, the sum of $25,000.
(ii) The Employee agrees that good cause for the
Employee's termination shall include (A) the Employee's
(1) willful refusal to accept duties and responsibilities which are lawfully
assigned by the Board of Directors or the president, chief executive officer or
chief operating officer of the Company, which assignments are consistent with
the Employee's status with the Company, or (2) willful refusal, failure or
physical inability to perform all or a material part of the Employee's assigned
duties or responsibilities, which refusal, failure or physical inability,
whether under subclause (1) or subclause (2) of this clause (A), is not remedied
promptly, but in no event later than, five days after notice thereof is provided
to the Employee, (B) the Employee's commission of an act of fraud,
misappropriation or dishonesty (including a meaningful falsification of
information (such as with respect to the Employee's prior experience or ability,
among other things) given to the Company by Employee in connection with the
Employee's hire) to the Company or any of its affiliates or falsification of a
written document delivered to the Company or any of its affiliates or on the
Company's or such affiliate's behalf, (C) the Employee's commission of a crime
with respect to which, in the reasonable judgment of the Company, the Employee
is likely to be incarcerated or as a result of which the Company, in its
reasonable judgment, determines it would be inappropriate for the Employee to
continue as an employee of the Company, and (D) notice by the Employee of his
intention to breach any of the terms or conditions of this Agreement.
7. Indemnity of Employee for Good Faith Acts and Omissions. The
Company agrees to indemnify, defend and hold the Employee harmless of and from
any liability, loss, expense, claim, cost, or other damage whatsoever arising
out of or in connection with any act or omission of the Employee, taken or
omitted in good faith in any capacity in which the Employee is acting for, or at
the request of, the Company, to the extent permitted by applicable law. The
Company presently maintains a Director and Officers Liability Policy covering
corporate officers. Employee shall be entitled to review a copy of any such
policy or policies which are in place from time to time.
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8. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties with respect to the employment
of the Employee by the Company and supersedes all prior agreements, arrangements
and understandings between the parties with respect thereto.
(b) Modification. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by an instrument executed by the party to be charged, or in the
case of a waiver, by the party waiving compliance.
(c) Waiver. The failure of either party at any time or times
to require performance of any provision of this Agreement in no manner shall
affect the right at a later time to enforce the same. No waiver by either party
of a breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach, or a waiver of
any other term or covenant contained in this Agreement.
(d) Notices. All notices, demands, consents, waivers and other
communications ("Communications") given under this Agreement shall be in writing
and shall be given (and shall be deemed to have been duly given) upon the
earlier of actual receipt, one business day after being sent by telegram or
telecopier or three business days after being sent by registered or certified
mail to the parties at the addresses set forth above or to such other address as
either party may hereafter specify by notice to the other party. Simultaneously
with sending a Communication to the Company, a copy of the Communication shall
be sent to Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxxxxx & Kuh, LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxx, Esq. Irrespective of the
foregoing, notice of change of address shall be effective only upon receipt.
(e) Governing Law. This Agreement and any supplemental
agreements hereto shall be construed in accordance with and governed by the laws
of the State of North Carolina applicable to contracts made and to be performed
wholly within such state and the courts of said state, including the federal
courts therein, shall have sole and exclusive jurisdiction of the parties and of
the subject matter of their respective agreements. Venue for any legal action
shall be in New Hanover County, North Carolina and in any legal action between
the parties, service of process may be accomplished by certified mail.
(f) Attorneys' Fees and Disbursements. In the event that
either party takes legal action to enforce any of the provisions of this
Agreement, the prevailing party shall be entitled to recover all reasonable
expenses incurred in connection therewith.
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(g) Assignability. This Agreement, and the Employee's rights
and obligations hereunder, may not be assigned by the Employee. The Company may
assign its rights, together with its obligations hereunder, to a successor by
merger or to a purchaser of substantially all of its assets, and such rights and
obligations shall inure to, and be binding upon, any such successor.
(h) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective legal representatives,
heirs, successors and permitted assigns.
(i) Invalidity. The invalidity of any part of this Agreement
is not intended to render invalid the remainder of this Agreement. If any
provision of this Agreement is so broad as to be unenforceable, such provision
is intended to be interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
C-PHONE CORPORATION
By: /s/ XXXXXX X.XXXXX
-------------------------------
Xxxxxx Xxxxx, President
and Chief Executive Officer
EMPLOYEE
/s/ XXXXX X. XXXXXX
-------------------------------
Xxxxx X. Xxxxxx
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SCHEDULE A
Employee Stock Options
1. Options under the Company's 1994 Stock Option Plan (the "Plan") to
acquire 50,000 Shares shall be granted as of the date of this Agreement
with the option price equal to the Fair Market Value of the Shares on
such date (as determined in accordance with the Plan) and expiring five
years from the date of grant, which shall be exercisable in accordance
with the terms of the Plan as follows:
Nonqualified Stock Option to purchase 12,500 Shares, which
shall vest 90 days from date of grant;
Incentive Stock Option to purchase 12,500 Shares, which shall
vest one year from date of grant;
Incentive Stock Option to purchase 12,500 Shares, which shall
vest two years from date of grant; and
Incentive Stock Option to purchase 12,500 Shares, which shall
vest three years from date of grant.
2. Options under the Plan to acquire an additional 50,000 Shares shall be
granted as of the date of this Agreement with the option price equal to
the Fair Market Value of the Shares on such date and expiring five
years from the date of grant, which shall be exercisable in accordance
with the terms of the Plan as follows:
Nonqualified Stock Option to purchase 25,000 Shares, which
shall vest on May 31, 2000 if the Company has met the
performance goals approved in good faith by the Compensation
Committee of the Board of Directors for the fiscal year ending
February 29, 2000; and
Nonqualified Stock Option to purchase 25,000 Shares, which
shall vest on May 31, 2001 if the Company has met the
performance goals approved in good faith by the Compensation
Committee of the Board of Directors for the fiscal year ending
February 28, 2001.
3. In the event that the Employee voluntarily terminates his employment,
any Options that have vested and are exercisable on the effective date
of his termination will remain exercisable until the expiration of 90
days from such date of termination (but in no event after the
expiration date of such Options). In the event that the Company
terminates the Employee for good cause, any Options that are
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exercisable will immediately terminate; and if any of such Options were
exercised but the underlying Shares were not yet delivered, such
exercises will be rescinded. In the event that the Company terminates
the employment of the Employee other than for good cause, any Options
that have vested and are exercisable on the effective date of the
Employee's termination will remain exercisable until the expiration of
such number of days as the Employee was immediately prior thereto
continuously employed by the Company but in no event less than 90 days
nor more that one year from such date of termination.
4. Any Options intended to be Incentive Stock Options must satisfy Section
422(b) of the Internal Revenue Code of 1986. In the event that any of
the provisions thereof are not satisfied, the effected Options shall be
deemed to be Nonqualified Stock Options.
5. All capitalized terms used in this Schedule A and not otherwise defined
herein shall have the meaning given them in the Plan, as currently in
effect.
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SCHEDULE B
Relocation Package
Housing Allowance: The Company shall provide the Employee with living
accommodations for the Employee and his family or
otherwise reimburse the Employee for his cost
therefor up to a maximum of $2,000 per month until
such time (not to exceed a period of six months) as
the Employee has obtained a permanent residence.
Moving Expenses: The Company shall advance the Employee the sum of
$6,250 against a non-accountable expense allowance in
connection with the expenses of moving Employee and
his family permanently to the Wilmington, North
Carolina area. The actual amount of relocation
expense, whether non-accountable or documented, shall
be agreed upon and approved in advance by Employer.
In the event that the Employee voluntarily terminates
his employment prior to his permanent relocation to
the Wilmington, North Carolina area, the Employee
shall reimburse the Company for the full amount of
the advance; which the Company is permitted to deduct
from any sums due and owing the employee. If Employer
terminates Employee without cause prior to permanent
relocation to the Wilmington, North Carolina area,
Employer shall reimburse the Employee for reasonable
expenses incurred for the return to California of
Employee and his family.
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