Exhibit 10.2 Employment Agreement Between Incomnet, Inc. and Xxxxxxx X.
Xxxxxxx, dated June 5, 1997
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 5th day of
June 1997, by and between Incomnet, Inc., a California corporation (the
"Company"), and Xxxxxxx X. Xxxxxxx, an individual ("Employee"), and is made with
respect to the following facts:
R E C I T A L S
A. The Company and the Employee wish to ensure that the Company will
receive the benefit of Employee's loyalty and service.
B. In order to help ensure that the Company receives the benefit of
Employee's loyalty and service, the parties desire to enter into this
formal Employment Agreement to provide Employee with appropriate
compensation arrangements and to assure Employee of employment
stability.
C. The parties have entered into this Agreement for the purpose of
setting forth the terms of employment of the Employee by the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, THE PARTIES HERETO AGREE AS FOLLOWS:
1. EMPLOYMENT OF EMPLOYEE AND DUTIES. The Company hereby hires Employee
and Employee hereby accepts employment upon the terms and conditions described
in this Agreement. The Employee shall be the Secretary and Vice-President of
the Company with all of the duties, privileges and authorities usually attendant
upon such office, including but not limited to responsibility for the management
of the Company's books and records, the keeping of corporate minutes, the
preparation of the Company's reports under the Securities and Exchange Act of
1934, as amended, the supervision of the administration of the Company, and
assisting the President of the Company in managing its day-to-day business.
Subject to (a) the general supervision of the President and the Board of
Directors of the Company, and (b) the Employee's duty to report to the President
and the Board of Directors periodically, as specified by them from time-to-time,
Employee shall have the authority to perform his employment duties for the
Company.
2. TIME AND EFFORT. Employee agrees to devote his full working time and
attention to the management of the Company's business affairs, the
implementation of its strategic plan, as determined by the President and the
Board of Directors, and the fulfillment of his duties and responsibilities as
the Company's corporate Secretary. Expenditure of a reasonable amount of time
for personal matters and business and charitable activities shall not be deemed
to be a breach of this Agreement, provided that those activities do not
materially interfere with the services required to be rendered to the Company
under this Agreement.
3. THE COMPANY'S AUTHORITY. Employee agrees to comply with the Company's
rules and regulations as adopted by the Company's President and Board of
Directors regarding the performance of his duties, and to carry out and perform
those orders, directions and policies established by the Company with respect to
his engagement. Employee shall promptly notify the Company's President or Board
of Directors,
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as the case may be, of any objection he has to the President's or the Board's
directives, respectively, and the reasons for such objection.
4. NONCOMPETITION BY EMPLOYEE. During the term of this Agreement and
during any period in which Employee is receiving severance benefits, if any,
the Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder (in a private
company), corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition with the business of the Company or its affiliates.
5. TERM OF AGREEMENT. Unless properly terminated earlier pursuant to
Section 13 of this Agreement, this Agreement shall commence to be effective
on the date first above written and shall continue until (i) six months after
the date that 100% of the Company's holdings of NTC stock are sold, conveyed,
spun-off, or otherwise distributed ("Early Termination Date", which means six
months after said sale, conveyance, spin-off or distribution) provided, that
in the event of a termination of this Agreement, as amended, pursuant to
Section 2(i) herein, then (a) the Company shall pay to the Employee a lump
sum payment equal to the sum of the annual compensation and accrued but
unpaid bonus (if any, with respect to bonus) which would be payable to the
Employee for one year after the Early Termination Date pursuant to Sections
6.1 and 6.2 herein, respectively, but not beyond December 31, 1999, (b)
Employee shall be entitled to all of the benefits under Section 7 of this
Agreement, as amended, for one additional year after the Early Termination
Date, but not beyond December 31, 1999, and (c) Employee shall be entitled to
exercise all vested stock options which he owns for the entire remaining
exercise period of the stock options as set forth in Section 8 of the
Company's 1996 Stock Option Plan and the Minutes (as defined in Section 6.3
of this Agreement), no such stock options shall terminate prior to said
expiration dates, and no "severance" shall be deemed to have occurred under
the Company's 1996 Stock Option Plan or under existing Stock Option
Agreements covering said stock options, or (ii) December 31, 1999, unless
properly terminated sooner as provided in Section 13 of the Agreement, as
amended by this Amendment.
6. COMPENSATION. During the term of this Agreement, the Company shall
pay the following compensation to Employee:
6.1 ANNUAL COMPENSATION. Employee shall be paid a fixed salary of
$115,000 per year, payable in two installments per month of $4,791.66 each on
the 15th and last day of each month, commencing for the period from June 5,
1997 to June 15, 1997 and ending for the period from December 15, 1999 to
December 31, 1999.
6.2 ADDITIONAL COMPENSATION. In addition to the compensation set
forth in Sections 6.1 and 6.3 of this Agreement, Employee may be paid a bonus
or bonuses during each year, as determined at the sole discretion of the
Company's Board of Directors based on the Board's evaluation of the
Employee's definable efforts, accomplishments and similar contributions.
6.3 STOCK INCENTIVES. The Company and the Employee hereby
reconfirm the terms and conditions of the stock options granted to the
Employee by the Company to date as set forth in Section 8 of the Company's
1996 Stock Option Plan, and the stock options to purchase 40,000 shares of
the Company's common stock pursuant to the terms and conditions set forth in
the minutes of the meeting of the Company's Board of Directors, dated January
21, 1997 and January 22, 1997 (collectively, the "Minutes").
7. FRINGE BENEFITS. Employee shall be entitled to all fringe benefits
which the Company or its subsidiaries may make available from time-to-time
for persons with comparable positions and responsibilities. Without
limitation, such benefits shall include participation in any life and
disability
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insurance programs, profit incentive plans, pension or retirement plans, and
bonus plans as are maintained or adopted from time-to-time by the Company.
The Company shall also provide Employee with medical group insurance coverage
or equivalent coverage for Employee and his dependents.
8. OFFICE AND STAFF. In order to enable Employee to discharge his
obligations and duties pursuant to this Agreement, the Company agrees that it
shall provide suitable office space for Employee in the Los Angeles
Metropolitan Area, together with all necessary and appropriate supporting
staff and secretarial assistance, equipment, stationery, books and supplies.
Employee agrees that the supporting staff presently in place is suitable for
the purposes of this Agreement. The Company agrees to provide at its expense
parking for one vehicle by the Employee at the Company's executive offices.
9. REIMBURSEMENT OF EXPENSES. The Company shall reimburse Employee for
all reasonable travel, mobile telephone, promotional and entertainment
expenses incurred in connection with the performance of Employee's duties
hereunder. Employee's reimbursable expenses shall be paid promptly by the
Company upon presentment by Employee of an itemized list of invoices
describing such expenses. All compensation provided in Sections 6, 7 and 9
of this Agreement shall be subject to customary withholding tax and other
employment taxes, to the extent required by law.
10. VACATION. Employee shall be entitled to three weeks of paid
vacation per year or pro rata portion of each year of service by Employee
under this Agreement. The Employee shall be entitled to the holidays
provided in the Company's established corporate policy for employees with
comparable duties and responsibilities.
11. RIGHTS IN AND TO INVENTIONS AND PATENTS.
11.1 DESCRIPTION OF PARTIES' RIGHTS. The Employee agrees that with
respect to any inventions made by him or the Company during the term of this
Agreement, solely or jointly with others, (i) which are made with the
Company's equipment, supplies, facilities, trade secrets or time, or (ii)
which relate to the business of the Company or the Company's actual or
demonstrably anticipated research or development, or (iii) which result from
any work performed by the Employee for the Company, such inventions shall
belong to the Company. The Employee also agrees that the Company shall have
the right to keep such inventions as trade secretes, if the Company chooses.
11.2 DISCLOSURE REQUIREMENTS. For purposes of this Agreement, an
invention is deemed to have been made during the term of this Agreement if,
during such period, the invention was conceived or first actually reduced to
practice. The Employee agrees that any patent application filed within one
year after termination of his employment shall be presumed to relate to an
invention made during the term of this Agreement unless he can provide
evidence to the contrary. In order to permit the Company to claim rights to
which it may be entitled, the Employee agrees to disclose to the Company in
confidence all inventions which the Employee makes during the term of this
Agreement and all patent applications filed by the Employee within one year
after termination of this Agreement.
12. ARBITRATION. Any disputes arising under this Agreement will be
resolved in accordance with the rules of the American Arbitration Association
as they apply in the County of Los Angeles, State of California. The
decision of the arbitrator shall be binding on all parties to this Agreement.
13. TERMINATION. This Agreement may be terminated in the following
manner and not otherwise:
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13.1 MUTUAL AGREEMENT. This Agreement may be terminated by the
mutual written agreement of the Company and Employee to terminate.
13.2 TERMINATION BY EMPLOYEE FOR BREACH. Employee may at his option
and in his sole discretion terminate this Agreement for the material breach
by the Company of the terms of this Agreement. In the event of such
termination, Employee shall give the Company 30 days' prior written notice.
13.3 TERMINATION BY THE COMPANY FOR BREACH. The Company may at its
option immediately terminate this Agreement in the event Employee commits
gross negligence in the performance of his duties under this Agreement, or
breaches his fiduciary duty to the Company, to the Board of Directors or to
the Company's shareholders; provided, however, that the Company shall give
the Employee written notice of specific instances for the basis of any
termination of this Agreement by the Company pursuant to Section 13.3 of this
Agreement. Employee shall have a period of 30 days after said notice in
which to cease the alleged violations before the Company may terminate this
Agreement. If Employee ceases to commit the alleged violations within said
30 day period, the Company may not terminate this Agreement pursuant to this
Section. If Employee continues to commit the alleged violations after said
30 day period, the Company may terminate this Agreement immediately upon
written notification to Employee.
13.4 TERMINATION UPON DEATH. This Agreement shall terminate upon
the death of the Employee.
13.5 TERMINATION UPON THE DISABILITY OF THE EMPLOYEE. This
Agreement shall terminate upon the disability of the Employee. As used in
the previous sentence, the term "disability" shall mean the complete
disability to discharge Employee's duties and responsibilities for a
continuous period of not less than six months during any calendar year.
Any physical or mental disability which does not prevent Employee from
discharging his duties and responsibilities in accordance with usual
standards of conduct as determined by the Company in its reasonable opinion
shall not constitute a disability under this Agreement.
14. IMPROPER TERMINATION. If this Agreement is terminated by Employee
pursuant to Section 13.2 herein or by the Company in any manner except as
specifically provided in Section 13 herein, then (i) the Company shall
immediately pay to the Employee a lump sum payment equal to the sum of (a)
the Employee's entire annual compensation and accrued but unpaid bonus (if
any, with respect to bonus) payable through December 31, 1999 pursuant to
Sections 6.1 and 6.2 herein, respectively, and (b) the annual compensation
and accrued but unpaid bonus (if any, with respect to bonus) which would be
payable to the Employee for 15 additional months pursuant to Sections 6.1 and
6.2 herein, respectively, (ii) Employee shall be entitled to all of the
benefits under Section 7 of this Agreement, through March 31, 2001, and (iii)
Employee shall be entitled to exercise all vested stock options which he owns
for the entire remaining exercise period of the stock options as set forth in
Section 8 of the Company's 1996 Stock Option Plan and the Minutes, no such
stock options shall terminate prior to said expiration dates, and no
"severance" shall be deemed to have occurred under the Company's 1996 Stock
Option Plan or under existing Stock Option Agreements covering said stock
options. It is specifically agreed that in such event Employee shall have no
duty to mitigate his damages by seeking comparable, inferior, or different
employment.
15. INDEMNIFICATION OF EMPLOYEE. Pursuant to the provisions and subject
to the limitations of the California Corporations Code, and in particular
Sections 204 and 317 therein, the Company shall indemnify and hold Employee
harmless as provided in Sections 15.1, 15.2 and 15.3 of this Agreement. The
Company shall, upon the request of Employee, assume the defense and directly
bear all of the expense of
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any action or proceedings which may arise for which Employee is entitled to
indemnification pursuant to this Section.
15.1 INDEMNIFICATION OF EMPLOYEE FOR ACTIONS BY THIRD PARTIES. The
Company hereby agrees to indemnify and hold Employee harmless from any
liability, claims, fines, damages, losses, expenses, judgments or settlements
actually incurred by him, including but not limited to reasonable attorneys'
fees and costs actually incurred by him as they are incurred, as a result of
Employee being made at any time a party to, or being threatened to be made a
party to, any proceeding (other than an action by or in the right of the
Company, which is addressed in Section 15.2 of this Agreement), relating to
actions Employee takes within the scope of his employment as the Secretary
and Vice-President of the Company or in his role as a director of the
Company, provided that Employee acted in good faith and in a manner he
reasonably believed to be in the best interest of the Company and, in the
case of a criminal proceeding, had no reasonable cause to believe his conduct
was unlawful.
15.2 INDEMNIFICATION OF EMPLOYEE FOR ACTIONS IN THE RIGHT OF THE
COMPANY. The Company hereby agrees to indemnify and hold Employee harmless
from any liability, claims, damages, losses, expenses, judgments or
settlements actually incurred by him, including but not limited to reasonable
attorneys' fees and costs actually incurred by him as they are incurred, as a
result of Employee being made a party to, or being threatened to be made a
party to, any proceeding by or in the right of the Company to procure a
judgment in its favor by reason of any action taken by Employee as an
officer, director or agent of the Company, provided that Employee acted in
good faith in a manner he reasonably believed to be in the best interests of
the Company and its shareholders, and provided further, that no
indemnification by the Company shall be required pursuant to this Section
15.2 (i) for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law, (ii) for acts or omissions that
Employee believed to be contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the part of
Employee, (iii) for any transaction from which Employee derived an improper
personal benefit, (iv) for acts or omissions that show a reckless disregard
by Employee of his duties to the Company or its shareholders in circumstances
in which Employee was aware, or should have been aware, in the ordinary
course of performing his duties, of a risk of serious injury to the Company
or its shareholders, (v) for acts or omissions that constitute an unexcused
pattern of inattention that amounts to an abdication of Employee's duties to
the Company or its shareholders, (vi) for any violation by Employee of
Section 310 of the California Corporations Code or (vii) for any violation by
Employee of Section 316 of the California Corporations Code. Furthermore,
the Company has no obligation to indemnify Employee pursuant to this Section
15.2 in any of the following circumstances:
A. In respect of any claim, issue, or matter as to which Employee is
adjudged to be liable to the Company in the performance of his duties to the
Company and its shareholders, unless and only to the extent that the court in
which such action was brought determines upon application that, in view of
all the circumstances of the case, he is fairly and reasonably entitled to
indemnity for the expenses and then only in the amount that the court shall
determine.
B. For amounts paid in settling or otherwise disposing of a threatened
or pending action without court approval.
C. For expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval.
15.3 REIMBURSEMENT. In the event that it is determined that
Employee is not entitled to indemnification by the Company pursuant to
Sections 15.1 or 15.2 of this Agreement, then Employee is
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obligated to reimburse the Company for all amounts paid by the Company on
behalf of Employee pursuant to the indemnification provisions of this
Agreement. In the event that Employee is successful on the merits in the
defense of any proceeding referred to in Sections 15.1 or 15.2 of this
Agreement, or any related claim, issue or matter, then the Company will
indemnify and hold Employee harmless from all fees, costs and expenses
actually incurred by him in connection with the defense of any such
proceeding, claim, issue or matter.
16. ASSIGNABILITY OF BENEFITS. Except to the extent that this provision
may be contrary to law, no assignment, pledge, collateralization or
attachment of any of the benefits under this Agreement shall be valid or
recognized by the Company. Payment provided for by this Agreement shall not
be subject to seizure for payment of any debts or judgments against the
Employee, nor shall the Employee have any right to transfer, modify,
anticipate or encumber any rights or benefits hereunder; provided that any
stock issued by the Company to the Employee pursuant to this Agreement shall
not be subject to Section 16 of this Agreement.
17. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Company will
review in good faith the prospect of purchasing directors' and officers'
liability insurance for the officers and directors of the Company, which
would include the same coverage for Employee, provided, that any decision was
to whether or not the Company purchases such insurance coverage will be in
the sole discretion of the Company's Board of Directors.
18. NOTICE. Except as otherwise specifically provided, any notices to
be given hereunder shall be deemed given upon personal delivery, air courier
or mailing thereof, if mailed by certified mail, return receipt requested, to
the following addresses (or to such other address or addresses as shall be
specified in any notice given):
In case of the Company:
Incomnet, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, President and
Chairman of the Board of Directors
In case of the Employee:
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxx. #0000
Xxxxxxxx Xxxxx, XX 00000
19. ATTORNEYS' FEES. In the event that any of the parties must resort
to legal action in order to enforce the provisions of this Agreement or to
defend such suit, the prevailing party shall be entitled to receive
reimbursement from the nonprevailing party for all reasonable attorneys' fees
and all other costs incurred in commencing or defending such suit.
20. ENTIRE AGREEMENT. This Agreement embodies the entire understanding
among the parties and merges all prior discussions or communications among them,
and no party shall be bound by any
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definitions, conditions, warranties, or representations other than as
expressly stated in this Agreement or as subsequently set forth in a writing
signed by the duly authorized representatives of all of the parties hereto.
21. NO ORAL CHANGE; AMENDMENT. This Agreement may only be changed or
modified and any provision hereof may only be waived by a writing signed by
the party against whom enforcement of any waiver, change or modification is
sought. This Agreement may be amended only in writing by mutual consent of
the parties.
22. SEVERABILITY. In the event that any provision of this Agreement
shall be void or unenforceable for any reason whatsoever, then such provision
shall be stricken and of no force and effect. The remaining provisions of
this Agreement shall, however, continue in full force and effect, and to the
extent required, shall be modified to preserve their validity.
23. APPLICABLE LAW. This Agreement shall be construed as a whole and in
accordance with its fair meaning. This Agreement shall be interpreted in
accordance with the laws of the State of California, and venue for any action
or proceedings brought with respect to this Agreement shall be in the County
of Los Angeles in the State of California.
24. SUCCESSORS AND ASSIGNS. Each covenant and condition of this
Agreement shall inure to the benefit of and be binding upon the parties
hereto, their respective heirs, personal representatives, assigns and
successors in interest. Without limiting the generality of the foregoing
sentence, this Agreement shall be binding upon any successor to the Company
whether by merger, reorganization or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
COMPANY:
INCOMNET, INC.,
a California corporation
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Xxxxxx Xxxxxxx, President and Chairman of the Board of Directors
/s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx, Director
/s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx, Director
/s/ Xxxxxx Xxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxx
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
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