EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into and made effective as of
January 1, 1999, by and between Log On America, Inc., a Delaware corporation
("Employer") and Xxxxxxx X. Paolo ("Employee").
R E C I T A L S
WHEREAS, Employer and Employee have entered into a certain Employment Agreement,
dated as of January 12, 1998 by and among the Employer, the Employee and Wan
Secure, Inc., and Employer and Employee desire to enter into this Agreement in
order to restate such Employment Agreement in its entirety, as set forth below;
WHEREAS, Employer is desirous of hiring Employee as one of its key employees;
WHEREAS, Employee is willing to accept employment as an employee of Employer;
and WHEREAS, the parties hereto desire to delineate the responsibilities of
Employee and the expectations of Employer;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and obligations herein contained, the parties hereto agree as follows:
AGREEMENT
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby accepts
employment with Employer, upon the terms and conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT. The employment of Employee pursuant to the terms of
this Agreement shall commence as of January 12, 1998, and shall continue
for a period of six (6) years, unless sooner terminated pursuant to the
provisions hereof; PROVIDED, HOWEVER, that this Agreement shall, unless
earlier terminated, as of the fifteenth of each month of the term of this
Agreement, be automatically extended for an additional month.
3. DUTIES.
3.1. BASIC DUTIES. Subject to the direction and control of the Board of
Directors of Employer, Employee shall serve as the Vice President of
Administration, Secretary and Treasurer of Employer and shall
fulfill all duties and obligations of such office.
3.2. OTHER DUTIES OF EMPLOYEE. In addition to the foregoing, Employee
shall perform such other or different duties related to those set
forth in Paragraph 3.1 as may be assigned to him from time to time
by Employer; PROVIDED, HOWEVER, that any such additional assignment
shall be at a level of responsibility commensurate with that set
forth in Paragraph 3.1 and PROVIDED, FURTHER, that Employee may
serve, or continue to serve, on the boards of directors of, and hold
any other offices or positions in, companies or entities that in the
judgment of Employer will not present any conflict of interest with
Employer or any of its operations or adversely affect the
performance of Employee's duties pursuant to this Agreement.
3.3. TIME DEVOTED TO EMPLOYMENT. Employee shall devote his full time to
the business of Employer during the term of this Agreement to
fulfill his obligations hereunder.
3.4. PLACE OF PERFORMANCE OF DUTIES. The services of Employee shall be
performed at Employer's place of business and at such other
locations as shall be designated from time to time by Employer.
4. COMPENSATION AND METHOD OF PAYMENT.
4.1 TOTAL COMPENSATION. As compensation under this Agreement, Employer
shall pay and Employee shall accept the following:
(1) For each year of this Agreement, measured from the effective
date hereof, base compensation of fifty one thousand five
hundred dollars ($51,500), increased to Sixty Nine thousand
five hundred dollars ($69,500) immediately upon adequate
funding and further increased annually by ten percent (10%)
per year, plus such additional increases as may be approved
from time to time by the Board of Directors of Employer. All
such increases shall be effective as of the beginning of such
calendar year in which the increase becomes effective pursuant
to the terms hereof or is approved by the Board of Directors,
as the case may be. Such adjustments may be based on the
performance of Employer, the value of Employee to Employer or
any other factors considered relevant by Employer.
(2) For each year:
(i) an income performance based bonus ("Income Performance
Bonus"), payable quarterly, as stated in the 1998
management incentive plan
(3) Reimbursement of such discretionary expenses as are reasonable
and necessary, in the judgment of the Board of Directors, for
Employee's performance of his responsibilities under this
Agreement.
(4) Nonqualified options as described in the 1999 employee stock
option plan.
(5) Participation in Employer's employee fringe benefit programs
in effect from time to time for employees at comparable levels
of responsibility. Participation will be in accordance with
any applicable policies adopted by Employer. Employee shall be
entitled to vacations, absences for illness, and to similar
benefits of employment, and shall be subject to such policies
and procedures as may be adopted by Employer. Without limiting
the generality of the foregoing, it is initially anticipated
that such benefits of employment shall include four (4) weeks'
vacation during each 12-month period of employment with
Employer (which shall accrue monthly on a PRO RATA basis and
which shall be carried forward for a period not to exceed
three (3) years and otherwise in accordance with Employer's
policies); major medical and health insurance; life and
disability insurance; and stock option plans for employees and
members of the Board of Directors. Employer further agrees
that in the event it offers disability insurance to its
employees, Employer shall arrange for Employee to be covered
by similar insurance.
(6) In addition, Employee shall be entitled to: (a) a car
allowance of $450 per month (b) if for any reason Employee
shall not be covered by a health insurance policy of Employer,
a medical insurance coverage expense allowance of $800 per
month.
(7) In the event of a Change of Control of Employer (as such term
is defined in Section 4.3(2) hereof), Employee shall be
entitled to receive the balance of the unpaid base
compensation ("Unpaid Base Compensation") which would
otherwise be payable to Employee during the remainder of the
term of this Agreement pursuant to Section 4.1(1) hereof
within thirty (30) days of the date of such Change of Control
and any and all options granted to Employee pursuant to
Section 4.1(4) hereof and otherwise shall vest immediately
upon the date of such Change of Control; PROVIDED, HOWEVER, in
the event of such Change of Control of Employer, the term of
this Agreement shall automatically be extended to a period of
five (5) years from the date of such Change of Control of
Employer for purposes of this Section 4.1(7).
4.2 PAYMENT OF COMPENSATION. Employer shall pay the compensation provided for
in Section 4.1 hereof as follows:
(1) Employer shall pay the base compensation in cash in fifty-two equal
installments or in accordance with Employer's payroll practices for
all its employees, but in no event less frequently than bi-monthly.
(2) Employer shall pay all Incentive Compensation in cash or in
securities ("Securities") issued by Employer, which shall be at the
sole election of Employee, to a Deferred Compensation Trust, to be
established by Employer in the form provided in Exhibit "B" hereto.
With respect to each year, Employee shall, on or before the
beginning of such year, inform Employer in writing of the percentage
of Incentive Compensation which shall be paid in cash and of the
percentage thereof which shall be paid in Securities to the Deferred
Compensation Trust.
(3) Employer shall pay in cash the reimbursement of such discretionary
expenses provided in Section 4.1(3) hereof.
4.3 AMOUNTS PAID TO THE DEFERRED COMPENSATION TRUST
(1) The amount of Incentive Compensation paid by the Company to the
Deferred Compensation Trust may not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of Employee or
his beneficiaries, and Employee has only the status of a general
unsecured creditor of the Company as to the amounts of Incentive
Compensation paid pursuant to this Agreement.
(2) The total of Incentive Compensation paid to the Deferred
Compensation Trust pursuant to this Agreement will be distributed to
Employee therefrom in a lump sum on the occurrence of the earliest
of the following:
(a) Employee's termination of service because of death,
disability, or termination of employment;
(b) Employee's attainment of the age of sixty-five (65) years; or
(c) A Change of Control of Employer. For all purposes of this
Agreement, a "Change of Control" shall mean: (i) the
acquisition by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d), or any comparable
successor provisions, of the Securities Exchange Act of 1934
(the "Act") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Act) of at least twenty-five
percent (25%) of either the outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote generally, or (ii) the
approval by the stockholders of Employer of a reorganization,
merger or consolidation, in which persons who were
stockholders of Employer immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own or control more than fifty percent (50%) of
the combined voting power entitled to vote generally in the
election of directors of the surviving corporation of such
reorganization merger or consolidation, or a liquidation or
dissolution of Employer or of the sale of all or substantially
all of Employer's assets, or (iii) in the event Employer
terminates Employee pursuant to this Agreement for any reason
other than the occurrence of any of the events set forth in
Sections 5.2(2),(3),(4),(6), (7) or (9) hereof, or (iv) in the
event any person shall be elected by the stockholders of
Employer to the Board of Directors of Employer who shall not
have been nominated for election by a majority of the Board of
Directors of Employer or any duly appointed committee thereof
5. TERMINATION OF AGREEMENT.
5.1. BY NOTICE. This Agreement, and the employment of Employee hereunder,
may be terminated by Employee or Employer upon ninety (90) days'
written notice of termination; PROVIDED, HOWEVER, in the event
Employer terminates this Agreement for any reason other than the
occurrence of any of the events set forth in Sections 5.2 (2), (3),
(4), (6), (7) or (9), and subject to Section 4.1(7) hereof, Employee
shall be entitled to receive the balance of the unpaid base salary
which would otherwise be payable to Employer during the remainder of
the term of this Agreement pursuant to Sections 4.1(1) and 4.1(6)
hereof within thirty (30) days after such ninety (90) day notice
period.
5.2. OTHER TERMINATION. This Agreement, and the employment of Employee
hereunder, shall terminate immediately upon the occurrence of any
one of the following events:
(1) The death or mental or physical incapacity of Employee.
(2) The loss by Employee of legal capacity (other than as
hdescribed in Section 5.2(1) hereof).
(3) The failure by Employee to devote substantially all of his
available professional time to the business of Employer or the
wilful and habitual neglect of duties.
(4) The willful engaging by Employee in an act of dishonesty
constituting a felony under the laws of the state in which
Employer's principal place of business is located, resulting
or intending to result in gain or personal enrichment at the
expense of Employer or to the detriment of Employer's business
and to which Employee is not legally entitled.
(5) The continued incapacity in excess of one hundred eighty (180)
days on the part of Employee to perform his duties, unless
waived by Employer.
(6) The mutual written agreement of Employee and Employer. (7) The
expiration of the term of this Agreement. (8) The involuntary
termination of Employee as a director of Employer. (9)
Employee's breach of this Agreement.
5.3 EFFECT OF TERMINATION BY REASON OF DEATH OR INCAPACITY. In the event
of the termination of Employee's employment pursuant to Sections
5.2(1) or (5) of this Agreement prior to the completion of the term
of employment specified herein, and subject to Section 4.1(7)
hereof, Employee shall be entitled to receive the balance of the
unpaid compensation (including any Incentive Compensation pursuant
to Section 4.4 hereof) which is not covered by disability or other
insurance and which would otherwise be payable to Employee during
the term of this Agreement pursuant to Section 4.1(1) hereof within
60 days after such termination.
5.4. REMEDIES. No termination of the employment of Employee pursuant to
the terms of this Agreement shall prejudice any other remedy to
which any party to this Agreement may be entitled either at law, in
equity, or under this Agreement.
6. PROPERTY RIGHTS AND OBLIGATIONS OF EMPLOYEE.
6.1. TRADE SECRETS. For purposes of this Agreement, "trade secrets" shall
include without limitation any and all financial, cost and pricing
information and any and all information contained in any drawings,
designs, plans, proposals, customer lists, records of any kind,
data, formulas, specifications, concepts or ideas, where such
information is reasonably related to the business of Employer and
has not previously been publicly released by duly authorized
representatives of Employer or Parent or otherwise lawfully entered
the public domain.
6.2. PRESERVATION OF TRADE SECRETS. Employee will preserve as
confidential all trade secrets pertaining to Employer's business
that have been or may be obtained or learned by him by reason of his
employment or otherwise. Employee will not, without the written
consent of Employer, either use for his own benefit or purposes or
disclose or permit disclosure to any third parties, either during
the term of his employment hereunder or thereafter (except as
required in fulfilling the duties of his employment), any trade
secret connected with the business of Employer.
6.3. TRADE SECRETS OF OTHERS. Employee agrees that he will not disclose
to Employer or induce Employer to use any trade secrets belonging to
any third party.
6.4. PROPERTY OF EMPLOYER. Employee agrees that all documents, reports,
files, analyses, drawings, designs, tools, equipment, plans
(including, without limitation, marketing and sales plans),
proposals, customer lists, computer software or hardware, and
similar materials that are made by him or come into his possession
by reason of his employment with Employer are the property of
Employer and shall not be used by him in any way adverse to
Employer's interests. Employee will not allow any such documents or
things, or any copies, reproductions or summaries thereof to be
delivered to or used by any third party without the specific consent
of Employer. Employee agrees to deliver to the Board of Directors of
Employer or its designee, upon demand, and in any event upon the
termination of Employee's employment, all of such documents and
things which are in Employee's possession or under his control.
6.5 NONCOMPETITION BY EMPLOYEE. During the term of this Agreement, and
for a period of one (1) year following the termination of this
Agreement, Employee shall not, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, principal
stockholder, corporate officer, director, or in any other individual
or representative capacity: (i) engage or participate in any
business that is in competition in any manner with the business of
Employer; (ii) divert, take away or attempt to divert or take away
(and during the one year period, call on or solicit) any of
Employer's clients within the United States. For purposes of this
Agreement, the term "Employer's clients" shall mean clients who had
a business relationship with Employer prior to Employee's employment
with Employer and those who develop a business relationship with
Employer, during Employee's employment with Employer; (iii)
undertake planning for or organization of any business within the
United States or in any other country in which Employer is engaged
in business activity competitive with Employer's business within the
United States or in any other country in which Employer is engaged
in business or combine or conspire with employees or other
representative of Employer's business within the United States or in
any other country in which Employer is engaged in business for the
purpose of organizing any such competitive activity within the
United States or in any other country in which Employer is engaged
in business; or (iv) induce or influence (or seek to induce or
influence) any person who is engaged, as an employee, agent,
independent contractor or otherwise by Employer within the United
States or in any other country in which Employer is engaged in
business to terminate his or her employment or engagement.
6.6 SURVIVAL PROVISIONS AND CERTAIN REMEDIES. Unless otherwise agreed to
in writing between the parties hereto, the provisions of this
Section 6 shall survive the termination of this Agreement. The
covenants in this Section 6 shall be construed as separate covenants
and to the extent any covenant shall be judicially unenforceable, it
shall not affect the enforcement of any other covenant. In the event
Employee breaches any of the provisions of this Section 6, Employee
agrees that Employer shall be entitled to injunctive relief in
addition to any other remedy to which Employer may be entitled.
7. GENERAL PROVISIONS.
7.1. NOTICES. Any notices or other communications required or permitted
to be given hereunder shall be given sufficiently only if in writing
and served personally or sent by certified mail, postage prepaid and
return receipt requested, addressed as follows:
If to Employer: Log On America, Inc.
0 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Paolo
Tel: 000-000-0000 Ext: 1
Fax: 000-000-0000
If to Employee: Xxxxxxx X.. Paolo
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
However, either party may change his/its address for purposes of this Agreement
by giving written notice of such change to the other party in accordance with
this Paragraph 7.1. Notices delivered personally shall be deemed effective as of
the day delivered and notices delivered by mail shall be deemed effective as of
three days after mailing (excluding weekends and federal holidays).
7.2. CHOICE OF LAW AND FORUM. Except as expressly provided otherwise in
this Agreement, this Agreement shall be governed by and construed in
accordance with the laws of the State of Rhode Island. The parties
agree that any dispute arising under this Agreement, whether during
the term of this Agreement or at any subsequent time, shall be
resolved exclusively in the courts of the State of Rhode Island and
the parties hereby submit to the jurisdiction of such courts for all
purposes provided herein and appoint the Secretary of State of the
State of Rhode Island as agent for service of process for all
purposes provided herein.
7.3. ENTIRE AGREEMENT; MODIFICATION AND WAIVER. This Agreement supersedes
any and all other agreements, whether oral or in writing, between
the parties hereto with respect to the employment of Employee by
Employer and contains all covenants and agreements between the
parties relating to such employment in any manner whatsoever. Each
party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, oral or written, have been
made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding.
Any modification of this Agreement shall be effective only if it is
in writing signed by the party to be charged. No waiver of any of
the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the
waiver.
7.4. ASSIGNMENT. Because of the personal nature of the services to be
rendered hereunder, this Agreement may not be assigned in whole or
in part by Employee without the prior written consent of Employer.
However, subject to the foregoing limitation, this Agreement shall
be binding on, and shall inure to the benefit of, the parties hereto
and their respective heirs, legatees, executors, administrators,
legal representatives, successors and assigns.
7.5. SEVERABILITY. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable, or invalid as applied to any particular
case or in all cases, such circumstances shall not have the effect
of rendering any such provision inoperative, unenforceable, or
invalid in any other case or of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid.
7.6 CORPORATE AUTHORITY. Employer represents and warrants as of the date
hereof that Employer's execution and delivery of this Agreement to
Employee and the carrying out of the provisions hereof have been
duly authorized by Employer's Board of Directors and authorized by
Employer's shareholders and further represents and warrants that
neither the execution and delivery of this Agreement, nor the
compliance with the terms and provisions thereof by Employer will
result in the breach of any state regulation, administrative or
court order, nor will such compliance conflict with, or result in
the breach of, any of the terms or conditions of Employer's Articles
of Incorporation or Bylaws, as amended, or any agreement or other
instrument to which Employer is a party, or by which Employer is or
may be bound, or constitute an event of default thereunder, or with
the lapse of time or the giving of notice or both constitute an
event of default thereunder.
7.7. ATTORNEYS' FEES. In any action at law or in equity to enforce or
construe any provisions or rights under this Agreement, the
unsuccessful party or parties to such litigation, as determined by
the courts pursuant to a final judgment or decree, shall pay the
successful party or parties all costs, expenses, and reasonable
attorneys' fees incurred by such successful party or parties
(including, without limitation, such costs, expenses, and fees on
any appeals), and if such successful party or parties shall recover
judgment in any such action or proceedings, such costs, expenses,
and attorneys' fees shall be included as part of such judgment.
7.8. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
7.9. HEADINGS AND CAPTIONS. Headings and captions are included for
purposes of convenience only and are not a part hereof.
7.10. CONSULTATION WITH COUNSEL. Employee acknowledges that he has had the
opportunity to consult with counsel independent of Employer or
Employer's counsel, Xxxxxxxx Xxxxxx Esq., regarding the entering
into of this Agreement and has done so to the extent he sees fit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first written above at Providence, Rhode Island.
"Employer"
Log On America, Inc.,
a Delaware corporation
By: /s/ Xxxxx X. Paolo
--------------------------
Xxxxx X. Paolo
President and Chief Executive Officer
"Employee"
By: /s/ Xxxxxxx X. Paolo
--------------------------
Xxxxxxx X.. Paolo
