Exhibit 10.1
NET-Tel, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and effective this 5th day of January, 1998, by
and between, NET-Tel, Inc., (hereinafter referred to as "Corporation") having
its principal place of business at 3050 "K" Street, NW, #250, Washington, DC
20007 and David Lynch (hereinafter referred to as the "Employee") who resides at
917 N. Glenhurst Road, Birmingham, MI 48009.
A. Corporation is engaged in the business of designing, creating, and
marketing telephone services and telephone management and consulting, including
the resale of long distance 1+ service, both domestic and international.
B. Corporation desires to hire the Employee.
C. Employee is willing to be employed by the Corporation.
D. The parties hereto desire to specify the terms of Employee's
employment by Corporation.
Therefore, the parties agree as follows.
1. Term of Employment.
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Corporation hereby employs Employee and Employee accepts
employment with and agrees to serve Corporation, subject to and upon the terms
and conditions of this Agreement. This Agreement shall commence on January 5,
1998 and remain in full force and effect unless and until terminated by either
party pursuant to the provisions in Paragraph 13.
2. Duties.
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Employee shall be employed by the Corporation as the
President, Direct Sales in such other positions involving comparable
responsibilities as the Chief Executive Officer or the Board of Directors of the
Corporation may designate from time to time. Employee shall perform the duties
normally associated with such position. In addition, Employee shall perform such
other duties as the Corporation shall reasonably assign from time to time.
3. Compensation.
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3.1 As compensation for services rendered to the Corporation, the
Corporation shall pay Employee a Base Salary, which on an annualized basis would
be equivalent to $ 150,000. In addition to the Base Salary, Corporation shall
pay Employee quarterly commissions based upon the Direct Sales revenue goals set
forth in Schedule A hereto, plus any other payments or benefits which may be
granted to him specifically or to which he may hereafter be entitled under any
plan or arrangement maintained by the Corporation for its executives, management
employees, or employees
generally. Employee's Base Salary shall be payable in installments at such
intervals as the Corporation pays the salaries of its management employees
generally, but in no event less frequently than on a monthly basis, and subject
to such deductions and withholdings as are required to be made pursuant to
applicable government laws, rules and regulations. Employee shall also be
eligible for such additional incentive compensation as may be determined by the
Board of Directors from time to time in its sole discretion.
3.2 Employee shall be eligible to participate in any
executive pension plan, benefit plan, or arrangement of the Corporation
applicable to executives, management employees, or employees generally, which
becomes available during the term of Employee's employment
4. Best Efforts.
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4.1 Employee agrees to perform faithfully, industriously, and
to the best of Employee's ability, experience, and talents, all of the duties
that may be required by the express and implicit terms of this Agreement, to the
reasonable satisfaction of Corporation. Such duties shall be performed at such
place(s) as the needs, business, or opportunities the Corporation may require
from time to time.
4.2 Employee agrees that so long as this Agreement continues
in effect, Employee shall devote substantially all of his full business time and
energies to the business and affairs of the Corporation, Employee shall use his
best efforts, skills and abilities to promote the Corporation's interests, and
Employee shall perform the duties described in this Agreement and such other
duties as may reasonably be assigned to Employee.
4.3 During the Employee's employment by Corporation, Employee
shall not directly or indirectly, either as owner, partner, shareholder, broker,
dealer, agent, employee or otherwise, engage in any other significant business
activity for gain or profit or other pecuniary advantage; provided, however,
that this section shall not limit or restrict Employee's right to make and have
personal investments in such form or manner that do not require Employee's
active services in the daily operations or affairs of the business in which such
investments are made and do not otherwise conflict with Employee's duties and
obligations to the Corporation.
5. Personal Days.
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5.1 Employee shall be entitled to three (3) weeks (i.e. 15
days) paid personal days days) after he/she has been employed with Corporation
for six months of employment. After the first year of employment, if Employee
continues to be employed by Corporation, Employee will be entitled to three (3)
weeks paid personal days on the anniversary of Employee's date of hire. After
four years of employment, Employee will be entitled to four (4) weeks of paid
personal days on his employment anniversary date.
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5.2 At the end of each calendar year, Employee can elect to
have one-half of his unused personal days, up to 10 days, paid to him as a bonus
(based on Employee's Base Salary). Employee can carry over the remainder of his
unused personal days into the following year, but at no time can Employee begin
a new year on January I with more than 20 personal days.
6. Business Expenses.
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Employee shall be entitled to reimbursement by Corporation for
any ordinary and necessary business expenses incurred by Employee in the
performance of Employee's duties on behalf of the Corporation, provided that:
(a) Each such expenditure is of a nature qualifying it as a
proper deduction on the federal and state income tax returns of Corporation as a
business expense and not as compensation to Employee; and
(b) Employee furnishes to Corporation adequate records and
other documentary evidence as required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of such expenditures as a deductible business expense of Corporation.
7. Reimbursement.
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Employee agrees that, if at any time any payment made to
Employee by Corporation as business expense reimbursement shall be disallowed in
whole or in part as a nondeductible expense of Corporation by any taxing
authority, Employee shall reimburse Corporation to the full extent of such
disallowance, with interest thereon at the rate as would be charged by the
Internal Revenue Service for such period from the date of reimbursement by
Corporation until repaid.
8. Stock Options.
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Employee shall be entitled to options to purchase shares of
common stock of the Corporation in accordance with the Corporation's Stock
Incentive Plan.
9. Prohibition on Using Confidential Information.
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9.1 Employee recognizes and acknowledges that Confidential
Information (defined below) is a valuable and unique asset of NET-tel, access to
and knowledge of which is essential to the performance of the Employee' duties
to NET-tel. Except as required to perform the services required under this
Agreement, Employee shall not, during his employment or any time thereafter,
disclose, in whole or in part, such Confidential Information to any person,
firm, corporation, association, or other entity for any reasons or purpose
whatsoever, or make use of such Confidential Information for his own purposes or
for the benefit of such person or other entity (except NET-tel), under any
circumstances.
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9.2 Employee shall, prior to or upon leaving NET-tel, deliver
to NET-tel any and all records, items, media of any type (including all partial
or complete copies or duplicates) containing or otherwise relating to
Confidential Information whether prepared or acquired by Employee or provided to
Employee by NET-tel. Employee also acknowledges that all such records, items and
media are at all times and shall remain the property of NET-tel.
9.3 Confidential information means information disclosed to or
known by an employee as a consequence or through his association with NET-tel,
including any information conceived, originated, discovered, or developed by
Employee , which is not generally known to the public or potential competitors
of NET-tel and which constitutes or relates to marketing, sales, research,
development, or know-how, including, but not limited to plans, specifications,
drawings, sketches, lay-outs and formulas, development and manufacture of the
products of the Corporation, purchasing, accounting, customer or contract lists,
trade engineering and technical data, computer software and hardware design,
information entrusted to NET-tel by third parties, or any trade secrets,
proprietary or confidential matter.
9.4 Employee shall not acquire any intellectual property
rights under this Agreement except the limited right to use set out above.
Employee acknowledges that, as between NET-tel and Employee, the Confidential
Information and all related copyrights and other intellectual property rights,
are (and at all times will be) the property of NET-tel, even if suggestions,
comments, and/or ideas made by Employee are incorporated into the Confidential
Information or related materials during the period of this Agreement.
10. Non-Solicitation.
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Employee recognizes and acknowledges that NET-tel has a
national and international market for its services, and that Employee's duties
will be performed in, and will require him to come into contact with the
national and international market. Employee acknowledges that this market is
very competitive and that because of these factors and because of the
Confidential Information and customer lists which NET-tel has purchased or
developed that have been or will be obtained by or disclosed to Employee, as
well as the access Employee has or will have to NET-tel's subscribers,
customers, and accounts, Employee will abide by the following conditions during
his employment and for a term of one year after termination of this Agreement
and Employee's employment thereunder, whether voluntary or involuntary. During
this period, Employee will not directly or indirectly:
(a) Induce or attempt to induce any employee of NET-tel to
leave its employ;
(b) Persuade or attempt to persuade any Subscriber of
Corporation to cease doing business with the Corporation, to reduce the amount
of business it does with the Corporation, or to do business with any other
person, firm, or corporation that directly or indirectly engages in any business
competitive to that of the Corporation;
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(c) Persuade or attempt to persuade any potential Subscriber
not to do business with the Corporation or to do business with any other
company, person, or firm that directly or indirectly engages in any business
competitive to that of the Corporation. For the purposes of this subparagraph
10(c), the term "potential Subscriber" includes any person, firm, or corporation
to which the Corporation made a presentation or otherwise actively solicited at
any time during the twelve (12) months preceding the date of the termination of
this Agreement.
11. Covenant Not to Compete.
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11.1 Except as expressly noted herein, during Employee's
employment with the Corporation, and for a period of one (1) year following the
termination of the Agreement and Employee's employment thereunder, Employee
shall not, either directly or indirectly, engage in or have any interest in any
person, firm, corporation or business (whether as an employee, officer,
director, agent, or principal investor) that engages in the business of
designing, creating or marketing telephone services in direct competition with
the Corporation in the continental United States.
11.2 Subject to the terms of Paragraph 13. 1 (c), upon
termination of this Agreement by Corporation under Paragraph 13.1 (Termination
Without Cause), Employee will be paid severance pay for a period of one year
based on the Employee's Base Salary, to be paid in accordance with the
Corporation's payment of Base Salary.
12. Enforcement of Confidential Information Clause, Non-
Solicitation Clause, and Covenant Not to Compete
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If Employee breaches or threatens to breach the terms of the
Confidential Information clause, Non-Solicitation clause, or Covenant Not to
Compete of this Agreement, NET-tel may pursue any remedies it is or may be
entitled to under the law or equity, including injunctive relief. Employee
acknowledges that NET-tel would be irreparably injured upon Employee's breach of
the foregoing provisions regarding confidential information, non-solicitation,
and covenant not to compete, and it is difficult to ascertain with certainty the
amount of money damages NET-tel will suffer. Employee agrees, however, that a
reasonable amount of such money damages would be the commissions and bonuses
Employee was paid by NET-tel in the six (6) month period prior to Employee's
termination. Provided further however, that nothing herein shall preclude
NET-tel from seeking a recoupment of its actual damages should they be
ascertainable in an amount certain and should they exceed the amount of
commissions and bonuses Employee received in the six (6) months prior to
termination.
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13. Termination.
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13.1 Termination Without Cause. Employee's employment under
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this Agreement shall be on an "at will" basis. Subject to the provisions of
Paragraph 13.2, either party may terminate this Agreement and Employee's
employment thereunder at any time, for any reason or no reason whatsoever by
providing the other party thirty (30) days notice of such termination.
(a) Subject to the terms of Paragraph 13.1 (c), upon
termination of this Agreement by either party under Paragraph 13.1 (Termination
Without Cause), Employee will be entitled to commissions earned up to the date
of termination which are subsequently collected by Corporation. Such commission
will be paid in the same manner and within the same period as if Employee was
still employed by Corporation.
(b) Subject to the terms of Paragraph 13.1(c), upon
termination of this Agreement by Corporation under Paragraph 13.1 (Termination
Without Cause), Employee will be paid severance pay for a period of one year
based on the Employee's Base Salary, to be paid in accordance with the
Corporation's payment of Base Salary.
(c) If, in the good faith belief of the Corporation,
the Employee breaches the prohibition against disclosing Confidential
Information in Paragraph 9, the Non-Solicitation clause in Paragraph 10, and the
Covenant Not Compete in Paragraph 11, the Employee's entitlement to any
commissions pursuant to Paragraph 13.1(a) or severance pursuant to Paragraph
13.1(b) will cease immediately and Corporation shall have no further obligation
or liability to Employee.
(d) Upon termination of employment under Paragraph
13. 1, Employee will be entitled to payment for his unused personal days.
However, if Employee terminates his employment under Paragraph 13.1 without
giving 30 days notice of that termination, he will forfeit his unused personal
days.
13.2 Termination for Cause. Corporation may, without providing
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the notice specified in Paragraph 13.1, terminate this Agreement for Cause and
cancel its obligation to Employee hereunder, except for base salary earned but
unpaid to the effective date of termination. In the event the Agreement is
terminated under this Paragraph for cause, Employee will not be entitled to any
further payment of commissions nor will Employee be entitled to severance pay.
As used herein, the term "Cause" shall include, but not be limited to: (i ) the
commission of Employee of a felony or a crime involving moral turpitude or the
commission of any other act involving dishonesty, disloyalty or fraud, (ii)
conduct by Employee tending to bring Corporation into substantial public
disgrace or dispute, (iii) failure of Employee to perform, in any material
respect, his obligations under this Agreement or the reasonable directives of
the Board or the Corporation's Chief Executive Officer, (iv) failure of Employee
to perform his job in an efficient and satisfactory manner, (v) negligence or
willful misconduct by Employee in providing services required hereby, (vi) the
Corporation files a voluntary bankruptcy petition or any bankruptcy, insolvency,
liquidation, dissolution proceeding or any other similar proceedings are
otherwise commenced against the
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Corporation or Corporation admits in writing its inability to pay its debts as
they become due and payable, (vii) Employee's breach of any aspect of this
Agreement (viii) the determination by the Board that Employee has acted, or had
failed to act, which action or failure to take actions are within Employee's
power and authority, in a manner detrimental to the best interests of
Corporation.
13.3 Death or Disability. In the event of Employee's death or
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the Employee's inability, due to a disability, to perform the essential
functions of his job with or without reasonable accommodation during the term of
this Agreement, Corporation shall have no further obligations or liability
hereunder, except to pay to Employee or Employee's estate (in addition to and
without regard for any benefits due under any insurance, retirement, stock
option, or other benefit plan of the Corporation or any other person or entity)
the amount of Employee's Compensation, including base salary, commissions, and
unused personal leave, other payments accrued but unpaid at the date of
Employee's death or disability as described above. Employee's employment shall
be deemed terminated by reason of disability as described above only if the
Board of Directors of the Corporation shall determine in good faith that
Employee shall be unable to perform his duties by reason of such disability for
a period of at least four (4) consecutive months.
13.4 Return of Property. Upon termination of this Agreement,
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Employee shall deliver all property (including keys, records, notes, data,
memoranda, models, and equipment) that is in the Employee's possession or under
the Employee's control which is the Corporation's property or related to the
Corporation's business.
14. Arbitration.
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With the exception of the Corporation's enforcement of the
Confidential Information provisions in Paragraph 9, the Non-Solicitation
Provisions of Paragraph 10, and the Covenant Not to Compete in Paragraph 11, any
dispute, controversy, or claim arising out of or related to this Agreement,
shall be resolved exclusively by arbitration in the Washington, D.C. area before
a single arbitrator appointed by the American Arbitration Association (the
"AAA") in a confidential arbitration conducted on an expedited basis in
accordance with applicable AAA rules and procedures. The determination and award
of the arbitrator shall be conclusive and binding on the Corporation and the
Employee, and judgment on the arbitrator's award shall be entered in any court
having jurisdiction thereof.
15. Successors.
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15.1 This Agreement is personal to Employee and neither it nor
any benefits hereunder shall, without the prior written consent of the
Corporation, be assignable by Employee.
15.2 This Agreement shall inure to the benefit of and be
binding upon the Corporation and its successors and assigns and any such
successor or assignee shall be deemed substituted for the Corporation under the
terms of this Agreement for all purposes. As used herein, "successor" and
"assignee" shall include any person, firm, corporation, or other business entity
that
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at any time, whether by purchase, merger, or otherwise, directly or indirectly
acquires the stock of the Corporation or to which the Corporation assigns this
Agreement by operation of law or otherwise.
16. Indemnification.
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The Corporation shall indemnify and hold harmless Employee
from and against any costs, expenses (including attorney's fees) judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with the defense or settlement of any threatened, pending, or future
civil, criminal, administrative or investigative action, suit or proceeding to
which he is or is threatened to be made a party by reason of the execution or
performance of this Agreement, the fact that he is or was a director, officer,
employee, or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, or other enterprise, if (i) such action, suit or
proceeding arises out of activities of the Corporation prior to his assumption
of such position, or (ii) he acted in good faith and in the manner he reasonably
believed to be in or not opposed to the best interests of the Corporation.
17. Governing Law.
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Because NET-tel is a national corporation, with employees
working on a national basis, to ensure uniformity, this Agreement is made
pursuant to, and shall be governed, construed, and enforced in all respects and
for all purposes in accordance with the laws of the State of Virginia.
18. Waivers.
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No consent or waiver, express or implied, by either party, to
or of any breach or default by the other in the performance by the other of its
obligations hereunder, shall be deemed or construed to be a consent or waiver
to, or of, any other breach or default in the performance by such other party
hereunder. Failure on the part of either party to complain of any act or failure
to act of any other party, or to declare any other party in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such party of its rights hereunder.
19. Amendments.
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This Agreement is subject to amendment only by a written
agreement signed by all of the parties hereto.
20. Invalid Provisions.
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In the event any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
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be construed as if such invalid, illegal or unenforceable provision had never
been contained herein and the same shall be enforceable to the fullest extent
permitted by law.
21. Attorneys' Fees.
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In the event of any arbitration or litigation between the
parties hereto to enforce any provision of this Agreement or any right of any
party hereto, the unsuccessful party to such arbitration or litigation agrees to
pay to the successful party, all costs and expenses, including reasonable
attorneys' fees and costs incurred therein.
22. Captions and Headings.
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The headings of the articles of this Agreement are inserted
solely for convenience of reference and are not a part of and are not intended
to govern, limit or aid in the construction of any term or provision hereto.
23. Entire Agreement.
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This Agreement contains the entire Agreement of the parties.
It supersedes any and all other agreements, either oral or in writing, between
the parties. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, or otherwise, 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. This Agreement may not be modified or amended by oral
agreement, but only by an agreement in writing.
24. Use of Terms.
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Wherever the context of this Agreement requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural.
25. Consideration.
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The parties hereto agree that no consideration, independent of
the services to be performed by Employee for Corporation and the compensation
and benefits to be provided Employee for such services as may be agreed to by
Corporation and Employee from time to time, exists or has been provided by
either party hereto to induce the other to enter into this Employment Agreement.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed
the same on the date and year first above written.
NET-Tel, Inc. Employee:
/s/ David Lynch
By: _________________________________ _____________________________________
David Lynch
Its:__________________________________
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