Exhibit 10.11
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, (this "Agreement") dated as of September 2,
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1997, is between Erol's Internet, Inc., a Delaware corporation (the "Company"),
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and Sal Quadrino (the "Executive"). In consideration of the mutual covenants
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and representations herein contained and the mutual benefits derived herefrom,
the parties, intending to be legally bound, covenant and agree as follows:
1. Purpose. The Company is engaged in providing internet services to the
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public (the "Business"). The Company wishes to employ the Executive, and the
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Executive has agreed to be employed by the Company, on the terms and conditions
herein provided.
2. Full-Time Employment of Executive - Duties and Status.
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(a) The Company hereby engages the Executive as a full-time executive
employee in the position of Vice President, Treasurer and Chief Financial
Officer, reporting directly to the Chief Executive Officer, for the period (the
"Employment Period") specified in Section 4(a) hereof, and the Executive accepts
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such employment, on the terms and conditions set forth in this Agreement.
Throughout the Employment Period, the Executive shall faithfully and competently
exercise such authority and perform such executive duties as are commensurate
with the authority and duties of a Chief Executive Officer of the Company and
such other reasonable duties as may otherwise be assigned to him from time to
time by the Company.
(b) Throughout the Employment Period, the Executive shall (i) devote
his full time and efforts to the business of the Company and shall not engage in
consulting work or any trade or business for his own account or for or on behalf
of any other person, firm or corporation which competes, conflicts or interferes
with the performance of his duties hereunder in any way, and (ii) accept such
additional position or positions to which the Executive may be appointed by the
Company, provided that the performance of the duties of such office or offices
shall generally be consistent with the scope of the duties provided for in
Section 2(a) hereof.
(c) The Executive agrees to execute the Employee Proprietary
Information and Inventions Agreement (the "Proprietary Rights Agreement"),
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attached hereto as Exhibit A, and to comply with the provisions thereof. The
Executive understands that both entering into and complying with the terms of
the Proprietary Rights Agreement is a condition to the Executive's continued
employment with the Company and that failure to comply with the terms of the
Proprietary Rights Agreement will constitute "cause" for purposes of this
Agreement. The Executive further represents
and warrants that his employment by the Company, and the performance by the
Executive of his duties hereunder, will not violate any of the terms and
conditions of any agreement with a previous employer or any legal right of any
previous employer.
3. Compensation and General Benefits. As full compensation for services
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provided to the Company, the Executive shall, during the Employment Period, be
compensated as follows:
(a) The Company shall pay to the Executive a salary (the "Salary")
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based upon a per annum rate of One Hundred Seventy-Five Thousand Dollars
($175,000). The Salary shall be payable in periodic equal installments not less
frequently than monthly, less such sums as may be required to be deducted or
withheld under applicable provisions of federal, state and local law, plus
increases in the Salary, if any, as may be approved from time to time by the
Compensation Committee in its discretion.
(b) At least annually, the Executive's Performance shall be evaluated
in an annual performance review (the "Performance Review"). The results of the
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Performance Review shall be provided to both the Executive and to the
Compensation Committee or its designees.
(c) Throughout the Employment Period, the Executive shall be entitled
to participate in such benefits plans of the Company or additional benefit
programs established by the Company as determined in the discretion of the
Compensation Committee commensurate with the Executive's level of responsibility
within the Company. For the period commencing on the date of this Agreement
through March 4, 1999, the Company will reimburse the Executive for (i) the
excess of any health insurance premium costs paid by the Executive to the
Company over the costs the Executive would have paid to Suburban Propane
Partners and (ii) any payments of the deductible amount with respect to health
insurance made by the Executive to the extent that such payments would not have
been required if the Executive was insured by the health insurance plan offered
by Suburban Propane Partners.
(d) Throughout the Employment Period, the Executive shall be entitled
to (i) three (3) weeks of annual vacation, (ii) leaves of absence, and (iii)
leaves for illness or temporary disability in accordance with the policies of
the Company in effect from time to time for its executive officers. Vacation
leaves and leaves of absence, if taken by the Executive, shall be taken at such
times as are reasonably acceptable to the Company. Any leaves on account of
illness or temporary disability which is short of Total Disability (as defined
in Section 4(d)(ii) hereof) shall not constitute a breach by the Executive of
his agreements hereunder even though leaves on account of a Total Disability may
be deemed to result in a termination of the Employment Period under the
applicable provisions of this Agreement.
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(e) The Executive shall perform his services at the corporate
headquarters office of the Company located in Springfield, Virginia, or at such
other office established by the Company within 50 miles of said corporate
headquarters, or at other locations as may be agreed to by the Executive and the
Chief Executive Officer.
(f) The Company shall reimburse the Executive from time to time for
all reasonable and customary business expenses incurred by him in the
performance of his duties hereunder, provided that the Executive shall submit
vouchers and other supporting data to substantiate the amount of said expenses
in accordance with Company policy from time to time in effect.
(g) If the Company purchases and maintains at any time during the term
of this Agreement one or more life insurance policies on the life of the
Executive, in addition to any policies purchased pursuant to Section 3(c)
hereof, in whatever amount or amounts which the Company, in its discretion,
deems desirable, the Company shall be the beneficiary of said policy or policies
and the Executive shall cooperate with the Company and submit to such reasonable
medical examinations as are necessary to enable the Company to purchase and
maintain in full force and effect such additional insurance policy or policies.
(h) If, after the date hereof, the Executive relocates to Springfield,
Virginia, then the Company will reimburse the Executive for all reasonable
relocation costs, plus any additional amount necessary to reimburse the
Executive for federal and state income taxes imposed on the amount of such
reimbursement.
4. Employment Period.
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(a) Duration. The Employment Period shall commence on the date of this
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Agreement and shall continue until the earlier of (i) the close of business on
the day immediately preceding the one year anniversary of this Agreement, or the
anniversary date of any extension of this Agreement as provided in Section 4(b)
hereof, whichever later occurs (the "Expiration Date"), or (ii) termination of
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this Agreement by the Company with "cause" (as defined in Section 4(d)(i)
hereof), or (iii) termination of this Agreement by the Company for any reason
other than cause, or (iv) the Executive's resignation for "good reason" (as
defined in Section 4(d)(iii), or (v) the Executive's resignation without "good
reason", or (vi) the death or Total Disability of the Executive.
(b) Extension of Employment Period. On the one year anniversary of the
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date of this Agreement, and on each anniversary thereafter, the Employment
Period shall be extended for an additional year, at the rate of compensation
then in effect as determined pursuant to the provisions of Section 3(a) hereof,
unless the Company or the Executive notifies the other in writing at least
ninety (90) days prior to such anniversary of its or his election not to renew
this Agreement.
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(c) Payments Upon Termination.
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(i) If the Executive's employment is terminated by the Company
for any reason other than "cause" (as defined in Section 4(d)(i) hereof) or by
the Executive for "good reason" (as defined in Section 4(d)(iii) hereof) at any
time during the Employment Period or any extension thereof, the Company shall
pay to, or provide for, as the case may be, the Executive, for the remainder of
the Employment Period, at the times otherwise provided in this Agreement as if
the Executive had not been terminated:
(A) his Salary then in effect as accrued through the date
of termination and twelve (12) months Salary, which Salary shall be payable in
equal monthly installments during such period in accordance with existing
payroll policies as well as any annual bonus to which the Executive would have
been entitled during such period under Company bonus policies in effect as of
the time of the termination of the executive;
(B) to the extent applicable, the sickness and health
insurance and other benefit programs to which he would have been entitled under
this Agreement if he had remained in the employ of the Company for such period.
(ii) If the Executive's employment is terminated (A) by the
Company for "cause", or (B) by the Executive by resignation without "good
reason", or (C) upon the death or Total Disability of the Executive, then the
Company shall have no further liability to the Executive, except for the Salary
which has accrued through the date of termination, which amounts shall be paid
by the Company within thirty (30) days of such termination, or in accordance
with applicable law. If the Executive's employment is terminated due to his
death or his Total Disability, then, in addition to the Salary which has accrued
through the date of termination, the Executive or his estate shall receive the
Salary then in effect for a period of three (3) months after the date of
termination in equal monthly installments.
(iii) If the Executive's employment with the Company is
terminated by the Company without cause within six (6) months of a Change in
Control (as defined below) or the Executive resigns within six (6) months of a
Change in Control, then the Company shall pay to the Executive, his Salary then
in effect as accrued through the date of termination and twelve (12) months
Salary, which Salary shall be payable in equal monthly installments during such
period in accordance with existing payroll policies as well as any annual bonus
to which the Executive would have been entitled during such period under Company
bonus policies in effect as of the time of the termination of the executive.
(iv) Notwithstanding any other provision of this Section 4(c),
if the Executive violates any covenant, term or condition of this Agreement or
the Proprietary Rights Agreement, the Company shall be entitled, in addition to
any other
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remedies it may have hereunder or at law or in equity, to offset the amount of
any payment otherwise due to the Executive pursuant to this Section 4(c) against
any loss or damage incurred by the Company as a result of the Executive's
violation of said covenant, term or condition.
(v) Any and all payments or provisions for the payment of
salary, benefits, perquisites and rights to Executive described in this Section
4(c) shall, notwithstanding any other provisions of this Agreement be construed
in accordance with the applicable provisions of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), as such Section may from time to
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time be amended and interpreted by regulation or judicial decision, in such
manner as is possible to preclude the application under such Section of any
disallowance, forfeiture, penalty, assessment or loss of tax benefit ("Tax
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Loss") to either the Executive or the Company.
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(A) The Executive and the Company agree that, should the
whole or any part or portion of the Executive's Salary, benefits, perquisites
and rights upon termination under Section 4(c) (the "Gross Benefits") be
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determined or construed to be excessive under Code Section 280G so as to prompt
any Tax Loss to the Executive (the Gross Benefits less the Executive's Tax Loss
shall be referred to as the "Net Benefits"), then, to the extent it is possible
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to increase the amount of the Net Benefits by reducing the Gross Benefits
because a reduction in Gross Benefits reduces the amount of the Executive's Tax
Loss, then the Gross Benefits shall be reduced in such amount that maximizes the
Net Benefits. To the extent that the Gross Benefits are reduced in accordance
with this Section 4(c)(v)(A), the Executive's rights and benefits will be
reduced in the following order of priority, or in such other order as determined
by Executive:
(i) incentive bonus payments, if any;
(ii) welfare benefit plan payments;
(iii) stock option purchase payments under any
qualified stock option plan;
(iv) retirement benefits;
(v) Incentive compensation payments; and
(vi) base salary payments.
(B) If the parties within sixty (60) days cannot agree as
to whether a payment to the Executive is excessive under the Code, then, in
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order to facilitate this Agreement, the following procedures shall be followed
to determine whether a payment results in a Tax Loss to the Executive under
Section 280G:
(i) Immediately upon termination after a Change in
Control and pursuant to written notice by the Executive or the Company, the
Company's independent auditors shall choose Tax Counsel who is acceptable to the
Executive. Tax Counsel shall be a person unaffiliated with both the Executive
and the Company and who is either a certified public accountant who is a member
of a "Big 6" accounting firm, or any attorney at law who is a member of a major
law firm, and who is experienced in matters concerning Section 280G. Tax
Counsel's fees and other costs shall be paid by the Company.
(ii) All or part of a payment or benefit due under
this Agreement shall be treated as resulting in a Tax Loss to the Executive
under Section 280G if, in the written opinion of Tax Counsel, it is more likely
than not that such payment or benefit will result in a Tax Loss to the Executive
under Section 280G. In making this determination, Tax Counsel shall take into
account all relevant facts and circumstances and may take into account such
authorities as he deems relevant (and shall not be limited to those items that
constitute "substantial authority" under Code Section 6661).
(iii) All opinions of Tax Counsel shall be binding upon
the Company and the Executive and, to the extent possible, shall be provided
within 60 days of the Executive's termination of employment.
(iv) Immediately after Tax Counsel provides his
opinion and after any waiver by the Executive pursuant to paragraph (B) of this
section, the Company shall pay or provide benefits to the Executive required by
this Agreement.
(d) Definitions. When used in this Agreement, the words "cause",
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"Total Disability" and "good reason" shall have the respective meanings set
forth below:
(i) The term "cause" means: (A) the Executive's failure to
perform his employment duties hereunder to the reasonable satisfaction of the
Company after reasonable notice to the Executive by the Company specifying such
failure and providing the Executive with a minimum of thirty (30) days to cure
such failure; (B) the Executive's breach of the covenants or agreements
contained in this Agreement, the Proprietary Rights Agreement, or any other
material agreement or undertaking of the Executive; (C) the Executive's
commission of a felony or any crime involving moral turpitude, fraud or
misrepresentation, whether or not related to the business or property of the
Company; (D) any act of the Executive against the Company intended to enrich the
Executive in derogation of his duties (including, but not limited to his duty of
loyalty) to
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the Company; (E) any willful or purposeful act or omission (or any act or
omission done in bad faith) or gross negligence of the Executive having the
effect of injuring the business or business relationships of the Company; or (F)
the Executive's discrimination, harassment, or retaliation in violation of
applicable federal state or local equal opportunity laws.
(ii) To the extent permitted by applicable law, the
term "Total Disability" means total disability as defined in the Company's group
and individual disability plans, if any. If the Company does not have in
existence such plans, then Total Disability shall mean:
(y) The inability to perform the duties required
hereunder for a continuous period of thirteen (13) weeks during the Employment
Period due to "mental incompetence" or "physical disability" as hereinafter
defined. The Executive shall be considered to be mentally incompetent and/or
physically disabled: (A) if the Executive is under a legal decree of
incompetency (the date of such decree being deemed the date on which such mental
incompetence occurred for purposes of this Section 4(d)); or (B) because of a
"Medical Determination of Mental and/or Physical Disability." A Medical
Determination of Mental and/or Physical Disability shall mean the written
determination by: (1) the physician regularly attending the Executive, and (2) a
physician selected by the Company, that because of a medically determinable
mental and/or physical disability the Executive is unable to perform any
essential functions of the Executive, and such mental and/or physical disability
is determined or reasonably expected to last thirteen (13) weeks or longer after
the date of determination, based on medically available information. If the two
physicians do not agree, they shall jointly choose a third consulting physician
and the written opinion of the majority of these three (3) physicians shall be
conclusive as to such mental and/or physical disability and shall be binding on
the parties. The date of any written opinion which is conclusive as to the
mental and/or physical disability shall be deemed the date on which such mental
and/or physical disability commenced for purposes of this Section 4(d), if the
written opinion concludes that the Executive is mentally and/or physically
disabled. In conjunction with determining mental and/or physical disability for
purposes of this Agreement, the Executive consents to any such examinations
which are relevant to a determination of whether the Executive is mentally
and/or physically disabled, and which is required by any two (2) of the
aforesaid physicians, and to furnish such medical information as may be
reasonably requested, and to waive any applicable physician patient privilege
that may arise because of such examination. All physicians selected hereunder
shall be Board-certified in the specialty most closely related to the nature of
the mental and/or physical disability alleged to exist.
(z) For purposes of determining whether the Executive
is mentally incompetent or physically disabled for the continuous thirteen (13)
week period specified in this Section 4(d), such disability shall be deemed to
continue from the date of any legal decree of incompetency, or written opinion
which is conclusive as to the
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mental and/or physical disability, through the date the legal decree expires or
is otherwise revoked or removed, or the date on which the mental and/or physical
disability has ceased, as the case may be, as set forth in a written opinion
prepared by the physicians described in this Section 4(d) pursuant to the
procedures provided herein.
(iii) The term "resignation for good reason" or "good reason"
means the following actions taken by the Company without the express written
consent of the Executive:
(A) the failure of the Company within ten (10) days
written notice by the Executive to the Chief Executive Officer (with a copy to
the Chairman of the Compensation Committee, if any), to make any payment due to
Executive hereunder;
(B) making any material change in the Executive's duties
not generally consistent with the Executive's scope of duties as set forth in
Section 2 hereof, which is not rescinded within thirty (30) days after the
Executive has given the Chief Executive Officer written notice of such change;
(C) decreasing the Executive's salary, or causing a
material decrease in life or disability insurance coverage or benefits payable
to the Executive or to which the Executive is entitled other than as part of a
general decrease in benefits provided or payable to officers and other salaried
employees of the Company;
(D) requiring the Executive to be based at any office or
location more than fifty (50) miles from the office at which the Executive is
based on the date hereof (except for any location to which the Executive and the
Chief Executive Officer agree), except for travel reasonably required in the
performance of the Executive's responsibilities;
(E) failing to comply (other than a failure to make
payments) with any of the material provisions of this Agreement, which change or
failure, as the case may be, continues unremedied for thirty (30) days after
Executive has given the Chief Executive Officer written notice of such change or
failure which notice specifies in detail the change or failure, as the case may
be.
(iv) The term "Change in Control" shall mean that subsequent to
the effectiveness of a registration statement under the Securities Act of 1933
(the "Securities Act") filed on behalf of the Company:
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(A) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), is or
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becomes the beneficial owner, directly or indirectly, of securities of the
Company
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representing thirty percent (30%) or more of the combined voting power of the
then outstanding securities of the Company; or
(B) a change of control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the
Regulation 14A promulgated under the Exchange Act as in effect on the date of
this Agreement; or
(C) there shall be consummated:
(I) any consolidation or merger or share exchange of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's common stock would be converted
into cash, securities or other property, other than a merger of the Company in
which the holders of the Company's common stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or
(II) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or a substantial
portion, of the assets of the Company; or
(D) the stockholders of the Company approve a plan or
proposal for the complete or partial liquidation, dissolution or divisive
reorganization of the Company.
For purposes of this subparagraph (iv), the term "person" shall not be
deemed to include any officer or director of the Company as of the date hereof
or any such person's transferee if such transferee is related to such person by
blood or marriage, or is affiliated with or controlled by such person.
5. Notices. Any notices, requests, demands and other communications
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provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address the Executive
has filed in writing with the Company and if to the Company at:
Erol's Internet, Inc.
Attention: CEO
7921 Woodruff Ct.
Springfield, VA 22151
6. Binding Agreement; Assignment. This Agreement shall be effective
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as of the date hereof and shall be binding upon and inure to the benefit of, the
parties and their respective heirs, successors, assigns, and personal
representatives, as the case may be. The Executive may not assign any rights or
delegate any duties under this
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Agreement. As used herein, the successors of the Company shall include, but not
be limited to, any successor by way of merger, consolidation, sale of all or
substantially all of the assets, or similar reorganization or change in control.
7. Entire Agreement. This Agreement shall constitute the entire
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understanding of the Executive and the Company with respect to the subject
matter hereof and supersedes any and all prior understandings, representations
or promises written or oral concerning said subject matter. This Agreement may
not be changed, modified or discharged orally, but only by an instrument in
writing signed by the parties.
8. Enforceability. This Agreement has been duly authorized,
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executed and delivered and constitutes the valid and binding obligations of the
parties hereto, enforceable in accordance with its terms. The undertakings
herein shall not be construed as any limitation upon the remedies the Company
might, in the absence of this Agreement, have at law or in equity for any wrongs
of the Executive.
9. Governing Law. The validity and construction of this Agreement
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or any of its provisions shall be determined under the laws of the State of
Delaware, without giving effect to its conflicts of laws provisions, and without
regard to its place of execution or its place of performance. The parties
irrevocably consent and agree to the exclusive jurisdiction of the Circuit Court
for Fairfax County or the United States District Court for the Eastern District
of Virginia, except for matters arbitrated subject to section 10 hereof.
10. Arbitration. The Company and the Executive mutually covenant and
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agree that if any controversy or dispute relating to this Agreement arises
between them that cannot be resolved by negotiation, either party may, after
providing written notice to the other party, submit such dispute to arbitration
in Fairfax County, Virginia in accordance with the rules of the American
Arbitration Association then in effect unless the rules of another association
are mutually agreeable to the parties. The arbitrator appointed must be an
attorney or retired judge who has experience with the principle issues to be
arbitrated. Any reward or finding made pursuant to such arbitration shall in all
respects be well and fairly kept and observed and may be imposed by judgment of
the appropriate court in the Commonwealth of Virginia pursuant to the applicable
laws relating thereto. Each party shall bear his or its own costs in connection
with the arbitration, except that the cost of the arbitrator shall be borne by
the party that the arbitrator, in his sole discretion, determines has not
prevailed on a majority of the issues submitted to arbitration.
11. Severability. Except as provided in Section 4(e) hereof, if any
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one or more of the terms or provisions of this Agreement shall for any reason be
held to be invalid, illegal or unenforceable, in whole or in part, or in any
respect or in the event that any one or more of the provisions of this Agreement
operated or would prospectively operate to invalidate this Agreement, then and
in either of those events, such provision or
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provisions only shall be deemed null and void to the extent such term or
provision is held to be invalid, illegal or unenforceable and shall not affect
any other provision of this Agreement and the remaining provisions of this
Agreement shall remain operative and in full force and effect and shall in no
way be affected, prejudiced or disturbed thereby.
12. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one Agreement.
13. Amendments and Waivers. This Agreement may, to the maximum
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extent permitted by applicable law, be amended by the parties, which amendment
shall be set forth in an instrument executed by all of the parties. Any term,
provision or condition of this Agreement (other than as prohibited by applicable
law) may be waived in writing at any time by the party which is entitled to the
benefits thereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
ATTEST: EROL'S INTERNET, INC.
/s/ Patricia L. Perkins By: /s/ Dennis Spina
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Its: CEO
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WITNESS: EXECUTIVE
/s/ Keith Poulsen /s/ Sal Quadrino
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Sal Quadrino
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EROL'S INTERNET, INC.
EMPLOYEE PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT
THIS EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT dated as
of December 28, 1996, by and between EROL'S INTERNET, INC., a Delaware
corporation (the "Company") and Sal Quadrino (the "Employee"). In consideration
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of the mutual covenants and representations herein contained and the mutual
benefits derived herefrom, the parties, intending to be legally bound, agree as
follows:
1. Nondisclosure.
(a) At all times during employment and thereafter, the Employee
shall hold in strictest confidence and shall not disclose, use, lecture upon or
publish any of the Company's Proprietary Information (defined below), except as
such disclosure, use or publication may be required in connection with work for
the Company, or unless an officer of the Company expressly authorizes such in
writing. The Employee shall obtain Company's written approval before publishing
or submitting for publication any material (written, verbal, or otherwise) that
relates to his work at the Company and/or incorporates any Proprietary
Information. The Employee hereby assigns to the Company any rights the Employee
may have or acquire in such Proprietary Information and recognizes that all
Proprietary Information shall be the sole property of the Company and its
assigns.
(b) The term "Proprietary Information" shall mean any and all
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confidential and/or proprietary knowledge, data or information of the Company.
By way of illustration but not limitation, Proprietary Information includes (a)
trade secrets, inventions, mask works, ideas, processes, formulas, source and
object codes, data, programs, other works of authorship, know-how, improvements,
discoveries, developments, designs and techniques (hereinafter collectively
referred to as "Inventions"); and (b) information regarding plans for research,
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development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of other
employees of the Company. Notwithstanding the foregoing, it is understood that,
at all such times, the Employee is free to use information that is generally
known in the trade or industry, which is not gained as result of a breach of
this Agreement, and his own, skill, knowledge, know-how and experience to
whatever extent and in whichever manner the Employee wishes.
(c) The Employee understands, in addition, that the Company has
received and in the future shall receive from third parties confidential or
proprietary information ("Third Party Information") subject to a duty on the
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Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. During the term of employment and thereafter, the Employee shall hold
Third Party Information in the strictest confidence and shall not disclose to
anyone (other than Company personnel who need to know such information in
connection with their work for the Company) or use, except in connection with
his work for the Company, Third Party Information unless expressly authorized by
an officer of the Company in writing.
(d) During his employment by the Company, the Employee shall not
improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom the Employee has an
obligation of confidentiality, and the Employee shall not bring onto the
premises of the Company any unpublished documents or any property belonging to
any former employer or any other person to whom the Employee has an obligation
of confidentiality unless consented to in writing by that former employer or
person. The Employee shall use in the performance of his duties only information
which is generally known and used by persons with training and experience
comparable to the Employee's own, which is common knowledge in the industry or
is otherwise provided or developed by the Company.
2. Assignment of Inventions.
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(a) The term "Property Rights" shall mean all trade secret,
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trademark, patent, copyright, mask work and other intellectual property rights
throughout the world.
(b) Inventions, if any, patented or unpatented, which the
Employee made prior to the commencement of employment with the Company are
excluded from the scope of this Agreement.
(c) Subject to Sections 2(d), and 2(f), the Employee hereby
assigns and agrees to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all right, title and interest in and to
any and all Inventions (and all Proprietary Rights with respect thereto) whether
or not patentable or registrable under copyright or similar statutes, made or
conceived or reduced to practice or learned by the Employee, either alone or
jointly with others, during the period of employment with the Company to the
extent that such Inventions are made or conceived or reduced to practice or
learned by the Employee (i) during the any time that the Employee either is
physically present on the Company's premises or is utilizing any property owned
or leased by the Company, or (ii) based on any information or knowledge gained
by the Employee through his employment with the Company. Inventions assigned to
the Company, or to a third party as directed by the Company pursuant to this
Section 2, are hereinafter referred to as "Company Inventions."
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(d) The Employee recognizes that, in the event of a specially
applicable state law, regulation, rule, or public policy ("Specific Inventions
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Law"), this Agreement shall not be deemed to require assignment of any invention
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which qualifies fully for protection under a Specific Inventions Law by virtue
of the fact that any such invention was, for
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example, developed entirely on the Employee's own time without using the
Company's equipment, supplies, facilities, or trade secrets and neither related
to the Company's actual or anticipated business, research or development, nor
resulted from work performed by the Employee for the Company. In the absence of
a Specific Inventions Law, the preceding sentence shall not apply.
(e) During the period of employment and for one (1) year after
termination of employment with the Company, the Employee shall promptly disclose
to the Company fully and in writing all Inventions authored, conceived or
reduced to practice by the Employee, either alone or jointly with others. In
addition, the Employee shall promptly disclose to the Company all patent
applications filed by the Employee or on behalf within one (1) year after
termination of employment. At the time of each such disclosure, the Employee
shall advise the Company in writing of any Inventions that the Employee believes
fully qualify for protection under the provisions of a Specific Inventions Law;
and the Employee shall at that time provide to the Company in writing all
evidence necessary to substantiate that belief. The Employee shall preserve the
confidentiality of any Invention that does not fully qualify for protection
under a Specific Inventions Law.
(f) The Employee also agrees to assign all right, title and
interest in and to any particular Company Invention to a third party, including
without limitation the United States, as directed by the Company.
(g) The Employee acknowledges that all original works of
authorship which are made by the Employee (solely or jointly with others) within
the scope of employment and which may be protected by copyright are "works made
for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101).
(h) The Employee shall assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary
Rights relating to Company Inventions in any and all countries. To that end the
Employee shall execute, verify and deliver such documents and perform such other
acts (including appearances as a witness) as the Company may reasonably request
for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, the
Employee shall execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. The Employee's obligation to assist the
Company with respect to Proprietary Rights relating to such Company Inventions
in any and all countries shall continue beyond the termination of employment and
the Company shall compensate the Employee at a reasonable rate after termination
for the time actually spent by the Employee at the Company's request on such
assistance.
(i) In the event the Company is unable for any reason, after
reasonable effort, to secure the Employee's signature on any document needed in
connection with the actions specified in the preceding paragraph, the Employee
hereby irrevocably appoints the Company and its duly authorized officers and
agents as the Employee's agent and attorney in fact to act for and in the
Employee's behalf to sign, execute, verify and file any and all documents and
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to do all other lawfully permitted acts to further the purposes of the preceding
paragraph with the same legal force and effect as if executed by the Employee.
The Employee hereby waives and quitclaims to the Company any and all claims, of
any nature whatsoever, which the Employee now or may hereafter have for
infringement of any proprietary rights assigned to the Company.
3. Agreement not to Compete.
------------------------
(a) The Employee agrees with the Company that the services which
the Employee shall render during the term of employment are unique, special and
of extraordinary character and that the Company shall be substantially dependent
upon such services to develop and market its products and to earn a profit.
Accordingly, in consideration for employment by the Company and compensation and
other benefits, during the period of employment the Employee shall not directly
or indirectly compete with the Company (or any division, subsidiary or other
affiliate of the Company) in the research, development, manufacture, licensing,
patenting or marketing of any direct or indirect internet access service, or any
other service, equipment or devices functionally similar to or which may compete
or interfere with a product, service, or technology of the Company unless the
Employee has disclosed all material aspects of any activity that may compete or
interfere with a product, service, or technology of the Company to an officer of
the Company and such officer has approved the Employee's conduct of such
activity in writing.
(b) The term "compete" as used herein means to engage directly
-------
or indirectly either as a proprietor, partner, employee, agent, consultant,
director, officer, stockholder or in any other capacity or manner whatsoever.
The phrase "interfere with" includes, but is not limited to, soliciting or
--------------
selling services or products which provide similar functions to any of the
Company's services or products to any current or potential customer of the
Company. The provisions of this Section shall not prevent the Employee from
investing any assets in securities of any corporation provided that such
investments do not, directly or indirectly, result in the Employee, his spouse
or his children collectively (i) owning beneficially at any time five percent
(5%) or more of the equity securities of any corporation engaged in a business
competitive with the Company, or (ii) otherwise being able to control or
actively participate in the business decisions of such competing business.
(c) The provisions of this Section 3 shall be enforced to the
fullest extent permissible under the laws and public policies applied to each
jurisdiction which enforcement is sought. If any particular provision or portion
of this Section 3 shall be adjudicated to be invalid or unenforceable, this
Section shall be deemed amended to interpret such provision or portion thereof
so adjudicated to be invalid or unenforceable to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable, such amendment to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is made.
4. No Conflicting Employment; No Inducement of other Employees or
--------------------------------------------------------------
Solicitation of Customers.
-------------------------
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The Employee agrees that during the period of employment by the Company
the Employee shall not, without the Company's express written consent, engage in
any other employment or business activity directly related to the business in
which the Company is now involved or becomes involved, nor shall the Employee
engage in any other activities which conflict with the Employee's obligations to
the Company. For the period of employment by the Company and for one (1) year
after the date of termination of employment by the Company the Employee shall
not (a) induce any employee of the Company to leave the employ of the Company or
(b) solicit the business of any client or customer of the Company (other than on
behalf of the Company).
If any restriction set forth in this Section 4 is found by any court of
competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
The Employee hereby covenants that he shall not represent in any manner
whatsoever to any party that any of the activities in which he engages pursuant
to this Section 4 or Section 3(a) are being conducted either on behalf or for
the benefit of the Company, or that the Company has any knowledge of such
activities other than as set forth in the written approval provided by the
Company to the Employee to engage in such activities. The Employee hereby agrees
to indemnify and hold harmless the Company for the amount of any claim,
liability, obligation, or indebtedness of any nature whatsoever arising from any
activity in which the Employee engages pursuant to this Section 4 and Section
3(a).
5. No Conflicting Obligations.
--------------------------
The Employee represents that performing of all the terms of this
Agreement and as an employee of the Company does not and shall not breach any
agreement to keep in confidence information acquired by the Employee in
confidence or in trust prior to employment by the Company. The Employee has not
entered into, and the Employee agrees not to enter into, any agreement either
written or oral in conflict herewith.
6. Return of Company Documents.
---------------------------
When the Employee leaves the employ of the Company, the Employee shall
deliver to the Company (and shall not keep in his possession, recreate or
deliver to anyone else) any and all devices, records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, other documents or property, together with all
copies thereof (in whatever medium recorded) belonging to the Company, its
successors or assigns. The Employee further agrees that any property situated on
the Company's premises and owned by the Company, including disks and other
storage media, filing cabinets or other work areas, is subject to inspection by
Company personnel at any time with or without notice. Prior to leaving, the
Employee shall cooperate with the Company in completing and signing the
Company's termination statement for technical and management personnel.
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7. Notification of New Employee.
----------------------------
In the event that the Employee leaves the employ of the Company, the
Employee hereby consents to the notification of the new employer of the
Employee's rights and obligations under this Agreement.
8. Legal and Equitable Remedies.
----------------------------
Because the Employee's services are personal and unique and because the
Employee may have access to and become acquainted with the proprietary
information of the Company, the Company shall have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or other
equitable relief, without bond, and without prejudice to any other rights and
remedies that the Company may have for a breach of this Agreement.
9. General Provisions.
------------------
(a) The Employee agrees and understands that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with the Employee's right or the
Company's right to terminate the Employee's employment at any time, with or
without cause as more fully set forth in the Employment Agreement between the
Employee and the Company to which this Agreement is attached as Exhibit A.
(b) The validity and construction of this Agreement or any of
its provisions shall be determined under the laws of the State of Delaware,
without giving effect to its conflicts of laws provisions, and without regard to
its place of execution or its place of performance. The parties irrevocably
consent and agree to the exclusive jurisdiction of the Circuit Court for Fairfax
County or the United States District Court for the Eastern District of Virginia
and to service of process for it and on its behalf by certified mail, for
resolution of all matters involving this Agreement or the transactions
contemplated hereby. Each party waives all rights to a trial by jury in any
suit, action or proceeding hereunder.
(c) This Agreement sets forth the final, complete and exclusive
agreement and understanding between the Company and the Employee relating to the
subject matter hereof and supersedes all prior and contemporaneous
understandings and agreements relating to its subject matter. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party to be
charged. Any subsequent change or changes in duties, salary or compensation
shall not affect the validity or scope of this Agreement.
(d) If one or more of the provisions in this Agreement are
deemed unenforceable by law, then the remaining provisions shall continue in
full force and effect.
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(e) This Agreement shall be binding upon the Employee's heirs,
executors, administrators and other legal representatives and shall be for the
benefit of the Company, its successors and its assigns.
(f) The provisions of this Agreement shall survive the
termination of the Employee's employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.
(g) No waiver by the Company of any breach of this Agreement
shall be a waiver of any preceding or succeeding breach. No waiver by the
Company of any right under this Agreement shall be construed as a waiver of any
other right. The Company shall not be required to give notice to enforce strict
adherence to all terms of this Agreement.
THE EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT AFFECTS HIS RIGHTS TO
INVENTIONS THAT HE MAKES DURING HIS EMPLOYMENT, AND RESTRICTS HIS RIGHTS TO
DISCLOSE OR USE THE COMPANY'S PROPRIETARY INFORMATION DURING OR SUBSEQUENT TO
HIS EMPLOYMENT.
THE EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS
TERMS.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
ATTEST: EROL'S INTERNET, INC.
/s/ Patricia L. Perkins By: /s/ Dennis Spina
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Its: CEO
---------------
WITNESS: EMPLOYEE
/s/ Keith Poulsen /s/ Sal Quadrino
- ----------------- ----------------
Sal Quadrino
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