EXHIBIT 10.48
EMPLOYMENT AGREEMENT
This Agreement is dated as of the 28th day of February, 2004 by and between
Michael Stemple, an individual residing at 1919 Denver West Dr. #1221, Golden,
CO 80401 ("Executive") and SmartServ Online, Inc., a Delaware corporation with
an address at 2250 Butler Pike, Suite 150, Plymouth Meeting, PA 19462 (the
"Company").
WHEREAS, pursuant to that certain Reorganization and Stock Purchase
Agreement Dated as of January 29, 2004 (the "Reorganization Agreement"), by and
among the Company, nReach, Inc. ("nReach") and the shareholders of nReach,
pursuant to which the Company will acquire 100% of the outstanding capital stock
of nReach;
WHEREAS, Executive entering into this Employment Agreement is a
condition to the closing of the Reorganization Agreement;
WHEREAS, the Company desires to employ Executive, and Executive
desires to accept employment with the Company, subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the Company and Executive agree as follows:
1. Period of Employment. The Company shall employ Executive, and
Executive shall serve the Company, commencing as of the date hereof and
continuing for a period of one year thereafter (the "Initial Term). This
Agreement shall be automatically deemed renewed on a year to year basis
thereafter (each a "Renewal Term") on the same terms as shall have been
effective at the end of the immediately preceding term, whether the Initial Term
or a Renewal Term, if neither party shall have delivered written notice of
non-renewal of this Agreement at least 30 days prior to the expiration of the
Initial Term or Renewal Term, as the case may be. As used herein, "Term" shall
mean the Initial Term and any Renewal Term.
2. Duties and Responsibilities.
(a) During the Term, Executive shall be employed by the Company
as a President of the nReach division of the Company, or such other senior
executive position with the Company as may be designated by the Chief Executive
Officer of the Company. As such, Executive shall be subject to the direction and
supervision of the Chief Executive Officer of the Company and/or the Board of
Directors. Executive shall perform such duties and have such responsibilities
reflective of his senior executive position with the Company as may from time to
time be assigned to or vested in Executive by the Company's Board of Directors
or by the Chief Executive Officer of the Company and shall at all times during
the Term report directly to the Chief Executive Officer of the Company and the
Company's Board of Directors. Executive acknowledges and agrees that Executive
may be required, without additional compensation, to perform services for any
Affiliate of the Company and to accept such comparable office or position with
any Affiliate as the Board of Directors may require in its reasonable discretion
and consistent with Executive's skills and background and position with the
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Company. "Affiliate" means for purposes of this Agreement any business entity
controlling, controlled by, or under common control with the Company by virtue
of direct or indirect beneficial ownership of voting securities of or voting
interests in the controlled entity (such business entities hereinafter
individually and collectively, "Affiliates"). Executive shall comply with all
applicable policies of the Company and its Affiliates; provided, however, that
the Company shall have no authority to impose employment duties or constraints
of any kind that would require Executive to violate any law, statute, ordinance,
rule or regulation now or hereafter in effect.
(b) Executive shall diligently and faithfully devote during
normal business hours his entire time, energy, skill, and best efforts to
promote the Company's business and affairs and perform his duties under this
Agreement. Executive shall conduct himself at all times so as to advance the
best interests of the Company and its Affiliates, and shall not undertake or
engage in any other business activity or continue or assume any other business
affiliations which conflict or interfere with the performance of his services
hereunder without the prior written consent of the Company. Executive shall not
serve as a director or officer of any other company without the prior written
consent of the Company.
(c) Executive's principal business office shall be located in
Golden, Colorado, subject to such travel requirements as may be reasonably
necessary to perform Executive's duties hereunder. Executive will not be
required to relocate his principal office of employment.
3. Compensation.
(a) During the Term, as compensation for services rendered
hereunder and in consideration of this Employment Agreement, the Company shall
pay Executive a base salary, in accordance with the Company's payroll practices,
at the annual rate of $168,000.00. Executive's salary may not be adjusted
downward at any time during the Term.
(b) During the Term, except as excluded below, Executive shall be
entitled to participate in and receive benefits under any fringe benefit plan or
program (including, without limitation, medical) and any bonus or incentive
compensation plans, retirement savings plan or program (including, without
limitation, 401(k) plan) as the Company may, from time to time and in its sole
discretion, make available to its executives. Participation in all such plans or
programs shall be subject to the terms and conditions of the Company's plans or
programs, including, but not limited to, eligibility provisions and waiting
periods as may be in effect from time to time for similarly situated executives
employed by the Company. The implementation of all benefits applicable to
Executive are subject to the policies and procedures established and issued by
the Company or the Affiliate offering such benefit, from time to time as
applicable to all senior executives of the Company. The Company does not
guarantee the adoption or implementation of any particular employee benefit plan
or program, and to the extent permissible by applicable law, expressly reserves
the right to modify or withdraw any such benefit, plan, program or arrangement
applicable to the Company's senior executives without the prior written consent
of Executive, provided however, the Company shall not reduce or impair any
benefits earned and accrued under any such plan, program or arrangement prior to
the date of the modification, discontinuance or termination.
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(c) The Company will withhold from compensation and benefits
payable to Executive under this Agreement, all federal, state and local taxes or
other governmental obligations with respect to Executive or garnishments that
may be required by law.
4. Vacation. During each calendar year, Executive shall be entitled to
four (4) weeks paid vacation, adjusted on a pro rata basis for any partial
calendar year. Notwithstanding the foregoing, Executive shall be fully vested in
four (4) weeks of paid vacation for the 2004 calendar year immediately upon
execution of this Agreement. Vacation benefits for any subsequent calendar year
shall vest in accordance with the Company's standard policies in effect from
time to time for senior executives of the Company. Such vacation may be taken as
Executive may from time to time decide, provided such vacation time does not
materially interfere with his duties to the Company and further provided he does
not take more than two (2) weeks of vacation consecutively.
5. Reimbursement of Expenses. The Company shall reimburse Executive
for all reasonable, ordinary, and necessary business expenses incurred in the
performance of Executive's duties hereunder in accordance with, and subject to
the terms and conditions of, the Company's expense policy. As a condition
precedent to obtaining such reimbursement, Executive shall provide to the
Company any and all statements, bills, or receipts evidencing the expenses for
which Executive seeks reimbursement, and such other related information or
materials as the Company may from time to time reasonably require.
6. Termination. Unless Executive's employment is terminated pursuant
to this Paragraph 6, the Company shall continue to employ Executive and
Executive shall continue to serve the Company throughout the Term.
(a) This Agreement shall terminate automatically upon Executive's
death. If Executive dies, then his rights to compensation and any and all other
rights hereunder shall terminate on the date of death, and neither he nor his
estate shall have any further rights hereunder, except that the Company shall
have the obligation to pay Executive's estate (i) such portion of his base
salary provided for in Section 3(a) hereof as may be accrued but unpaid at the
date of death, and (ii) all other benefits payable in accordance with the terms
of the applicable plans of the Company.
(b) In light of the unique nature of Executive's services, and
the undue burden on the Company that would result from Executive's absence, the
Company shall have the right to terminate Executive's employment hereunder in
the event Executive shall remain or is reasonably expected by the Board of
Directors of the Company to remain Disabled for a period exceeding ninety (90)
days during any twelve (12) month period. Such termination will become effective
thirty (30) days after written notice to Executive. The term "Disabled" as used
herein shall mean the inability of Executive to perform his duties hereunder for
the reason that he has become disabled within the meaning of the Company's
policy of disability income insurance covering Executive then in force. In the
event that the Company has no policy of disability income insurance covering
Executive in force when Executive becomes disabled, the term "Disabled" shall
mean Executive shall be unable, by virtue of illness or physical or mental
incapacity or, in the reasonable judgment of the Company's Board of
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Directors, is expected to be unable (from any cause or causes whatsoever), to
perform Executive's duties hereunder, for a period exceeding ninety (90) days
during any twelve (12) month period. Executive's rights to compensation and any
and all other rights hereunder shall terminate on the effective date of
termination by reason of Disability (i.e., thirty (30) days after written
notice), and he shall not have any further rights hereunder, except that the
Company shall have the obligation to pay Executive (i) such portion of his base
salary provided for in Section 3(a) hereof as may be accrued but unpaid at the
effective date of termination (net of any payments made under the Company's
policy of disability income insurance), and (ii) all other benefits payable in
accordance with the terms of the applicable plans of the Company, including,
without limitation, any payments after the effective date of termination under
the Company's policy of disability income insurance covering Executive then in
force, if any.
(c) The Company shall have the right to terminate Executive's
employment immediately at any time upon written notice to Executive for "Cause".
For purposes of this Agreement, "Cause" shall include: (i) material default or
other material or consistent breach by Executive of Executive's obligations
hereunder which breach is not cured in all material respects within 15 business
days after delivery of written notice from the Company specifying such breach or
default; (ii) failure or neglect by Executive to perform diligently and
competently Executive's duties hereunder or a written direction by the Board of
Directors of the Company (unless the performance of such assigned duties will
cause the Executive to violate, or risk violating, any law, regulation, rule,
order, professional ethics or licensing requirement, or the best practices of
his profession or position) which performance failure or insubordination is not
cured within 15 business days after delivery of written notice from the Company
specifying such failure or neglect; (iii) misconduct, dishonesty, or other act
by Executive which is materially and demonstrably detrimental to the Company or
its Affiliates or their good will or materially and demonstrably damaging to
their relationships with their customers, suppliers, or employees; (iv)
conviction of or plea of guilty or no contest to a felony, (v) conviction of or
a plea of guilty or no contest to any crime involving moral turpitude,
dishonesty, or theft, in each case which materially and demonstrably impairs or
harms the reputation, or is otherwise to the material and demonstrable
detriment, of the Company, or any of its Affiliates, (vi) the possession or use
of illegal drugs or prohibited substances; and (vii) material failure by
Executive to comply with applicable laws or governmental regulations with
respect to Company operations or the performance of Executive's duties.
Executive's rights to compensation and any and all other rights hereunder shall
terminate on the date of termination for "Cause", and he shall not have any
further rights hereunder, except that the Company shall have the obligation to
pay Executive such portion of his base salary provided for in Section 3(a)
hereof as may be accrued but unpaid at the effective date of termination.
(d) The Company may terminate Executive's employment without
Cause at any time and without prior notice. If (i) such termination is without
Cause or (ii) the Company does not renew this Agreement prior to the expiration
of the Initial Term or any Renewal Term without Cause or (iii) the Executive
voluntarily terminates his employment (including giving written notice of
non-renewal prior to the expiration of the Initial Term or any Renewal Term) due
to the Company's requiring the Executive to relocate to a location more than 15
miles from Golden, Colorado, without Executive's prior written consent, then,
the Company shall pay to Executive an amount equal to Executive's base salary
for twelve (12) months (the "Severance Payments"). All Severance Payments
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shall be paid in twelve (12) monthly payments following the date of termination,
in accordance with the Company's then-prevailing payroll cycle. In consideration
for the receipt of such compensation following termination, Executive shall
execute a general release prepared by the Company and reasonably acceptable to
Executive.
(e) Executive's employment and rights to compensation and any and
all other rights hereunder shall terminate immediately if Executive voluntarily
leaves the employment of the Company, except that the Company shall have the
obligation to pay Executive such portion of his base salary provided for in
Section 3(a) hereof as may be accrued but unpaid on the date Executive
voluntarily leaves the employment of the Company.
(f) In the event of termination of this Agreement for any reason,
the payments (if any) required to be provided to Executive pursuant to this
Paragraph 6 shall be in full and complete satisfaction of any and all
obligations owing to Executive pursuant to this Agreement.
(g) Upon any termination of Executive's employment under this
Agreement, Executive shall immediately resign, without claim for compensation
(except as otherwise provided herein), as an officer and, if the case may be, a
director of the Company and any Affiliates. In the event of Executive's failure
to do so, Executive hereby irrevocably authorizes and appoints the Chairman of
the Board of Directors as his lawful attorney-in-fact in his place, in his name
and on his behalf to sign and deliver such resignations to the Board. Such power
of attorney shall be irrevocable and shall be deemed coupled with an interest.
7. (a) Confidential Information; Intellectual Property. As a material
inducement for Company entering into this Agreement, Executive agrees to be
bound by and shall execute the Invention and Confidential Private Proprietary
Information Agreement in the form set forth in Exhibit "A" attached hereto.
(b) Noncompetition, Nonsolicitation. As a material inducement for
the Company to enter into the Reorganization Agreement, Executive agrees that:
(i) The Executive shall not, at any time during the period of his
employment by the Company or within one year after termination of his
employment, if termination of employment is a result of the voluntary
resignation by the Executive (including the delivery of written notice by the
Executive to the Company of non-renewal of this Agreement at least 30 days prior
to the Initial Term or Renewal Term) or termination for Cause by the Company
(including the delivery by the Company to the Executive of written notice of
non-renewal of this Agreement at least 30 days prior to the Initial Term or
Renewal Term for Cause) (such period, as applicable, the "Restriction Period"),
in the Territory (as defined below), directly or indirectly, without the
Company's prior written consent:
(A) render services to, be engaged in, become employed by, own,
manage, or have a financial or other interest in (either as an individual,
partner, joint venturer, owner, manager, stockholder, employee, consultant,
partner, officer, director, independent contractor, agent or other such role)
any business which is engaged anywhere in United States and its territories in a
business that
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is directly competitive with the business of the Company on the commencement of
the Restriction Period; except that nothing herein shall prohibit the Executive
from owning less than 1% of the outstanding shares of a publicly traded
corporation, provided Executive does not actively participate in the management
or decision-making processes of such other entity. Executive agrees that this
covenant is reasonable with respect to its duration, geographical area and
scope;
(B) during the Restriction Period, directly or indirectly, for or
on behalf of a business which is competitive with the business of the Company,
contact, solicit, contract with, or accept business competitive with the Company
from any entity or individual which (A) was or is a customer or supplier of the
Company on the date Executive's employment is terminated or within the one (1)
year period immediately prior to the beginning of the Restriction Period, and/or
(B) was or is a prospective customer or supplier of the Company with which the
Company had substantive business-related communications actually known to
Executive identifying the nature and scope of the prospective business
relationship; and
(C) during the Restriction Period, affirmatively contact or
induce, offer, solicit, assist, encourage, suggest, hire or engage the services
of any employee, agent or representative of the Company, or induce, encourage,
solicit, suggest or cause any employee, agent or representative of the Company
to terminate his employment or business affiliation with the Company.
(ii) The parties agree that the "Territory" is the United States and
its territories.
(iii) The parties agree that should the Executive render any material
services to or have access to the confidential or trade secret information of
any Affiliate of the Company the covenants in this Section 7 shall also apply to
the business of such Affiliate.
(iv) In the event of a breach by Executive of any covenant set forth
in Section 7(b) of this Agreement, the term of such covenant will, as it
pertains to the breaching party, be extended by the period of the duration of
such breach. With the exception of Executive's right to receive his wages,
salary and Severance Payments as provided for herein (which specifically shall
constitute a defense), the existence of any claim, dispute, or cause of action
of the Executive against the Company, whether predicated on this Agreement or
otherwise, will not constitute a defense to the enforcement of the covenants
contained in this Section 7.
(v) The Executive acknowledges that the provisions of this Section 7
are reasonable and necessary for the protection of the Company and that the
Company will be irrevocably damaged if such covenants are not specifically
enforced. In addition to any other rights available to the Company and their
Affiliates at law or in equity, upon a breach by Executive of the covenants set
forth in this Agreement, the Company and its Affiliates will be entitled to
pursue injunctive or other equitable relief (temporary and/or permanent) to
restrain any breach or threatened breach or otherwise to enforce specifically
the provisions of this Agreement, it being agreed that money damages alone would
be inadequate to compensate the Company and its Affiliates and would be an
inadequate remedy for such breach, as well as an equitable accounting of all
profits and benefits arising out of such breach.
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(vi) The rights and remedies of the parties to this Agreement are
cumulative and in addition to, not in lieu of, any other rights and remedies the
Company or its Affiliates may be entitled to.
(vii) The provisions contained in this Section 7 as to the time
periods, scope of activities, persons or entities affected and territories
restricted shall be deemed divisible so that, if any provision contained in this
Section is determined to be invalid or unenforceable, such provisions shall be
deemed modified so as to be valid and enforceable to the full extent lawfully
permitted.
8. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Pennsylvania, without
regard to principles of conflicts of laws. If either party shall commence an
action or proceeding to enforce any provisions of this Agreement, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
9. Additional Obligations. Both during and after the Term, Executive
shall, upon reasonable notice, furnish the Company with such information as may
be in Executive's possession, and cooperate with the Company (at the Company's
cost and expense), as may reasonably be requested by the Company in connection
with any litigation in which the Company or any Affiliate is or may become a
party.
10. Notice. Any notice or other communication required or permitted
under this Agreement by either party hereto to the other shall be in writing,
and shall be deemed effective upon (a) personal delivery, if delivered by hand,
(b) three days after the date of deposit in the mails, postage prepaid, if
mailed by certified or registered mail, or (c) the next business day, if sent by
a prepaid overnight courier service, and in each case addressed as follows:
If to Executive:
----------------
Michael Stemple
1919 Denver West Dr. #1221
Golden, CO 80401
With a copy to:
---------------
Robert G. Hueston, Esq.
3773 Cherry Creek N. Drive, Suite 575
Denver, Colorado 80209
If to the Company:
------------------
SmartServ Online, Inc.
2250 Butler Pike, Suite 150
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Plymouth Meeting, Pennsylvania 19462,
Attention: Robert Pons
With a copy to:
---------------
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
Attention: Dean Schwartz
Either party may change the address or addresses to which notices are to be sent
by giving notice of such change of address in the manner provided by this
Paragraph 10.
11. Entire Agreement. This Agreement (including Exhibit "A" hereto)
represents the entire agreement between the Company and Executive with respect
to Executive's employment with the Company, and supersedes and is in full
substitution for any and all prior agreements or understandings, whether oral or
written, relating to Executive's employment.
12. Amendment. This Agreement may not be canceled, changed, modified,
or amended orally, and no cancellation, change, modification or amendment hereof
shall be effective or binding unless in a written instrument signed by the
Company and Executive. A provision of this Agreement may be waived only by a
written instrument signed by the party against whom or which enforcement of such
waiver is sought.
13. No Waiver. The failure at any time either of the Company or
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by either the Company
or Executive of any breach of any provision of this Agreement be taken or held
to constitute a waiver of any succeeding breach of such or any other provision
of this Agreement.
14. Assignment. This Agreement is binding on and for the benefit of
the Company and Executive and their respective successors, heirs, executors,
administrators, and other legal representatives. Neither this Agreement nor any
right or obligation hereunder may be sold, transferred, assigned, or pledged by
the Company or by Executive without the prior written consent of the other.
However, nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another entity which expressly assumes this Agreement and all obligations
and undertakings of the Company hereunder.
15. Interpretation and Severability. In the event any provision of
this Agreement, or any portion thereof, is determined by any arbitrator or court
of competent jurisdiction to be unenforceable as written, such provision or
portion thereof shall be interpreted so as to be enforceable. In the event any
provision of this Agreement, or any portion thereof, is determined by any court
of competent jurisdiction to be void, the remaining provisions of this Agreement
shall nevertheless
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be binding upon the Company and Executive with the same effect as though the
void provision or portion thereof had been severed and deleted.
16. No Conflict. Executive represents and warrants that Executive is
not subject to any agreement, order, judgment or decree of any kind which would
prevent Executive from entering into this Agreement or performing fully
Executive's obligations hereunder.
17. Execution. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Survival. Executive's obligations as set forth in Paragraphs 7 and
8 above, represent independent covenants by which Executive is and shall remain
bound notwithstanding any breach or claim of breach by the Company, and shall
survive the termination or expiration of this Agreement.
19. Headings. The headings contained in this Agreement are for
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
20. No Presumption. This Agreement is the result of negotiation and,
accordingly, no presumption or burden of proof will arise with respect to any
ambiguity or question of intent concerning this Agreement favoring or
disfavoring any party to this Agreement by virtue of authorship of any provision
of this Agreement.
21. Legal Counsel. Executive acknowledges that he has the right and
opportunity to seek the advice of independent counsel of Executive's own
choosing with respect to legal rights and obligations and the legal effect of
this Agreement. Executive further acknowledges that he has either sought or
declined to seek the advice of legal counsel and that Executive has read the
Agreement and is fully aware of the contents thereof and its meaning and legal
effect.
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IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement as of the date first written above.
SMARTSERV ONLINE, INC.
By: /s/ Robert Pons /s/ Michael Stemple
------------------------------- -----------------------------------
Name: Robert Pons Michael Stemple
Title: CEO
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