EXHIBIT 10.3
EMPLOYMENT AGREEMENT
BY AND BETWEEN
Z-TEL COMMUNICATIONS, INC.
AND
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the date set forth on the signature page hereto by and between Z-TEL
COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and D. ▇▇▇▇▇▇▇
▇▇▇▇▇ ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to assure the Company of the services of Employee and to set forth the
respective rights and duties of the parties hereto;
WHEREAS, the Company is a wholly-owned subsidiary corporation of Z-Tel
Technologies, Inc., a Delaware corporation;
WHEREAS, the Company is principally in the business of providing local,
long-distance and enhanced telecommunications services (such activities, present
and future, being hereinafter referred to as the "Business"); and
WHEREAS, the Company has developed and expects to develop trade
secrets, methods of doing business, business plans, computer software and other
items worthy of protection;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee agree
as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. The Company hereby employs Employee, and
Employee hereby accepts such employment, as President and CEO of the Company,
all upon the terms and conditions set forth herein.
1.2 SERVICES. During the Term (as hereinafter defined) hereof, Employee
agrees to perform diligently and in good faith the duties of President and CEO
of the Company, under the direction of the Board of Directors of the Company
(the "Board of Directors") and the Company's Chief Executive Officer. Employee
agrees to devote his best efforts and all of his full business time, energies
and abilities to the services to be performed hereunder and for the exclusive
benefit of the Company. Employee shall be vested with such authority as is
generally commensurate with the position of President and CEO of the Company, as
further outlined below. Employee will report solely to the Board of Directors
and the Company's Chief Executive Officer.
1.3 LOCATION. The principal place of employment and the location of
Employee's principal office shall be in Tampa, Florida; provided, however,
Employee shall, if he determines it to be reasonably necessary, engage in
reasonable travel in the performance of his duties under this Agreement.
1.4 REPRESENTATIONS. Both parties represent and warrant to the other
that they have full power and authority to enter into and perform this Agreement
and that their execution and performance of this Agreement shall not constitute
a default under or breach of any of the terms of any agreement to which they are
a party or under which they are bound. Both parties represent that no consent or
approval of any third party is required for their execution, delivery and
performance of this Agreement or that all consents or approvals of any third
party required for their execution, delivery and performance of this Agreement
have been obtained. Employee further represents that his employment hereunder
will not involve the use of information or materials that belong to a former
employer or another person or entity and for which Employee has a duty of
confidentiality.
ARTICLE II
TERM
2.1 TERM. The initial term of Employee's employment hereunder shall
commence as of the date hereof (the "Commencement Date") and shall continue for
a period of three years, unless earlier terminated pursuant to the provisions of
this Agreement. The initial term and every renewal term thereafter shall
automatically renew for an additional one-year term unless either party delivers
written notice of non-renewal to the other party at least ninety (90) days
before the expiration of the initial term or renewal term as the case may be.
The initial term and any renewal term are hereinafter collectively referred to
as the "Term." The date upon which the Term (including any renewal term if
applicable) is to expire is referred to as the "Scheduled Termination Date."
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary of not less than TWO HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($275,000), which base salary shall accrue monthly (prorated for periods less
than a month) and shall be paid in accordance with the Company's standard
payroll practices. The base salary will be reviewed annually, or, more
frequently, as appropriate, by the Board of Directors for upward, but not
downward, adjustment in its sole discretion.
3.2 BONUS COMPENSATION. For every fiscal year ending during the Term,
Employee will be entitled to participate in an Executive Bonus Pool to be
established by the Company (the "Executive Bonus Pool"). Each fiscal year ending
during the Term, the Company will reserve for the Executive Bonus Pool an amount
equal to five percent (5%) the Adjusted EBITDA of Z-Tel Technologies, Inc. For
this purpose, "Adjusted EBITDA" means net income before deduction for interest
expense, income taxes, depreciation and amortization determined in accordance
with generally accepted accounting principles, consistently applied, and
adjusted to exclude the following items: (i) the amount of the Executive Bonus
Pool determined hereunder and any other bonuses or fees (whether payable to
Employee, other executives of the Company or any other person or entity) that
are based, without substantial discretion, primarily upon the Company's net
income, the net income of Z-Tel Technologies, Inc. or any substantially similar
measurement base; (ii) gains or losses arising from any material, extraordinary,
non-recurring transactions; (iii) gains or losses arising from sales or
dispositions of capital assets or the Company's capital stock; and (iv)
discharge of indebtedness income. The Board of Directors will allocate the
entire Executive Bonus Pool among the participants in the Executive Bonus Pool,
including Employee. Such amounts allocated will be due and payable to the
participants, including Employee, one hundred twenty days (120) after the
Company's fiscal year end. The Board of Directors shall have the sole discretion
(i) to determine the number of participants from time to time (ii) to select the
participants (without excluding Employee) from time to time, and (iii) to
determine the allocations (which may be -0- to a given participant) among the
participants. Employee shall be eligible to receive any other bonus or incentive
compensation, which may be granted from time
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to time in the sole discretion of the Board of Directors in accordance with the
Company's compensation structure in effect from time to time.
3.3 EMPLOYEE'S LEGAL FEES. Employee may, and the Company has encouraged
the Employee to, engage competent independent legal counsel for advice and
guidance with respect to this Agreement, including advice as to the federal
income tax consequences of this ARTICLE III and ARTICLE VII. The Company shall
reimburse Employee for all reasonable legal fees incurred by Employee in
connection with the negotiation and execution of this Agreement.
3.4 BENEFITS. Employee shall be entitled, during the Term hereof, to
the same medical, hospital, dental and life insurance coverage and benefits as
are then available to the Company's most senior executive officers, together
with the following additional benefits:
(a) Comprehensive medical coverage, including dependent
coverage, paid fully by the Company;
(b) Life insurance in an amount equal to two times
Employee's base salary;
(c) Long-term disability insurance in an amount, adjusted
annually, equal to two-thirds of Employee's prior
year base salary and incentive compensation, if any,
excluding compensation earned through Company stock
options or other securities; and
(d) The Company's normal vacation allowance and other
paid time off for all employees who are executive
officers of the Company, but not less than three
weeks annually.
3.5 WITHHOLDING. Any and all amounts payable under this Agreement,
including amounts payable under this ARTICLE III and ARTICLE VII, are subject to
withholding for such federal, state and local taxes required pursuant to any
applicable law, rule or regulation.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished with
an office at the Employee's principal office as set forth in SECTION 1.3 hereof,
or at such other location as agreed to by Employee and the Company, and other
working facilities and secretarial and other assistance suitable to his position
and reasonably required for the performance of his duties hereunder. The Company
shall reimburse Employee for all of Employee's reasonable expenses incurred
while employed and performing his duties under and in accordance with the terms
and conditions of this Agreement, subject to Employee's full and appropriate
documentation, including receipts for all such expenses in the manner required
pursuant to Company's policies and procedures and the Internal Revenue Code of
1986, as amended (the "Code"), and applicable regulations in effect from time to
time.
4.2 INSURANCE. The Company may secure in its own name or otherwise, and
at its own expense, life, disability and other insurance covering Employee or
Employee and others, and Employee shall not have any right, title or interest in
or to such insurance other than as expressly provided herein. Employee agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such
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physicians(s) as the Company or such insurance company may designate and by
signing such applications and other written instruments as may be required by
any insurance company to which application is made for such insurance. Any
information provided by Employee to such insurance company (the results of
examinations being deemed part of such information) will be provided on a
confidential basis, and the Company shall have no access thereto.
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. Except as provided by this Article and
notwithstanding anything else to the contrary contained in this Agreement, the
Company shall have no right to terminate Employee's employment hereunder during
any period that Employee suffers illness or incapacity. The Company shall have
the right to terminate Employee's employment hereunder by delivery of thirty
(30) days written notice of termination if Employee is unable to perform, with
reasonable accommodation, in all material respects the essential duties of his
employment hereunder for a period exceeding six (6) consecutive months by reason
of illness or incapacity. A termination of employment under this Article will be
deemed a termination "without good cause" as described in SECTION 7.1 hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of thirty (30)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to
temporarily perform Employee's duties; provided, however, that if Employee
returns to work from such illness or incapacity within the six (6) month period
following his inability due to such illness or incapacity, he shall be entitled
to be reinstated in the capacity described in ARTICLE I hereof with all rights,
duties and privileges attendant thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to his full
base salary under SECTION 3.1 hereof and full benefits under SECTION 3.4 hereof
during such illness or incapacity unless and until an election is made by the
Company to terminate Employee's employment in accordance with the provisions of
this ARTICLE V.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this
ARTICLE V, the term "illness or incapacity" shall mean Employee's inability to
perform his duties hereunder substantially on a full-time basis because of
physical or mental illness or physical injury as determined by the Board of
Directors, in its reasonable discretion based upon competent medical evidence.
Upon the Company's written request, Employee shall submit to reasonable medical
and other examinations to provide the evidence required hereunder.
ARTICLE VI
TRADE SECRETS
6.1 CONFIDENTIALITY. Employee will hold Confidential Information in
confidence and trust and limit disclosure of Confidential Information strictly
to persons who have a need to know such Confidential Information in connection
with the Business and who have agreed in writing with the Company to maintain
the confidentiality of such Confidential Information. Employee will not
disclose, use, or permit the use or disclosure of Confidential Information,
except in satisfying his obligations under this Agreement. Employee will use
reasonable care to protect Confidential Information from inappropriate
disclosure, whether inadvertent or intentional. Notwithstanding
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the foregoing, Employee may disclose Confidential Information if such disclosure
is required by a court order or an order of a similar judicial or administrative
body; provided, however, that Employee notifies the Company of such requirement
immediately and in writing, and cooperates reasonably with the Company in
obtaining a protective or similar order with respect thereto.
6.2 CONFIDENTIAL INFORMATION. For the purposes of this Agreement, the
phrase "Confidential Information" means information or materials that, in the
Company's view, provide advantage to the Company over others not having such
information or materials and includes (i) customer information, supplier
information, sales channel and distributor information, material terms of any
contracts, marketing philosophies, strategies, techniques and objectives
(including service roll-out dates and volume estimates), legal and regulatory
positions and strategies, advertising and promotional copy, competitive
advantages and disadvantages, non-published financial data, network
configurations, product or service plans, designs, costs, prices and names,
inventions, discoveries, improvements, technological developments, know-how,
software code, business opportunities (including planned or proposed financings,
mergers, acquisitions, ventures and partnerships) and methodologies and
processes (including the look and feel of computer screens and reports) for
provisioning (whether in connection with interexchange carriers or incumbent
local exchange carriers), customer assistance, order acceptance and tracking,
repairs, and commissions; (ii) information designated in writing or
conspicuously marked as "confidential" or "proprietary" or likewise designated
or marked with words of similar import; (iii) information for which the Company
has an obligation of confidentiality so long as such obligation is known to
Employee; and (iv) information of a nature that a reasonable person would
conclude that it is confidential or proprietary.
6.3 NOTIFICATION OF THIRD PARTY DISCLOSURE REQUESTS. If Employee
receives any written or oral third party request, order, instruction or
solicitation for the disclosure of Confidential Information not in conformance
with this Agreement or if Employee becomes aware of any attempt by a third party
to improperly gain Confidential Information, Employee shall immediately notify
the Company's Chief Executive Officer or the Board of Directors of such request,
order, instruction or solicitation or of such attempt and fully disclose the
details surrounding such request, order, instruction or solicitation or such
attempt.
6.4 NON-REMOVAL OF RECORDS. All documents, files, records, data,
papers, materials, notes, books, correspondence, drawings and other written,
graphic or electronic records of the Business and all computer software of the
Company which Employee shall prepare or use, or come into contact with, shall be
and remain the exclusive property of the Company, in its discretion, and shall
not be physically, electronically, telephonically or otherwise removed from the
Company's premises without the Company's prior written consent.
6.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION. Confidential
Information gained, received or developed by Employee or in which Employee
participated in developing will remain the exclusive property of the Company, in
its sole discretion. Employee will promptly return to the Company or destroy or
erase all records, books, documents or any other materials whatsoever (including
all copies thereof) containing such Confidential Information in his possession
or control upon the earlier of (i) the receipt of a written request from the
Company for return or destruction of Confidential Information or (ii) the
termination of Employee's employment hereunder.
6.6 TRADE SECRETS OF OTHERS. In the course of his employment hereunder,
Employee will not use any information or materials that belong to any former
employer or any other person
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or entity and for which he has a duty of confidentiality or use or allow the use
of any illegally obtained confidential or secret information or materials.
ARTICLE VII
TERMINATION
7.1 TERMINATION BY THE COMPANY. The Company may terminate the
Employee's employment hereunder without good cause anytime not fewer than 30
days nor more than 45 days after delivering written notice of termination to the
Employee. The Company may terminate the Employee's employment hereunder for
"good cause" anytime by delivery of written notice of termination. A termination
for good cause under this SECTION 7.1 shall be effective upon the date set forth
in a written notice of termination delivered to Employee. Good cause will be
limited to the following circumstances:
(a) Employee has committed any fraud, dishonesty,
misappropriation or similar act against the Company
or an Affiliate of the Company; or
(b) Employee is in default in a material respect in the
performance of Employee's obligations, services or
duties hereunder, including Employee's willfully
disregarding the written or oral instructions of the
Company's Chief Executive Officer concerning the
conduct of his duties hereunder, Employee's conduct
which is materially inconsistent with the published
policies of the Company, as promulgated from time to
time and which are generally applicable to all
employees or senior executives, or Employee's breach
of any other material provision of this Agreement; or
(c) Employee is grossly negligent or engages in willful
misconduct in the performance of his duties
hereunder; or
(d) Employee has been adjudicated guilty by, or enters a
plea of guilty or no contest before, a court of
competent jurisdiction of illegal activities or found
by a court of competent jurisdiction to have engaged
in other wrongful conduct and such illegal activities
or wrongful conduct, individually or in the
aggregate, has (or could be reasonably expected to
have) a material adverse effect on the Company, its
prospects, earnings or financial condition.
7.2 EFFECT OF TERMINATION FOR GOOD CAUSE. If Employee's employment is
terminated by the Company for good cause-
(a) Employee shall be entitled to accrued base salary
under SECTION 3.1 and accrued vacation pay and other
paid time off, each through the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of SECTION 4.1 hereof;
and
(c) Except as provided in ARTICLE XI, this Agreement
shall thereupon be of no further force and effect.
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7.3 EFFECT OF TERMINATION WITHOUT GOOD CAUSE. If the Company terminates
Employee's employment without good cause-
(a) Employee shall be entitled to accrued base salary
under SECTION 3.1 and accrued vacation pay and other
time off, each through the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of SECTION 4.1 hereof;
(c) Employee shall be entitled to receive all amounts of
base salary as would have been payable under SECTION
3.1 (provided that Employee shall receive not less
than twelve (12) months of base salary) through the
Scheduled Termination Date of the applicable term
hereof, which amounts shall be paid as and when such
base salary would have been paid under this Agreement
if employment had not been terminated;
(d) Employee shall be entitled to receive all bonuses and
benefits as would have been awarded or paid under
SECTIONs 3.2 and 3.4 hereof through (or as a result
of events occurring through) the Scheduled
Termination Date, which benefits shall be awarded as
and when the same would have been awarded under the
Agreement had employment not been terminated;
(e) If the termination is within three years of a Change
of Control (as defined herein), the Employee shall be
entitled to receive a one-time, lump sum severance
payment (due upon termination) equal to two and
nine-tenths (2.9) times the total amount of the
annual base salary payable under the terms of SECTION
3.1 of this Agreement plus any incentive or bonus
paid in the prior year pursuant to SECTION 3.2 of
this Agreement; and
(e) Except as provided in THIS ARTICLE AND ARTICLE XI,
this Agreement shall thereupon be of no further force
or effect.
7.4 DEEMED TERMINATION WITHOUT GOOD CAUSE. After the occurrence of any
of the following events, the Employee, at his sole option, may declare by thirty
days (30) written notice to the Company that his employment hereunder has been
terminated by the Company, and such termination will for all purposes of this
Agreement be deemed a termination by the Company without good cause:
(a) The Company removes the Employee from the office of
President and CEO;
(b) The Company materially changes the Employee's
reporting requirements;
(c) The Company fails to afford Employee the power and
authority generally commensurate with the position of
President and CEO
(d) The Company requires Employee to relocate his
residence outside of Tampa, Florida; or
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(e) The Company breaches any material provision of this
Agreement.
In addition, Employee's death will be deemed a termination without good cause as
of the date of death.
7.5 TERMINATION BY EMPLOYEE. Employee may terminate his employment
hereunder by giving not less than forty-five (45) days written notice to the
Company.
7.6 EFFECT OF TERMINATION BY EMPLOYEE. If Employee terminates his
employment pursuant to SECTION 7.5 hereof -
(a) Employee shall be entitled to accrued base salary
under SECTION 3.1 and accrued vacation pay and other
paid time off, each through the date of termination;
(b) Employee shall be entitled to reimbursement for
expenses accrued through the date of termination in
accordance with the provisions of SECTION 4.1 hereof;
and
(c) Except as provided in ARTICLE XI, this Agreement
shall thereupon be of no further force and effect.
7.7 CHANGE OF CONTROL. For purposes of SECTION 7.3 of this Agreement, a
"Change of Control" shall be deemed to have occurred in the event of:
(a) The acquisition by any person or entity, or group
thereof acting in concert, of "beneficial" ownership
(as such term is defined in Securities and Exchange
Commission ("SEC") Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")), of securities of the Company or of Z-Tel
Technologies, Inc. which, together with securities
previously owned, confer upon such person, entity or
group the voting power, on any matters brought to a
vote of shareholders, of thirty percent (30%) or more
of the then outstanding shares of capital stock of
the Company or capital stock of Z-Tel Technologies,
Inc.; or
(b) The sale, assignment or transfer of assets of the
Company or Z-Tel Technologies, Inc. in a transaction
or series of transactions, if the aggregate
consideration received or to be received by the
Company or Z-Tel Technologies, Inc. in connection
with such sale, assignment or transfer is greater
than fifty percent (50%) of the book value,
determined by the Company or Z-Tel Technologies,
Inc., as the case may be, in accordance with
generally accepted accounting principles, of the
Company's assets or the assets of Z-Tel Technologies,
Inc. determined on a consolidated basis immediately
before such transaction or the first of such
transactions; or
(c) The merger, consolidation, share exchange or
reorganization of the Company or Z-Tel Technologies,
Inc. as a result of which the holders of all of the
shares of capital stock of the Company (or of Z-Tel
Technologies, Inc. as the case may be) as a group
would receive less than fifty percent (50%)
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of the voting power of the capital stock or other
interests of the surviving or resulting corporation
or entity; or
(d) The adoption of a plan of liquidation or the approval
of the dissolution of the Company or of Z-Tel
Technologies, Inc.; or
(e) The commencement (within the meaning of SEC Rule
14d-2 under the Exchange Act) of a tender or exchange
offer that, if successful, would result in a Change
of Control;
(f) A determination by the Board of Directors of the
Company, in view of then current circumstances or
impending events, that a Change of Control has
occurred or is imminent, which determination shall be
made for the specific purpose of triggering the
operative provisions of this Agreement; or
(g) The Board of Directors of the Company or of Z-Tel
Technologies, Inc. is not comprised of a majority of
directors who were either directors as of the date of
this Agreement (the "Initial Directors") or whose
nomination or election was approved by at least a
majority of the Initial Directors or by a majority of
directors whose nomination or election was approved
by the Initial Directors.
7.8 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) If it shall be determined that any payment,
distribution or benefit received or to be received by
Employee from the Company ("Payments") would be
subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), then Employee shall be
entitled to receive an additional payment (the
"Excise Tax Gross-Up Payment) in an amount such that
the net amount retained by Employee, after the
calculation and deduction of any Excise Tax on the
Payments and any federal, state and local income
taxes and excise tax on the Excise Tax Gross-Up
Payment provided for in this SECTION 7.8, shall be
equal to the Payments. In determining this amount,
the amount of the Excise Tax Gross-Up Payment
attributable to federal income taxes shall be reduced
by the maximum reduction in federal income taxes that
could be obtained by the deduction of the portion of
the Excise Tax Gross-Up Payment attributable to state
and local income taxes. Finally, the Excise Tax
Gross-Up Payment shall be reduced by income or excise
tax withholding payments made by the Company or any
affiliate of either to any federal, state or local
taxing authority with respect to the Excise Tax
Gross-Up Payment that was not deducted from
compensation payable to Employee.
(b) All determinations required to be made under this
SECTION 7.8, including whether and when an Excise Tax
Gross-Up Payment is required and the amount of such
Excise Tax Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, except as
specified in SECTION 7.8(A) above, shall be made by
the Company's independent auditors (the "Accounting
Firm"), which shall provide detailed supporting
calculations both to the Company and Employee within
15 business days after Employee provides the Company
with notice that a Payment has been or will be made
or such earlier time as may be required by the
Company. The
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determination of tax liability made by the Accounting
Firm shall be subject to review by the Employee's tax
advisor and, if Employee's tax advisor does not agree
with the determination reached by the Accounting
Firm, then the Accounting Firm and Employee's tax
advisor shall jointly designate a nationally
recognized public accounting firm, which shall make
the determination. All fees and expenses of the
accountants and tax advisors retained by either
Employee or the Company shall be borne by the
Company. Any Excise Tax Gross-Up Payment, as
determined pursuant to this SECTION 7.8, with respect
to a Payment shall be paid by the Company to Employee
at such time as Employee is entitled to receive the
Payment. Any determination by a jointly designated
public accounting firm shall be binding upon the
Company and Employee.
(c) As a result of the uncertainty in the application of
Subsection 4999 of the Code at the time of the
initial determination hereunder, it is possible that
Excise Tax Gross-Up Payments will not have been made
by the Company that should have been made consistent
with the calculations required to be made hereunder
("Underpayment"). In the event that Employee
thereafter is required to make a payment of any
Excise Tax, any such Underpayment calculated in
accordance with and in the same manner as the Excise
Tax Gross-Up Payment in SECTION 7.8(A) above shall be
promptly paid by the Company to or for the benefit of
Employee. In the event that the Excise Tax Gross-Up
Payment exceeds the amount subsequently determined to
be due, such excess shall constitute a loan from the
Company to Employee payable on the fifth day after
demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
ARTICLE VIII
NON-COMPETITION AND NON-INTERFERENCE
8.1 NONCOMPETITION. Employee agrees that during the course of his
employment with the Company and (i) in the event of termination for Good Cause
or a termination by Employee of such employment, for a period of twenty-four
(24) months after termination of such employment; or (ii) in the event of a
termination of employment for any other reason, for a period of the lesser of
(x) twenty-four (24) months after termination of such employment; and (y) the
number of months after termination of such employment during which Employee
receives payments of base salary pursuant to SECTION 7.3(C), Employee will not,
directly or indirectly, as an employee, agent, independent contractor,
consultant, partner, joint venturer or otherwise, within any state in the United
States within which Employee has been involved with the provision of services
(or offers or plans to provide services) to customers or prospective customers
of the Company within the twelve (12) months preceding the date of the
termination of Employee's employment with the Company, enter into, engage in, be
employed by or consult with (or solicit to enter into, engage in, be employed by
or consult with) any business which competes with the Company by providing
services of the same nature or type as those provided by the Company within the
twelve (12) month period preceding the termination of the Employee's employment
with the Company, including (a) participating as an officer, director,
stockholder, member, employee, agent, independent contractor, consultant,
representative or partner of, or having any direct or indirect financial
interest (including the interest of a creditor) in, any such competitor or (b)
assisting any other individual or business entity, of whatever type or
description, in providing any such competing services. The provisions of this
section shall not
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apply to the ownership by Employee of less than five percent (5%) of any
publicly traded corporation or other business entity solely as an investor and
under circumstances in which Employee neither provides services nor assists
anyone else to provide any services to or on behalf of any such entity. Employee
further agrees that upon a violation of this section of this Agreement, the
period during which Employee's covenants in this section apply will be extended
by the number of days equal to the period of such violation.
8.2 NON-SOLICITATION/NON-ACCEPTANCE. Employee agrees, during the course
of his employment with the Company and for a period of twenty-four (24) months
after termination of that employment, whether voluntarily or involuntarily, with
or without cause, that Employee will refrain from and will not, directly or
indirectly, as employee, agent, independent contractor, consultant, partner,
joint venturer or otherwise (a) solicit or counsel any third person,
partnership, joint venture, company, corporation, association, or other
organization that is or was a current or prospective customer of the Company
within the twelve (12) months preceding the termination of the Employee's
employment with the Company and with which Employee had a substantial
relationship within such preceding twelve (12) month period, regardless of such
person's or entity's location, to terminate any existing or prospective business
relationship with the Company or commence a similar business relationship with
any other individual or business entity; (b) accept, with or without
solicitation, any business from any third person, partnership, joint venture,
company, corporation, association or other organization that is or was a current
or prospective customer of the Company with which Employee had a substantial
relationship within the preceding twelve (12) month period, regardless of such
person's or entity's location; or (c) solicit any of the employees, agents,
independent contractors or consultants of the Company, regardless of such
person's or entity's location, to terminate any business relationship with the
Company. Employee further agrees that upon a violation of this section of this
Agreement, the period during which Employee's covenants in this section apply
will be extended by the number of days equal to the period of such violation.
8.3 SEVERABILITY. Every provision of this Article is intended to be
severable. If any provision or portion of a provision is illegal or invalid,
then the remainder of this Article will not be affected. Moreover, any provision
of this Article which is determined to be unreasonable, arbitrary or against
public policy will be modified as necessary so that it is not unreasonable,
arbitrary or against public policy. An illegally long period of time or
illegally large geographic area, for example, should be reduced to a shorter
period of time or smaller geographic area.
8.4 ACKNOWLEDGEMENTS. Employee acknowledges that he has incurred the
obligations set forth in this Article solely in consideration of the Company's
execution of this Agreement and those obligations (as well as this provision)
will survive and continue notwithstanding the termination, rescission or
expiration of this Agreement or any provision of this Agreement. Employee
further acknowledges that the foregoing restrictive covenants are reasonable and
necessary in light of the circumstances, including the Confidential Information
to which he has been exposed, the business relationships with the Company's
customers and others he has developed and the specialized training he has
received during his employment by the Company.
8.5 COUNTERCLAIMS. The existence of any claim or cause of action
Employee may have against the Company will not at any time constitute a defense
to the enforcement by the Company of the restrictions or rights provided by this
Article.
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ARTICLE IX
REMEDIES
9.1 EQUITABLE REMEDIES. Employee and the Company agree that the
services to be rendered by Employee pursuant to this Agreement, and the rights
and interests granted and the obligations to be performed by Employee to the
Company pursuant to this Agreement, are of a special, unique, extraordinary and
intellectual character, which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the terms of this Agreement will cause
the Company great and irreparable injury and damage. Employee hereby expressly
agrees that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to prevent a breach of ARTICLES
VI, VIII AND XII of this Agreement, both pendente lite and permanently, against
Employee, as such breach would cause irreparable injury to the Company and a
remedy at law would be inadequate and insufficient. Therefore, the Company may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction in the matter restraining any further violation.
9.2 RIGHTS AND REMEDIES PRESERVED. Nothing in this Agreement except
SECTION 10.11 shall limit any right or remedy the Company or Employee may have
under this Agreement or pursuant to law for any breach of this Agreement by the
other party. The rights granted to the parties herein are cumulative and the
election of one shall not constitute a waiver of such party's right to assert
all other legal remedies available under the circumstances.
ARTICLE X
MISCELLANEOUS
10.1 NO WAIVERS. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
10.2 NOTICES. Any notice to be given to the Company and Employee under
the terms of this Agreement may be delivered in person, by courier or Federal
Express, United Parcel Service, Airborne Express U.S. express mail or other
similar nationally recognized overnight delivery service that that obtains a
confirmation of delivery, or by registered or certified mail, postage prepaid,
return receipt requested, and shall be addressed as follows:
IF TO THE COMPANY: Z-Tel Communications, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Counsel
IF TO EMPLOYEE: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party may hereafter notify the other in writing of any change in address.
Any notice shall be deemed duly given (i) when personally delivered, (ii) when
delivered by courier or overnight delivery service or (iii) on the third day
after it is mailed by registered or certified mail, postage prepaid, return
receipt requested as provided herein.
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10.3 SEVERABILITY. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
10.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification
(except as otherwise provided herein with respect to the modification of
provisions that are unreasonable, arbitrary or against public policy),
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding that involves the interpretation of any provisions of this
Agreement.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida without reference
to the conflict of law principles thereof.
10.7 CONSTRUCTION. This Agreement was negotiated at arms'-length and
will not be construed more strongly against any party regardless of which party
was responsible for its preparation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural will include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender will include the other genders. The words "Agreement," "hereof,"
"herein" and "hereunder" and words of similar import referring to this Agreement
refer to this Agreement as a whole, including Exhibits, and not to any
particular provision of this Agreement. Whenever the word "include," "includes"
or "including" is used in this Agreement, it will be deemed to be followed by
the words "without limitation." The various headings contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of any of the provisions of this Agreement.
10.8 FURTHER ASSURANCES. Each party hereto shall cooperate and shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
10.9 AFFILIATE. The term "Affiliate" with respect to a party to this
Agreement means (i) any person or entity directly or indirectly controlling the
party; (ii) any person or entity controlled by or under common control with the
party; (iii) any person or entity owning or controlling 10% or more of the
outstanding voting securities or interests of the party; (iv) any officer,
director, partner or employee of a person or entity described in (i), (ii) or
(iii) above; and (v) any entity for which a person or entity described in (i),
(ii) or (iii) above is an officer, director, partner, or employee.
10.10 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which taken together shall be deemed one original.
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10.11 CONFIDENTIAL ARBITRATION. The parties hereto agree that any
dispute concerning or arising out of the provisions of this Agreement,
Employee's employment or termination of Employee's employment shall be resolved
by confidential arbitration in accordance with the rules of the American
Arbitration Association. Such confidential arbitration shall be held in Tampa,
Florida, and the decision of the arbitrator(s) shall be conclusive and binding
on the parties and shall be enforceable in any court of competent jurisdiction.
The arbitrator may, in his or her discretion, award attorney's fees and costs to
such party as he or she sees fit in rendering his or her decision.
Notwithstanding the foregoing, if any dispute arises hereunder as to which the
Company desires to exercise any rights or remedies under SECTION 9.1 hereof, the
Company may, in its discretion, in lieu of submitting the matter to arbitration,
bring an action thereon in any court of competent jurisdiction in Tampa,
Florida, which court may grant any and all relief available in equity or at law.
In any such action, the prevailing party shall be entitled to reasonable
attorneys' fees and costs as may be awarded by the court.
10.12 PIRATED SOFTWARE. During the course of Employee's employment by
the Company, Employee will not utilize or allow the utilization of computer
software owned by another without permission of the owner.
ARTICLE XI
SURVIVAL
The provisions of ARTICLES VI, VII, VIII, IX AND X of this Agreement
and this ARTICLE shall survive the termination, rescission or expiration of this
Agreement whether upon, or prior to, the Scheduled Termination Date hereof. The
representations and warranties of the parties hereto shall survive the execution
of this Agreement and continue without limitation.
ARTICLE XII
INTELLECTUAL PROPERTY
All Confidential Information, computer software, video and sound
recordings, scripts, creations, inventions, improvements, designs and
discoveries conceived, created, invented, authored, developed, produced or
discovered by Employee while employed by the Company, whether alone or with
others, whether during or after regular work hours, are and will be the
Company's property exclusively, in its sole discretion. Employee hereby assigns
to the Company all copyrights, trademarks and other rights of authorship or
ownership he may have with respect to such items. Moreover, at any time, without
additional consideration, Employee will execute and deliver any documents or
instruments that the Company may request in order to effectively convey and
transfer good title and right to, and put the Company in possession of, such
items.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date set forth.
Z-TEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/
------------------------------
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
President and Chief Executive Officer
DATE: July 30, 2002
------------------------------
/s/
------------------------------
D. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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