EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of June, 1998, by and between COLMENA CORP., a Delaware corporation
("Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., an Ohio resident ("Employee").
RECITALS
A. The Company is a corporation engaged in the business of providing
telecommunications services (the "Business").
B. Employee is a principal shareholder, director and executive employee of
the Company.
C. The Company desires to engage Employee, and Employee agrees to serve, as
the President and Chief Executive Officer of the Cpompany, subject to the terms
and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:
1. Recitals. The recitals set forth above shall constitute and shall be
deemed to be an integral part of this Agreement.
2. Duties. Employee shall serve as the President and Chief Executive
Officer of the Company ands shall be responsible for the managing, directing and
supervising of all the business operations of the Company, subject to the
management of the Company by the Board of Directors of the Company. Employee
agrees to perform his duties pursuant to this Agreement in good faith and in a
manner which he honestly believes to be in the best interests of the Company,
and with such care, including reasonable inquiry, as an ordinary prudent person
in a like position would use under similar circumstances. Employee agrees to
observe a duty of loyalty to the Company placing the interests of the Company
ahead of his own. Employee shall diligently and faithfully devote his best
efforts, talents and skills to the Business in accordance with the restrictions,
direction and control of the Company, and shall perform such duties as may
reasonable be assigned to Employee by the Company's Board of Directors from time
to time, but shall not require Employee to move his principal residence from,
Bay Village, Ohio. Such duties shall be rendered at such place or places as the
Company shall require in accordance with the best interests, needs, business and
opportunities of the Company. Employee shall at all times be subject to and
shall observe and carry out such reasonable rules, regulations, policies,
directions and restrictions as may be established from time to time by the
Company. Employee's service shall be rendered on a full-time basis.
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3. Limitations on Other Employment. Throughout the Term (as hereinafter
defined) of Employee's employment under this Agreement, Employee shall not enter
into the services of or be employed in any capacity of for any purposes
whatsoever, whether directly or indirectly, by any person, firm, corporation or
entity other than the Company, and will not, during said period of time., be
engaged in any business, enterprise or undertaking other than employment by the
Company except for such other activities that do not detract from the full
discharge of Employee's duties hereunder.
4. Compensation and Benefits.
4.1 Base Salary. In consideration of Employee's performance of all of his
duties and responsibilities hereunder and his observance of all of the
covenants, conditions and restrictions contained herein, Employee shall be
entitled, during the Term of Employee's employment under this Agreement, to
receive a base salary ("Base Salary") of Three Hundred Thousand Dollars
($300,000) per year, payable in weekly or other periodic installments in
accordance with the Company's payroll procedures in effect from time to time.
The Base Salary has been expressed in terms of a gross amount, and the Company
is or may be required to withhold from such gross amount deductions in respect
of federal, state or local income taxes, FICA and the like.
4.2 Incentive Compensation. Employee shall be entitled to the following
incentive compensation:
4.2.1. Concurrently with the execution hereof, Employee shall receive
options to purchase an aggregate of One Million (1,000,000) shares of the common
stock, $.01 par value, of the Company, vesting at the rate of Two Hundred
Thousand (200,000) shares per year on each anniversary date of this Agreement at
an exercise price of Six Dollars ($6.00) per share and exercisable for six (6)
years following the grant of such options. The options granted shall not be
pursuant to the Company's 1998 Stock Option Plan.
4.2.1. Additional incentive compensation shall be determined by the Board
of Directors' Compensation Committee.
4.3 Employee Benefits.
4.3.1. Vacation. Throughout the Term of Employee's employment under this
Agreement, Employee shall be entitled to four (4) weeks of paid vacation (to be
taken at such time or times as is reasonably convenient to the Company).
4.3.2 Automobile Allowance. The Company will provide Employee with an
automobile allowance of $650.00 per month, for each month in which this
Agreement remains in effect
4.3.3 Life Insurance. The Company shall provide Employee, at the Company's
cost, with a life insurance policy on the life of Employee, which policy shall
be owned personally by Employee or his assignee. The amount of such policy shall
be equal to up to five (5) times Employee's Base Salary; provided, however, that
the Company shall not be required to pay more than $5,000.00 per annum in
premiums. Employee shall be entitled to increase the amount of such policy by
reimbursing the Company for the additional premium attributable to such increase
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4.3.4. Medical, Dental and Disability Insurance. The Company shall provide
Employee with such other employment benefits, including, without limitation,
medical and dental insurance, as is provided by the Company to its other
executive officers.
4.4 Expenses. Employee may incur reasonable expenses in performing his
services hereunder which shall be reimbursed by the Company, in accordance with
the Company's standard expense reimbursement policies, upon presentation by
Employee of supporting documentation (e.g., receipts and vouchers) for such
expenditures. Expenses reimbursements payable to affiliates of Employee shall be
limited to an amount equal to or lesser than the cost of the same goods or
services charged to third parties.
5. Term. Employee's employment pursuant to this Agreement shall commence on
the date hereof and continue thereafter through and including the day
immediately preceding the fifth anniversary of the date hereof (the "Term")
unless terminated earlier pursuant to Section 6 below.
6. Termination.
6.1 By Company For Cause. Employee's employment under this Agreement may be
terminated immediately by the Company only upon the occurrence of one or more of
the following causes:
6.1.1 Employee's conviction of any criminal act involving moral turpitude
or which otherwise tends to bring disrepute upon the Company;
6.1.2 The commission by Employee of any act of dishonesty in connection
with the performance of any of Employee's duties hereunder (including, but not
limited to falsification of Company records, making false statements of material
facts to third parties regarding the Company's Business, fraud, and
misappropriation or embezzlement against the Company or any of its customers or
suppliers);
6.1.3 Any willful material breach by Employee of any of the covenants,
conditions or restrictions set forth in this Agreement, including, but not
limited to, the restrictions set forth in Sections 7, 8 or 9 of this Agreement.
6.1.4 The material failure to perform Employee's duties, and/or to observe
the written rules, regulations, policies, directions or restrictions adopted by
the Company from time to time to the extent such rules, regulations, policies,
directions or restrictions are not inconsistent with the terms of this
Agreement, provided that such failure shall not have been cured within ten (10)
days after Employee is given specific notice and an opportunity to cure such
failure;
6.1.5 If Employee dies or becomes disabled (Employee shall be deemed
"disabled" for purposes of this Agreement if he is unable, by reason of illness,
accident, or other physical or mental incapacity, to perform substantially all
of his regular duties for a continuous period of one hundred twenty (120 days);
and
6.1.6 Repeated abuse of alcohol or illegal narcotics which result in the
failure of Employee to perform his duties hereunder.
6.2 Severance Pay
6.2.1 Termination For Cause. In the event Employee's employment by the
Company is terminated under Section 6.1, except for a termination pursuant to
Section 6.1.5, Company shall have no obligation to pay any severance pay to
Employee under this Section 6.2.
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6.2.2 Termination Other Than For Cause. In the event Employee's employment
by the Company is terminated for any reason other than pursuant to Section 6.1,
or upon Employee's voluntary resignation, death or disability, Employee shall
receive immediately upon termination, as severance pay, a cash payment equal to
the Base Salary for two (2) years, and all options granted pursuant to Section
4.2 hereof shall vest immediately.
6.3 Termination in Connection with Charge in Control
6.3.1 Payments to Employee Upon Change in Control. In the event that
Employee's employment under this Agreement is terminated by the Company within
six (6) months of a Change in Control (as herein after defined), the Company
shall continue to pay Employee's Base Salary, as specified in Section 4.1
hereof, until the expiration of the Term of this Agreement. For purposes of this
Section 6.3.1, any reduction, without Employee's consent, of his duties,
responsibility or Base Salary, or Employee's relocation by more than 30 miles,
as compared to his duties, responsibilities, Base Salary or location of
employment immediately before a Change of Control, shall, at the election of
Employee, be deemed a termination of this Agreement by the Company upon the
occurrence of a Change in Control. Employee shall not be required to mitigate
the amount of any payments provided for in this Section 6.3 by seeking other
employment or otherwise, nor shall the amount of any payments provided for in
this Section 6.3 be reduced by any compensation earned by Employee as the result
of employment by another employer after the date of Employee's termination by
Employer, or otherwise.
6.3.2 Acceleration of Vesting of Options. In the event that Employee's
employment is terminated upon the occurrence of a Change in Control, all options
granted pursuant to Section 4.2 hereof shall vest immediately.
6.3.3 Change in Control. The term "Change in Control" shall mean a change
in control of the Company of a nature that would be required to be reported in
response to item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided that,
without limitation, such a charge in control shall be deemed to have occurred if
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, other than the Company or any "person" who on the date hereof is a
director or officer of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company's then outstanding securities, or (2)
during any period of two (2) consecutive years during the term of this
Agreement, as extended (if applicable), individuals who at the beginning of such
period constitute the Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director representing at least two thirds of the directors then in office who
were directors at the beginning of the period.
7. Disclosure or Use of Confidential Information.
7.1 Confidentiality and Appropriation of Confidential Information. During
the Term of Employee's employment under this Agreement and thereafter, Employee
will keep confidential and will not directly or indirectly reveal, divulge or
make known in any manner to any person or entity (except as required by
applicable law or in connection with the performance of his duties and
responsibilities as an employee hereunder) nor use or otherwise appropriate for
Employee's own benefit, or on behalf of any other person or entity by whom
Employee might subsequently be employed or otherwise associated or affiliated
with, any Confidential Information 9as hereinafter defined). Confidential
Information shall include information (not readily complied from publicly
available sources) which is made available to Employee or obtained by Employee
during the course of his employment relating or pertaining to the Company's
Business, including trade secrets, business and financial information,
operations information, projects, products, customers, supplier names, addresses
and pricing policies, Company pricing policies, computer programs and software
or unpublished know-how, whether patented or unpatented. Employee agrees to
cooperate with the Company to maintain the secrecy of and limit the use of such
Confidential Information. Employee further agrees that he is under no obligation
to any former employer which is in any way inconsistent with this Agreement or
which imposes any restriction on the Company.
7.2 Prevention of Unauthorized Release of Company Information. Employee
agrees to promptly advise the Company of any knowledge which he may have of any
unauthorized release or use of any Confidential Information, and shall take
reasonable measures to prevent unauthorized persons or entities from having
access to, obtaining or being furnished with any Confidential Information.
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8. Proprietary Rights and Materials. All documents, memoranda, reports,
notebooks, correspondence, files, lists and other records, and the like,
designs, drawings, specifications, computer software and computer equipment,
computer printouts, computer disks, and all photocopies or other reproductions
thereof, affecting or relating to the Business, which Employee shall prepare,
use, construct, observe, possess or control ("Company Materials"), shall be and
remain the sole property of the Company. Upon termination of this Agreement,
Employee shall deliver promptly to the Company all such Company Materials.
9. Non-Competition.
9.1 Solicitation. Employee agrees that he will not at any time during his
employment or after the termination or expiration of his employment relationship
with the Company (the "Termination Date"), whether voluntarily or involuntarily,
directly or indirectly for himself or any other person or entity solicit,
interfere with or endeavor to entice away from the Company any other employee of
the Company. Additionally, Employee agrees that during the Non-Competition
Period (as hereinafter defined) any employment by Employee or any entity in
which he has an interest, directly or indirectly (other than a publicly traded
company in which he does not have a controlling interest) of any person who was
in the employ of the Company within the preceding year, shall be a violation of
this Section. For the purposes of this Agreement indirect interests shall
include interests held by Employee's family members or any partner in a
partnership in which he has a twenty percent (20%) or greater partnership
interest.
9.2 Non-Competition Agreement. Employee agrees that while employed by the
Company and for a three (3) year period following the Termination Date (the
"Non- Competition Period"), he will not, for himself or on behalf of any person,
partnership, trust , corporation or other entity other than the Company for
whatever reason engage in or be connected with, directly or indirectly (either
as an employee, officer, director, partner, shareholder, consultant or
independent contractor), any business in which the principal product or focus is
the providing of telecommunications services, within those areas in the United
States (the "Non-Competition Area") in which the Company is doing business as of
the Termination Date.
10. Remedies.
10.1 Injunctive Relief. The Company and Employee recognize and acknowledge
that employee is employed under this Agreement as an employee in a position
where Employee will be rendering personal services of a special, unique, unusual
and extraordinary character requiring extraordinary ingenuity and effort by
Employee. Hereby acknowledges that compliance with the provisions of Sections 7,
8 and 9 of this Agreement (which shall survive the termination of this Agreement
in all respects) is necessary to protect the goodwill and other proprietary
interests of the Company and that the Company would suffer continuing and
irreparable injury which injury is not adequately compensable in monetary
damages or at law. Accordingly, Employee agrees that the Company, its successors
and assigns may obtain injunctive relief against the breach or threatened breach
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of the foregoing provisions, in addition to any other legal remedies which may
be available to it under this Agreement (including money damages), and that any
such breach or threatened breach may be preliminarily enjoined by the Company
without bond
10.2 Other Remedies. However, no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now hereafter existing at law or in equity or by
statue or otherwise. The election of any one or more remedies by the Company
shall not constitute a waiver of the right to pursue other available remedies.
10.3 Accounting for Profits. Employee covenants and agrees that if he
violates the provisions of Sections 7, 8 or 9, the Company shall be entitled to
an accounting and repayment of all profits, compensation, commissions,
remuneration or other benefits that Employee has realized and/or may realize as
a result of or in connection with any such violation. These remedies shall be in
addition and not in limitation of any injunctive relief or other rights or
remedies to which the Company is or may be entitled at law, in equity or under
this Agreement.
10.4 Attorneys' Fees. If litigation arises under this Agreement between the
Company and Employee, the prevailing party n such litigation shall be entitled
to recover its reasonable attorneys' and paralegals' fees, court costs and
out-of-pocket litigation expenses from the non-prevailing party.
10.5 Arbitration. Any controversy or claim arising out of or relating to
this Agreement, except Sections 7,m 8 and/or 9, shall be resolved by arbitration
in accordance with the Commercial Rules of the American Arbitration Association
then in effect. The decision of the arbitrator shall be final and binding upon
the parties hereto, and judgement upon the award rendered by the arbitrator may
be entered in any court of competent jurisdiction. There shall be a single
arbitrator, the situs of the arbitration shall be in the County of Cuyahoga,
State of Ohio, and the prevailing party (or parties) shall also recover from the
losing party (or parties) reasonable attorneys' fees and the costs of
arbitration as part of the judgment rendered.
10.6 Cumulative Remedies. The remedies described in this Section 10 are in
addition to and not in substitution for any other remedies available under the
law.
11. Severability. It is the desire of the parties that the provisions and
restrictions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies in each jurisdiction in which enforcement
might be sought. Thus, whenever possible, each provision or restriction of this
Agreement shall be interpreted in such manner as to be effective under
applicable law. If any section or portion of this Agreement or the application
thereof to any party or circumstance shall be prohibited by or invalid under
applicable law, the invalidity or unenforceablity of that section or portion of
this Agreement shall not invalidate any other section or portion, nor shall ir
affect the application of such section or portion to other parties or other
circumstances. If in any judicial proceeding, a court shall refuse to enforce
this Agreement, whether because the time limit is too long or because the
restrictions contained herein are more extensive (whether as to geographic area,
scope of business or otherwise) than is necessary to protect the business and
goodwill of the Company, it is expressly understood and agreed between the
parties hereto that this Agreement is deemed modified to the extent necessary to
permit this Agreement to be enforced in any such proceedings.
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12. Term Company as Including Corporate Affiliates. For purposes of this
Agreement, the term "Company" shall be deemed to include any corporation which
is in control of, controlled by, or under common control with the Company,
whether or not Employee is directly employed by such other corporation or
corporations.
13. Continuing Obligations. Employee's obligations pursuant to Sections 7,
8 and 9 of this Agreement and the rights and remedies of the Company hereunder
shall continue in effect beyond the term of this Agreement.
14. Waiver or Modifications. No waiver or modifications of this Agreement
or of any covenant, condition, or limitation herein contained shall be valid
unless in writing and duly executed by the party to be charged therewith.
Furthermore, no evidence of any modification or waiver shall be offered or
received as evidence in any litigation between the parties arising out of or
affecting this Agreement or the rights or obligations of any party hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid.
The provisions of this Section may not be waived except herein set forth.
15. Entire Agreement. This written Agreement contains sole and entire
agreement between the parties as to the matters contained herein, and supersedes
any and all other agreements between them. The parties acknowledge and agree
that neither of them has made any representation with respect to such matters of
this Agreement or any representations except as are specifically set forth
herein, and each party acknowledges that he or it has relied on his or its own
judgement in entering into this Agreement. The parties further acknowledge that
statements or representations that may have been heretofore made by either of
them to the other are void and of no effect and that neither of them has relied
thereon in connection with his or its dealing with the other.
16. Choice of Law. This Agreement and the performance hereunder and all
suits and special proceedings hereunder shall be construed in accordance with
the laws of the State of Ohio.
17. Binding Effect of Agreement; Assignment; Merger; Dissolution. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, successors, assigns and legal representatives. This Agreement
shall be construed as a contract for personal services by Employee to the
Company and shall not be assignable by Employee. In the event of the sale,
merger or consolidation of the Company, Employee agrees that the Company may
assign its rights and obligations hereunder to its successor or purchaser.
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18. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by certified registered
mail, return receipt requested, with postage prepaid to the following addresses:
To Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Company: Colmena Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first written above.
"Company"
COLMENA CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Secretary
"Employee"
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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