EXHIBIT 10.12
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated as of August 17, 1999 (the "Effective Date"), is
made by and between iBasis, Inc., a Delaware Corporation with its
principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx
00000 (the "Employer"), and Xxxx X. Xxxxxx, Xx. (the "Employee").
SECTION 1. FREEDOM TO CONTRACT.
The Employee represents that he is free to enter into this Agreement,
and that he has not made and will not make any agreements in conflict with
this Agreement. The Employee will not, and the Employer will not require the
Employee to, disclose to the Employer, or use for the Employer's benefit, any
trade secrets or confidential information now or hereafter in the Employee's
possession which is the property of any other party.
SECTION 2. EMPLOYMENT.
The Employer hereby continues to employ the Employee, and the Employee
hereby accepts his continued employment by the Employer, upon the terms and
conditions set forth herein.
SECTION 3. EFFECTIVE DATE AND TERM.
This Agreement shall take effect as of the Effective Date, and shall
continue in full force and effect until terminated in accordance with Section
6 herein.
SECTION 4. TITLE AND DUTIES; EXTENT OF SERVICES.
The Employee shall promote the business and affairs of the Employer as
Vice President, Engineering and Operations of the Employer, with
responsibility for performing such duties consistent with such position as
the Chief Executive Officer of the Employer (the "CEO") or the Board of
Directors of the Employer (the "Board") may from time to time designate.
Except as otherwise provided in this Agreement and except for vacations and
absences due to temporary illness, the Employee shall devote his full time
and efforts to the business and affairs of the Employer, provided that, with
the Employer's prior written consent the Employee may engage in such other
business activities outside the scope of his employment hereunder as in the
reasonable judgment of the Employer will not materially adversely affect the
Employee's ability to perform his obligations under this Agreement.
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SECTION 5. COMPENSATION AND FRINGE BENEFITS.
Section 5.1. BASE SALARY. In consideration of the services rendered by
the Employee under this Agreement, the Employer shall pay the Employee an
initial base salary (the "Base Salary") at an annual rate of One Hundred
Twenty Thousand Dollars ($120,000), payable in arrears bi-weekly (or on such
other payment schedule as the Employer shall have reasonably implemented with
respect to the payment of its other salaried employees), such Base Salary
being subject to increase at the discretion of the CEO or the Board.
Section 5.2. PERFORMANCE BONUS. On an annual basis, the CEO or the
Board shall establish, objective written performance goals for the Employee.
Upon the attainment of such performance goals, in addition to his Base
Salary, the Employee shall be entitled to a cash bonus in an amount determined
in the discretion of the CEO or the Board. Any such performance bonus shall
be due and payable within ninety (90) days after the end of the calendar
year to which it relates.
Section 5.3. FRINGE BENEFITS. The Employee shall be entitled to such
life insurance, health insurance and other employee fringe benefits as may be
offered or generally made available by the Employer to its executive officers.
SECTION 6. TERMINATION; CHANGE OF CONTROL.
Section 6.1. TERMINATION OF EMPLOYMENT. The Employee's employment
hereunder shall terminate upon the Employee's death or Permanent Disability.
For purposes of this Agreement, "Permanent Disability" shall mean the
Employee's inability to perform his duties hereunder for a continuous period
of three (3) months or a total or more than six (6) months in any twelve (12)
month period by reason of his physical or mental illness or incapacity. In
the event of any dispute concerning the existences of a Permanent
Disability, such question shall be determined by a licensed physician
selected by the Employer and reasonably acceptable to the Employee, whose
determination shall be final and binding upon the parties. The Employee shall
submit to such examinations and furnish such information as such physician may
reasonably request. The Employee's employment hereunder may also be
terminated:
(a) By the Employee at any time upon at least thirty (30) days prior
written notice to the Employer; or
(b) By the Employer at any time upon at least thirty (30) days
prior written notice to the Employee; or
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(c) By the Employee at any time for good reason, including but not
limited to:
(i) failure of the Employer to continue to employ the
Employee as Vice President, Finance and Chief Financial Officer of
the Employer; or
(ii) material diminution of the Employee's responsibilities,
duties or authorities as Vice President, Finance and Chief Financial
Officer of the Employer, or assignment to the Employee of any
responsibilities or duties inconsistent with such positions; or
(iii) failure of the Employer to pay and provide to the Employee
the compensation provided for herein; or
(iv) requiring the Employee to be permanently based anywhere
other than the principal executive offices of the Employer
(including business-related travel to an extent reasonably
consistent with past practice); or
(d) By the Employer at any time for cause, including but not limited
to:
(i) the Employee's gross negligence or willful misconduct with
respect to the business and affairs of the Employer; or
(ii) the Employee's material breach of this Agreement; or
(iii) the commission by the Employee of an act involving moral
turpitude or fraud; or
(iv) the Employee's conviction of any felony.
The provisions of Sections 6.2, 6.3, 7, 8, 9 and 10 shall survive any
termination of the Employee's employment hereunder and shall continue in
effect until such time as all obligations of the parties described therein
have been satisfied.
SECTION 6.2. COMPENSATION FOLLOWING TERMINATION; SEVERANCE PAY;
ACCELERATION OF STOCK OPTIONS.
(a) If the Employee terminates his employment pursuant to
Section 6.1(a) hereof, or if such employment is terminated by the death
or Permanent Disability of the Employee, the Employee shall not be
entitled to compensation, severance pay or fringe benefits beyond the
date upon which he ceases to be employed hereunder (the "Employment
Termination
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Date") except as may be otherwise provided in any then existing insurance
or health benefit programs of the Employer.
(b) If, within the six (6) month period following the occurrence of
an Acquisition or Change in Control (each as defined below), the Employer
terminates the employment of the Employee pursuant to Section 6.1(b)
hereof or the Employee terminates his employment pursuant to
Section 6.1(c) hereof, then:
(i) the Employee shall be entitled for a period of nine (9)
months from the Employment Termination Date, to continue to receive
payment of his Base Salary (as in effect on the Employment
Termination Date) at the same rate and on the same schedule as
if the Employee were still employed by the Employer during
such period; PROVIDED, HOWEVER, that each such payment shall
be subject to dollar-for-dollar reduction for any cash amounts
received by the Employee or accrued for his benefit from any
successor employer or other entity as payment for services
rendered during such nine (9) month period. During such nine
(9) month period, the Employer shall also continue to provide the
Employee with such health benefits as were provided to the
Employee immediately prior to the Employment Termination Date
(or substantially comparable benefits if a continuation of
benefits is not permitted under then existing insurance or
health benefit programs of the Employer), such benefits to be
provided to the same extent and under the same terms and
conditions as if the Employee were still employed by the
Employer during such period. Except as specifically provided
in this Section 6.2(b), the Employee shall not be entitled to
any fringe benefits following the Employment Termination Date.
(ii) each option to acquire shares of capital stock of
the Employer and each share of restricted capital stock of
the Employer then held by the Employee shall automatically
and without further action become fully vested, and each such
option shall remain exercisable until the expiration of such
option or until it sooner terminates in accordance with its
terms; PROVIDED, HOWEVER, that nothing in this Section 6.2(b)
shall be applied so as to restrict, impair or reduce in any
way any other right that the Employee may have from time to
time with respect to the acceleration of vesting of any
option to acquire shares of capital stock of the Employer or
share of restricted capital stock of the Employer then held
by the Employee.
(c) If the Employer terminates the employment of the Employee for
cause pursuant to Section 6.1(d) hereof, the Employee shall not be
entitled to
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compensation, performance bonus or fringe benefits hereunder beyond the
Employment Termination Date.
(d) For purposes of this Section 6.2, the term "Acquisition" shall
mean:
(i) a merger, consolidation or similar transaction in which
securities possessing more than 50% of the total combined voting
power of the Employer's outstanding securities are transferred to a
person or persons different from the persons who held those
securities immediately prior to such transaction, or
(ii) the sale, transfer, or other disposition of all or
substantially all of the Employer's assets to one or more persons
(other than any wholly owned subsidiary of the Employer) in a
single transaction or series of related transactions.
(e) For purposes of this Section 6.2, the term "Change in Control"
shall mean a change in ownership or control of the Employer effected
through either of the following transactions:
(i) any person or related group of persons (other than the
Employer or a person that directly or indirectly controls, is
controlled by, or is under common control with the Employer)
directly or indirectly acquires beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Securities
Xxxxxxxx Xxx 0000, as amended) of securities possessing more than
50% of the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to
the Employer's stockholders, or
(ii) over a period of 36 consecutive months or less,
there is a change in the composition of the Board such that a
majority of the Board members (rounded up to the next whole
number, if a fraction) ceases, by reason of one or more proxy
contests for the election of Board members, to be composed of
individuals who either (A) have been Board members
continuously since the beginning of such period, or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in the preceding clause (A) who were still in office
at the time such election or nomination was approved by the
Board.
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SECTION 7. INTELLECTUAL PROPERTY MATTERS.
Section 7.1. INVENTIONS. All discoveries, inventions, improvements,
techniques, trademarks and innovations, whether or not patentable or subject
to copyright protection (including all data and records pertaining thereto),
which the Employee may invent, discover, originate or make during the term of
his employment with the Employer either alone or with others and whether or
not during working hours or by the use of facilities of the Employer, and
which relate to, or are, or may likely be useful in connection with the
business of the Employer ("Inventions"), shall be the exclusive property of
the Employer. The Employee shall promptly and fully disclose Inventions to
the Employer and shall promptly record Inventions in such form as the
Employer may request.
Section 7.2. ASSIGNMENTS. The Employee shall assign to the Employer all
right, title and interest to all Inventions reduced to writing, drawings or
practice by or for the Employee during the term of his employment. The
Employee shall execute upon the Employer's request at any time, and at the
Employer's sole expense, any applications, assignments and other documents
that the Employer may deem necessary or desirable to protect or perfect its
rights, including any patent rights in Inventions, and shall assist the
Employer, at the Employer's sole expense, in obtaining, defending and
enforcing its rights thereon. The Employee hereby appoints the Employer his
attorney-in-fact for purposes of effecting any assignments hereunder.
Section 7.3. CONFIDENTIAL INFORMATION. The Employee acknowledges that
all information acquired by the Employee from the Employer, its customers,
suppliers or others, or developed by the Employee alone or in conjunction
with others during the term of his employment which relate directly or
indirectly to the present or potential business of the Employer, including
but not limited to any ideas, formulae, processes, know-how, data, test
results, raw materials, prospective products or services, techniques, models,
computer programs, plans, schedules, sketches, notebooks, drawings, process
sheets, customer or supplier lists, and financial information ("Confidential
Information"), is a valuable and unique asset of the Employer for the
Employer's sole benefit. Except as set forth below, the Employee shall not,
at any time during or after the term of his employment, use for himself or
others, or disclose or communicate to any person, firm, corporation,
association, or other entity for any reason or purposes whatsoever (other
than to Directors, officers and employees of the Employer in the regular
course of the Employer's business or to others subject to appropriate
confidentiality restrictions), any Confidential Information without the prior
written consent of the Employer; PROVIDED, HOWEVER, that the confidentiality
and nondisclosure provisions of this Section 7.3 shall not apply to (i) a
disclosure of any Confidential Information which, as of the time of such
disclosure, or thereafter, shall have become a part of the public knowledge
through no fault of the Employee, (ii) a disclosure of Confidential
Information by the Employee to a
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governmental entity in fulfillment of a legal obligation of the Employee to
such governmental authority; (iii) Confidential Information that the Employee
can establish was lawfully in his possession at the time of disclosure by
Employer and was not acquired, directly or indirectly, from Employer and (iv)
Confidential Information which Employee lawfully receives from a third party,
provided, however, that such Confidential Information was not obtained by
said third party, directly or indirectly, from the Employer.
Section 7.4. PROPRIETARY ITEMS. All originals, copies and summaries of
manuals, memoranda, notes, photographs, notebooks, records, reports, plans,
drawings and other documents or items of any kind concerning any matters
affecting or relating to the present or potential business of the Employer,
whether or not they contain Confidential Information, are, and shall continue
to be, the property of the Employer, and all of such documents or items in
the possession or control of the Employee shall be delivered to the Employer
by the Employee immediately upon the Employer's request or termination of the
Employee's employment hereunder.
SECTION 8. NON-COMPETITION.
In view of the unique nature of the business of the Employer and the
need of the Employer to maintain its competitive advantage in the industry
through the protection of its trade secrets and proprietary information, the
Employee agrees that during the term of his employment with the Employer and
for a period of one (1) year thereafter, the Employee shall not, directly or
indirectly, within the United States of America or its Territories or
Possessions or within any other country in which the Employer or any
affiliate of the Employer is engaged in or actively contemplating engaging in
any activity described below (i) engage in, (ii) own greater than a 5%
interest in, be employed by, or consult for, or act as an advisor to, any
business, person or entity which engages in, or (iii) otherwise participate
in any way in, research, development, manufacturing, marketing, selling or
licensing activities, or in any other activity, that may reasonably be deemed
by the Employer to be in competition with any activity in which the Employer
or any subsidiary of the Employer is then, or is then contemplating becoming,
engaged in the field of internet telephony. If at any time the foregoing
provisions shall be deemed to be invalid or unenforceable or are prohibited
by the laws of the state or place where they are to be performed by reason of
being vague or unreasonable as to duration or place of performance, this
section shall be considered divisible and shall become and be immediately
amended to include only such time and such area as shall be determined to be
reasonable and enforceable by the court or other body having jurisdiction
over this Agreement; and the Employee and the Employer expressly agree that
this section, as so amended, shall be valid and binding as though any invalid
or unenforceable provision had not been included herein. The Employer further
agrees that during, and for a period of one (1) year after the termination
of, the
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Employee's employment hereunder, he shall not solicit, or arrange to have any
other person or entity solicit, any person or entity engaged by the Employer
as an employee, customer, supplier, or consultant or advisor to, the Employer
to terminate such party's relationship with the Employer. The time periods
provided for in this Section 8 shall be extended for a period of time in
which Employee is in violation of any of the provisions of this Section 8.
SECTION 9. REMEDIES.
The Employer and Employee agree and acknowledge that the rights and
obligations set forth under this Agreement are of a unique and special nature
and that each party is, therefore, without an adequate legal remedy in the
event of the other party's violation of the covenants set forth in this
Agreement. The Employer and Employee agree, therefore, that the covenants
made under this Agreement shall be specifically enforceable in equity, in
addition to all other rights and remedies, at law or in equity or otherwise
(including termination of employment) that may be available to the parties.
SECTION 10. PROVISIONS OF GENERAL APPLICATION.
Section 10.1. DISPUTES. In the event of any dispute touching or
concerning this Agreement, the parties will submit to the exclusive
jurisdiction and venue of any court of competent jurisdiction sitting in
Suffolk County, Massachusetts, and the parties agree to comply with all
requirements necessary to give such court jurisdiction over the parties and
the controversy. EACH PARTY HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AND TO
CLAIM OR RECOVER PUNITIVE DAMAGES.
Section 10.2. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
determined in accordance with the internal substantive laws of the
Commonwealth of Massachusetts (excluding choice of law or conflict of law
provisions).
Section 10.3. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original and all of which,
taken together, shall constitute one and the same document. In making proof
of this Agreement it shall not be necessary to produce or account for more
than one such counterpart.
Section 10.4. OTHER AGREEMENTS. This Agreement represents the entire
understanding and agreement between the parties as to the subject matter
hereof and supersedes all prior or concurrent oral or written agreements
relating thereto.
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Section 10.5. AMENDMENT. This Agreement may be amended only a written
document executed in one or more counterparts by each of the parties hereto.
Section 10.6. WAIVER. No consent to or waiver of any breach or default
in the performance of any obligation hereunder shall be deemed or construed
to be a consent to or waiver of any other breach or default in the
performance of any of the same or any other obligation hereunder. Failure on
the part of either party to complain of any act or failure to act of the
other party or to declare the other party in default, irrespective of the
duration of such failure, shall not constitute a waiver of rights hereunder
and no waiver hereunder shall be effective unless it is in writing, executed
by the party waiving the breach or default hereunder.
Section 10.7. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
This Agreement may be assigned by the Employer to any Affiliate (as
hereinafter defined) or to a successor to the portion of its business to
which this Agreement relates (whether by purchase or otherwise). For purposes
of this Agreement, "Affiliate" shall mean any person or entity which,
directly or indirectly, controls or is controlled by or is under common
control with the Employer and, for the purposes of this definition, "control"
(including the terms "controlled by" and "under common control with"), shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of another, whether through the
ownership of voting securities or holding of office in another, by contract
or otherwise. The Employee may not assign or transfer any of his rights or
obligations under this Agreement.
Section 10.8. HEADINGS. The headings of sections and subsections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement or to affect the meaning of any
of its provisions.
Section 10.9. SEVERABILITY. If any provision of this Agreement shall,
in whole or in part, prove to be invalid for any reason, such invalidity
shall affect only the portion of such provision which shall be invalid, and
in all other respects this Agreement shall stand as if such invalid
provisions, or the invalid portion thereof, had not been a part hereof.
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IN WITNESS WHEREOF, this Agreement has been executed by the Employer, by
its duly authorized officer, and by the Employee, as of the Effective Date.
IBASIS, INC.
By: /s/ Xxxxxx X. XxxxxxXxxx
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Name: Xxxxxx X. XxxxxxXxxx
Title: Executive Vice President
EMPLOYEE
Xxxx X. Xxxxxx, Xx.
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Xxxx X. Xxxxxx, Xx.
