EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the 1st day of
January 2002 by and between Intercallnet, Inc., a Florida corporation (the
"Company") and Xxxxxx Xxxxxxx ("Employee"), with reference to the following
facts and circumstances:
WHEREAS, the Company had previously offered to employ Employee as a
full time employee of the Company, whereupon Employee joined the Company as an
employee thereof as of January 1, 2002; and
WHEREAS, the Company and Employee now wish to continue the employment
of Employee with the Company and for this purpose desire to set forth the terms
and conditions of such continued employment;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Employment
The Company hereby employs Employee and Employee hereby accepts
employment with the Company for an initial period of three (3) years commencing
from January 1, 2002 and ending on December 31, 2004 and for additional periods
of one (1) year each commencing at the end of the initial period and each
additional period; provided, however, that the Company or Employee may terminate
such employment, without cause and each at its sole discretion, at the end of
the initial period or at the end of any additional period by giving notice to
such effect to the other party at least six (6) months prior to the end of the
applicable period. As used herein, the phrase "Employment Period" refers to and
shall mean the actual period of employment of Employee by the Company and/or its
subsidiaries hereunder, whether for the periods provided above, or terminated
earlier as hereinafter provided or extended by mutual agreement between the
Company and Employee.
2. Duties
2.1 During the Employment Period, Employee shall serve as Chief
Operating Officer of the Company. The Board of Directors (the "Board") of the
Company recognizes that the Employee's contribution to the growth and success of
the Company has been, and believes will continue to be, substantial, and desires
to assure the Company of the Employee's present and continued employment in an
executive capacity and to compensate him therefor.
2.2 In consideration of the obligations of the Company hereunder,
Employee hereby agrees to devote during the Employment Period substantially all
of his productive time, ability and attention to the performance of his duties
under this Agreement.
2.3 Employee represents and warrants to the Company that there are no
agreements or arrangements, whether written or oral, in effect which would
lawfully prevent Employee from rendering services to the Company during the
Employment Period. Employee
further represents, warrants and agrees with the Company that as of the date
hereof he has not made, and will not make during the Employment Period, any
commitment or do any act in conflict with this Agreement, or take any action
that might divert from the Company any opportunity which would be in the scope
of any present business of the Company.
3. Compensation and Benefits
3.1 As base compensation for Employee's services hereunder the Company
shall pay to Employee a base salary equal to at least the following:
(i) for the period from January 1, 2002 through July 31, 2002, the
amount of one hundred and thirty thousand dollars ($130,000)
and for the period from August 1, 2002 through December 31,
2002, the amount of one hundred and fifty thousand dollars
($150,000) per year;
(ii) for the period from January 1, 2003 through December 31, 2003,
the amount of one hundred and sixty five thousand dollars
($165,000) per year; and
(iii) for the period from January 1, 2004 through December 31, 2004,
the amount of one hundred and eighty one thousand five hundred
dollars ($181,500) per year; and
(iv) thereafter for each subsequent calendar year an amount equal
to the previous year's salary plus twenty percent (20%) of
such previous year's salary.
Such compensation shall be payable in accordance with the Company's
payroll policies and procedures.
3.2 (a) As additional incentive compensation for Employee's services
hereunder, the Company shall pay to Employee in respect of each full fiscal year
of the Company which commences within the Employment Period an amount equal to
twenty percent (20%) of a "bonus pool" equal to ten percent (10%) of "earnings
before income taxes depreciation amortization" (EBITDA) (as hereinafter defined
in subsection (b)) of the Company for such fiscal year in excess of one million
four hundred and twenty five thousand dollars ($1,425,000). Such additional
compensation shall be paid within thirty (30) days after the date of receipt by
the Company of financial statements, certified by the independent public
accountants at the time engaged by the Company. The amount of additional
compensation payable in respect of any such fiscal year shall not be prorated if
the Employment Period terminates during such fiscal year.
(b) At the end of each fiscal year of the Company covered by Section
3.2(a), the Company's independent public accountants shall prepare and submit to
the Company and Employee an audited financial statement covering the operations
of the Company for such year
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and setting forth, among other things, the "earnings before income taxes
depreciation amortization" (EBITDA) of the Company for that year as hereinafter
defined. Each such financial statement shall be prepared in accordance with
generally accepted accounting principles and generally accepted auditing
standards consistently applied and shall be accompanied by a Report of the
Company's independent public accountants auditing such financial statement to
the effect that such financial statement was prepared in accordance with
generally accepted accounting principles and generally accepted auditing
standards. For the purposes of Section 3.2(a), the "earnings before income taxes
depreciation and amortization" of the Company for any fiscal year of the Company
shall mean the consolidated gross revenues and income of the Company and its
consolidated subsidiaries for such fiscal year remaining after deduction
therefrom of (i) all normal cost and expense deductions determined in accordance
with generally accepted accounting principles and generally accepted auditing
standards consistently applied and appropriately deductible from gross revenues
under such principles and standards and (ii) an amount equal to the amount of
base compensation paid to Employee by the Company during such fiscal year under
Section 3.1 (but no deduction for any additional compensation paid or payable to
Employee at any time under this Agreement), but excluding (A) any provision for
any United States Federal, state or local income taxes or for any foreign income
taxes in respect of such fiscal year, (B) any depreciation and/or amortization
and (C) any profit or loss, as the case may be, resulting from unusual and
nonrecurring items which are not identifiable with, or do not result from, the
business operations of the Company and its subsidiaries. For purposes of this
Section 3.2, the "fiscal year" of the Company means the annual period for which
the Company files its Federal income tax returns.
3.3 Nothing herein shall prevent the compensation provided for in
Section 3.1 and/or Section 3.2 from being increased at any time by the consent
and agreement of the Company and Employee, as approved by the Board of Directors
of the Company; and nothing herein shall prevent Employee from being entitled to
receive any bonus or additional compensation which may be voted or approved by
the Board of Directors of the Company. If any substantial entity shall be added
to the Company during the Employment Period, then the parties hereto agree to
negotiate in good faith to determine whether any further compensation to
Employee is appropriate as a result of duties Employee undertakes on behalf of
the Company with respect to such entity.
3.4 It is understood and agreed that all amounts to be paid by the
Company to Employee under this Agreement shall be subject only to deductions for
Federal, State and local payroll and other taxes and charges (including, without
limitation, income taxes, FICA, etc.) and to such other deductions in respect to
Company benefits.
3.5 Any compensation otherwise payable to Employee under this
Agreement in respect of any period during which Employee is receiving amounts
for loss of earnings or the like under any Company insurance plan or policy
and/or under any government program shall be reduced by such amounts.
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Article 4. Options
4.1 On June 29, 2001, the Company granted to Employee a non-qualified
option under the Company's 2001 Stock Option Plan to purchase from the Company
one hundred thousand (100,000) shares of the Company's Common Stock at the price
of $0.50 per share.
Article 5. Benefits
5.1 No later than December 31, 2002, the Company shall obtain and pay
for life insurance on Employee in the amount of one million dollars
($1,000,000). The proceeds of such insurance shall be payable and paid to
Employee's beneficiary in accordance with Section 6.2. After December 31, 2002
and until the end of the Employment Period, the Company shall obtain and pay for
disability insurance on Employee providing for monthly payments to Employee of
at least $5,900 in the case of Employee becoming permanently disabled as defined
in Section 6.3. All terms and conditions in this paragraph 5.1 are subject to
the determination by the Company's Board of Directors that the payment of such
benefit is financial feasible.
5.2 Except as otherwise expressly provided herein, during the
Employment Period, Employee shall be covered by and participate in the Company's
various benefits as in effect from time to time, including, without limitation,
the Company's medical benefits plan and long term disability plan, as and to the
extent customarily provided by the Company to its other most senior executives
and shall be entitled to paid vacation in accordance with the Company's then
current vacation policy.
Article 6. Death and Disability
6.1 It is understood and acknowledged that Employee's efforts expended
to date and to be hereafter expended are necessary in order for the Company to
achieve any significant growth and success. Accordingly, if during the
Employment Period Employee should die Employee's beneficiary (determined as set
forth in Section 6.2), shall have the full right to exercise the options set
forth in Article 4; provided, however, that for the purposes of this Section 6.1
only, the Employment Period shall end at the end of the three year period in
which such disability or death occurs and shall not be automatically extended
for any additional period, without any requirement that the Company give written
notice of termination at the end of such three year period in accordance with
Article 1.
6.2 Whenever any of the provisions of this Agreement require the
distribution of any options or stock to Employee's beneficiary, such
distribution shall be made to such individual or individuals, and in such
shares, as Employee shall last have designated by written notice to the Company
or, in the absence of an effective designation, to his widow or, if he shall not
then be living, to his children in equal shares or, if no such child shall then
be living, to his descendants in equal shares per stirpes. If no such
beneficiary shall be living when any such payment and/or distribution is
required to be made, such payment and/or distribution shall be made to
Employee's estate. Employee may, in the manner provided above, change any such
designation from time to time, may designate successor beneficiaries and may
make separate
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designations in respect of each provision of this Agreement under which any such
payment may be made.
6.3 For the purposes of this Agreement, Employee shall be deemed to
have become permanently disabled if Employee should be unable, due to physical
or mental incapacity, to substantially perform Employee's duties and
responsibilities under this Agreement for a period of one hundred eighty (180)
consecutive days.
7. Termination
7.1 Subject to the provisions of this Article 7, Employee's employment
with the Company may be terminated at any time (i) by the Company, "For Cause"
or "Without Cause", by giving written notice of termination to Employee, in the
manner provided in Article 10, no later than sixty (60) calendar days prior to
the date elected by the Company as the termination date, or (ii) by
Employee, by written resignation, in the manner provided in Article 10, no later
than sixty (60) calendar days prior to the date elected by Employee as the
resignation date; the Employment Period shall end and terminate on the aforesaid
termination date or resignation date, as the case may be.
7.2 Termination "For Cause".
(a) For the purposes of this Agreement, "For Cause" is defined as a
termination for: (i) willful breach of confidentiality, non-disclosure or
non-compete obligations to the Company; (ii) conviction of, or plea of nolo
contendere to, any felony involving dishonesty or moral turpitude; or (iii)
conviction for fraud, embezzlement or other act of dishonesty that causes
material injury to the Company or any of its affiliates.
(b) If Employee's employment with the Company should be terminated by
the Company "For Cause", Employee shall not be entitled to receive any base
compensation under Section 3.1 after the date of such termination; however,
Employee's rights and benefits under all other Articles and Sections of this
Agreement shall continue for a period of no longer than three (3) months.
Employee's right to purchase shares of the Company's stock under Article 4 shall
continue to be governed by the Employee's stock option agreement.
7.3 Termination "Without Cause" or Certain Resignation.
(a) For the purposes of this Agreement, "Without Cause" is defined as
a termination for any reason other than "For Cause".
(b) If Employee's employment with the Company should be terminated by
the Company "Without Cause", or if Employee should resign his employment with
the Company because of demotion from Chief Operating Officer of the Company then
in such case:
(i) Employee shall be entitled to receive any and all amounts which
would have been paid to Employee (i.e., base compensation and
additional incentive compensation) under Article 3, as in effect on
the date immediately prior to
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Employee's termination hereunder, had his employment had not been so
terminated shall be paid in full to Employee until the end of the
three year period under Article 3 in which such termination occurred
(with regard to the additional incentive compensation, such
compensation shall be determined based upon the fiscal year in which
such termination date occurs and the amount of such additional
compensation as so determined shall be payable for each fiscal year
which commences within such three year period);
(ii) Employee shall have the full right to exercise the options and
purchase shares set forth in Article 4 in accordance with terms of the
applicable stock option agreement;
(iii) In lieu of the payments provided in (i) of this Section 7.3,
Employee may elect in writing the payment to Employee by the Company
of a lump sum settlement in an amount equal to eighty percent (80%) of
the total aggregate payments that would have been payable under such
(i) of this Section 7.3; and
(iv) Employee's rights and benefits under all other Articles and
Sections of this Agreement shall continue in accordance with the terms
and provisions thereof, including, without limitation, Employee's
rights and benefits under Article 5.
7.4 Resignation by Employee
If Employee should resign his employment with the Company for any
reason other than demotion from Chief Operating Officer of the Company or a
Business Combination, then in such case, the Company shall have no liability or
obligation to Employee hereunder or otherwise in respect of his employment other
than the obligation to pay to Employee any accrued and unpaid base compensation
under Section 3.1 as of the date of termination plus such additional
compensation as shall be due to Employee under Section 3.2 in respect of any
fiscal year in which such resignation occurs and the amount of such additional
compensation in respect of such fiscal year shall not be prorated even though
such resignation occurs within such fiscal year.
Article 8. Business Combination
8.1 For purposes of this Article 8, a "Business Combination" shall
mean the merger or consolidation of the Company with or into, the sale or other
transfer of all or substantially all of the assets and/or business of the
Company to, or the ownership of ten percent (10%) or more of the total voting
capital stock of the Company then issued and outstanding by, any person or
entity not affiliated with the Company as of October 1, 2001.
8.2 It is expressly recognized by the parties that a Business
Combination would necessarily result in the material alteration or diminishment
of Employee's position and responsibilities. Therefore, if, during the
Employment Period, there shall occur, with or without the consent of the
Company, a Business Combination, and if the Employment Period should be
terminated by the Company during the last year of the Employment Period, or if
during such last
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year Employee should resign his employment with the Company because of demotion
from Chief Operating Officer of the Company then in such case, and only in such
case, and notwithstanding anything in this Agreement to the contrary, the
following provisions shall apply:
(a) Employee shall be under no obligation whatever to seek other
employment opportunities during the aforesaid one (1) year period, and
Employee shall not be obligated to accept any other employment
opportunity, which may be offered to Employee during such period.
(b) Employee shall be entitled to receive any and all amounts (i.e., base
compensation and additional incentive compensation) under Article 3,
as in effect on the date immediately prior to Employee's termination
or resignation, as the case may be, hereunder, for the period of one
(1) year commencing from the date of termination or resignation
hereunder (with regard to the additional incentive compensation, such
compensation shall be determined based upon the fiscal year in which
such termination or resignation date occurs and the amount of such
additional compensation as so determined shall be payable for each
fiscal year which commences within such one year period);
(c) In lieu of the semi-monthly payments provided in (b) of this Section
8.2, Employee may elect in writing the payment to Employee by the
Company of a lump sum settlement in an amount equal to eighty percent
(80%) of the total aggregate payments that would have been payable
under such (b) of this Section 8.2.
(d) All of Employee's rights under this Agreement, including, without
limitation, the right to exercise the options and purchase shares set
forth in Article 4 in accordance with terms of the applicable stock
option agreement, shall continue in full force and effect in
accordance with their terms during such one (1) year period.
The payments to be made to Employee under (b) or (c) above of this Section 8.2
shall be in lieu of Employee's rights to receive payments under Article 3;
however, notwithstanding any termination or resignation under this Article 8,
Employee's rights and benefits under all other Articles and Sections of this
Agreement shall continue in accordance with the terms and provisions thereof,
including, Employee's rights and benefits under Article 5.
8.3 Any termination or resignation under this Article 8 and the
receipt by Employee of any amounts pursuant to Section 8.2 shall not preclude
Employee's employment by any other party after the date of such termination.
Article 9. No Adequate Remedy
The parties declare that it is impossible to measure in money the
damages which will accrue to either party by reason of a failure to perform any
of the obligations under this Agreement. Therefore, if either party shall
institute any action or proceeding to enforce the
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provisions hereof, such person against whom such action or proceeding is brought
hereby waives the claim or defense that such party has an adequate remedy at
law, and such person shall not urge in any such action or proceeding the claim
or defense that such party has an adequate remedy at law.
Article 10. Notices
Any notice, request, consent, waiver or other communication given,
made or withdrawn pursuant to this Agreement to be effective shall be in writing
or by telegram, telex or other electronic written communication and shall be
effective (a) same day when delivered personally to Employee or to the Company,
as the case may be, by hand or courier service or (b) three (3) business days
after deposit in the mail, sent certified, postage prepaid, or (c) same day when
sent by telex or other electronic written communication, answerback or other
acknowledgement of receipt received, addressed as provided below, or to such
other address as may be designated by any party hereto giving or changing its
address:
If to Employee, to:
Xxxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
If to the Company, to:
Intercallnet, Inc.
0000 XX 0xx Xxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Article 11. Personal Agreement
This Agreement is personal. Employee shall not have the right to
assign, sell, pledge or otherwise dispose of his rights and obligations under
this Agreement without the Company's prior written consent and then only in
accordance with such consent.
Article 12. Confidential
It is understood and agreed by the parties hereto that the matters
described in this Agreement and the terms and conditions of this Agreement shall
be treated as confidential by Employee and the Company and shall not be
disclosed or made available by Employee or the Company to any third party
without the prior written consent of the other party hereto and then only to the
extent and only in accordance with the conditions set forth in any such consent.
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Article 13. Miscellaneous Provisions
13.1 This Agreement contains the sole and complete agreement
concerning the arrangements between the parties and supersedes and replaces any
and all prior agreements, written and/or oral, between the parties; accordingly,
all of such prior agreements between the parties are null and void and without
any force or effect. Neither party has made any representation with respect to
the subject matter of this Agreement or any representations inducing the
execution and delivery hereof except such representations as are specifically
set forth herein and each of the parties hereto acknowledges that he or it has
relied on his or its own judgment in entering into this Agreement.
13.2 No waiver, amendment or modification 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 and no evidence
of any waiver, amendment or modification shall be offered or received in
evidence in any proceeding, arbitration or litigation between the parties hereto
arising out of or affecting the Agreement, or the rights or obligations of the
parties hereunder, unless such waiver, amendment or modification is in writing,
duly executed as aforesaid. The parties further agree that the provisions of
this Section 13.2 may not be waived except as herein set forth.
13.3 The Article captions are inserted only as a matter of
convenience, and shall not be used in any manner to interpret the provisions
thereof.
13.4 This Agreement is executed and delivered in the State of Florida
and shall be construed and enforced in accordance with the laws and decisions of
that State, without reference to its choice of laws rules.
13.5 The effective date of this Agreement for all purposes shall be
the date first above written.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed in their name and on their behalf by their respective
representatives thereunto duly authorized as of the date first above written.
Employer:
Intercallnet, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
President
Employee:
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
Chief Operating Officer
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