EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is dated this 18th day of May,
1998, by and between Harbor City Corporation, t/a ACC Telecom, the "Employer"
and Xxxxx X. Xxxx, the "Employee".
1. EMPLOYMENT: The Employer employs the Employee and the
Employee accepts employment upon the terms and conditions of this Agreement.
2. TERMS: The term of this Agreement shall begin on the
Closing Date of the purchase of Employer's Stock by Carnegie International
Corporation and shall continue for a period of five (5) years, unless terminated
prior thereto.
3. COMPENSATION: For all services rendered by the employee,
the employer shall pay the employee an annual salary of One Hundred Twenty-Five
Thousand Dollars ($125,000) to be paid through Five Thousand Two Hundred and
Eight Dollar and Thirty-three Cent ($5,208.33) semi-monthly payments, payable at
the end of each of twenty-four (24) semi-monthly periods. The annual salary
shall be increased to Two Hundred Thousand Dollars ($200,000) and payable
semi-monthly in the event that Xxxxx Xxxx and Xxxxx Xxxx become divorced or on
the death or termination of employment of Xxxxx Xxxx or if Xxxxx Xxxx does not
become employed pursuant to the Agreement set forth in Attachment A. Salary
payments shall be subject to withholding and other applicable taxes.
4. DUTIES: The employee is engaged to serve as the President
of Employer. Employee's duties include but are not
limited to managing the operations of the Company. The precise services of the
Employee may be extended or curtailed by the employer from time to time.
5. EXTENT OF SERVICES: The Employee shall devote substantially
his entire working time, attention and energies to the Employees business and
shall not during the term of this Agreement be engaged in any employment
activities, undertake to work for compensation or accept employment with another
entity for gain, profit, or other pecuniary advantage. However, the Employee may
invest his assets in such form or manner as will not require his services in the
operation of the affairs of the companies in which such investments are made.
6. DISCLOSURE OF CONFIDENTIAL INFORMATION: The employee
acknowledges that he will have access to significant amounts of confidential
information of employer and its Parent Company, Carnegie International
Corporation, including such information as lists of customers, sources of
supply, production information, product information, service information,
formulas, computer programs and development ideas related thereto, work in
progress, trade secrets, technical information acquired by Employee from
Employer or Carnegie or from the inspection of Employer's or Carnegie's
property, confidential information disclosed to Employee by third parties, and
all documents, things and record bearing media disclosing or containing the
aforegoing information,
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including any confidential materials prepared by the parties hereto which
contain or otherwise relate to such information concerning the Employer's and or
Carnegie's financial, intellectual, technical and commercial information
(collectively hereinafter referred to as "Confidential Information") shall be
and remain confidential. The Employee will not during or after the term of this
employment, disclose the Confidential Information or any part thereof to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever. In the event of a breach or threatened breach by the
Employee of the provisions of this paragraph, the Employer shall be entitled to
an injunction restraining the Employee from disclosing, in whole or in part, the
Confidential Information, or from rendering any services in connection with the
telecommunications industry to any person, corporation, association, or other
entity to whom such Confidential Information, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein shall be construed as
prohibiting the Employer or Carnegie from pursuing any of the remedies available
to the Employer for such breach or threatened breach, including the recovery of
damages from the Employee. If Employee buys back the Shares of Employer, the
provisions hereof relating only to Employer shall no longer apply.
7. EXPENSES: The Employee may incur reasonable expenses for
promoting the Employees business. The employer shall
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reimburse the Employee for all such expenses upon the Employee's periodic
presentation of an itemized account of such expenditures.
8. VACATIONS: The Employee shall be entitled to twenty (20)
vacation days each year, during which time his salary and benefits shall be paid
in full. Each vacation shall be taken so as not to unreasonably interfere with
the operation of Employer's business. No such vacations shall be taken before
May 31, 1998.
9. SURVIVAL AFTER TERMINATION OR EXPIRATION OF EMPLOYMENT
RELATIONSHIP: The Provisions contained within paragraphs 6, 11 and 14 of this
Agreement shall survive the expiration or other termination of this Agreement.
10. TERMINATION: The following termination provisions shall
apply hereto:
a. Termination by Employer for cause. The
Employer may terminate this Agreement immediately by written notice if Employee
is convicted of any crime involving fraud, dishonesty, or willful misconduct
directly or indirectly connected to Employee's duties and responsibilities to
Employer or the management and or operation of Employer's business. If Employer
chooses not to pursue criminal action against Employee in connection with fraud,
dishonesty, or willful misconduct that has a material impact on the Employer,
the Employee may terminate this Agreement for such cause, after written notice
to the Employee of the reason for termination and failure by the Employee within
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thirty (30) days thereafter to cure or eliminate such reason for termination and
compensate Employer for any losses sustained as a result of Employee actions in
connection with such fraud, dishonesty or willful misconduct. All terminations
made pursuant to this paragraph shall be considered for cause and the Employer
shall not be liable for any amounts pursuant to this Agreement, following such
termination.
b. Termination by Employer for other than cause.
If the Employer terminates this Agreement for any reason other than cause during
the first two years of this Agreement, then the Employee may exercise his option
to Buy-Back the Shares of the Employer. If the Employer terminates this
Agreement for any reason other than cause during the final three years of the
term of this Agreement, the Employer shall pay to the Employee all salary owed
pursuant to paragraph 3 of this Agreement, for the remainder of the term of this
Agreement.
c. Termination by Employee for Good Reason. The
Employee may terminate his employment with Employer pursuant to this Agreement
for "good reason", provided that the Employee has given written notice to the
Employer of the reason of the resignation and Employer fails to cure or
eliminate such reason within thirty (30) days from the receipt of such written
notice by Employer. For the purposes of this Agreement, good reason shall mean:
(i) removal form the position of President, other than as a
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result of promotion; (ii) material diminution of the
Employee's title, position, or responsibilities; (iii) material reduction in the
Employee's salary or benefits; (iv) relocation of the Employee to a location
more than thirty (30) miles from the Employee's principal work place at the time
this Agreement takes effect; or (v) the Employees willful failure to comply with
and satisfy material requirements of this Agreement. If the Employee terminates
his employment for good reason during the first two years of the term of this
Agreement, the Employee may exercise his option to Buy-Back the Shares of the
Employer. If the Employee terminates his employment for good reason during the
final three years of he term of this Agreement, the Employer shall pay to the
Employee one year of salary as delineated in paragraph 3 of this Agreement,
consistent with similar benefits being provided to other executives of Carnegie
International Corporation.
d. Termination by Employee for other than good reason.
Employee may terminate this Agreement for any reason or no reason at any time,
upon thirty (30) days written notice to the Employer. In such event, the
Employee if requested by the Employer, shall continue to render his services and
receive full salary and benefits up to the date of termination. The Employer may
elect to terminate Employee by written notice thereof before the expiration of
the thirty (30) day period and discontinue all salary and benefits as of said
termination date. If Employee
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terminates this Agreement for any reason other than good reason, the Employer
shall not be liable for any amounts due to Employee pursuant to the terms of
this Agreement.
e. Termination by Employee or Employer by Exercise of
Buy-Back/Sell-Back Agreement Options. In the event that the Shares of the
Employer are transferred to Employee pursuant to options exercised under the
terms the Buy-Back/Sell-Back Agreement between Employer, Carnegie, Xxxxx Xxxx
and Xxxxx Xxxx, this Agreement shall terminate effective on the closing date for
said Buy-Back or Sell-Back, except for the provisions hereof contained in
paragraph 6 related to non-disclosure of confidential information related to
Carnegie or any of its subsidiaries and any other provisions related to the
enforcement thereof which all shall remain in full force and effect. f. Other
Termination. This Agreement shall terminate upon the occurrence of any of the
following events: 1. Expiration of the term of employment, as provided in
Section 2 hereof; or 2. Death of Employee, except for those benefits as provided
to the contrary herein; or 3. In the event Employee shall become permanently
disabled as defined in the following paragraph and such permanent disability
prevents the Employee from substantially performing the duties of his
employment, Employer shall pay to
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Employee the amounts provided in the following paragraph.
Disability Compensation. In the event of
illness, injury or other condition which causes disability of the Employee,
which in the reasonable objective opinion of two Physicians (one of said
physicians to be chosen by the Company and one to be chosen by Xxxx) is of such
a nature that it prevents the Employee from substantially fulfilling his
obligations under this Agreement (hereinafter referred to as the "Permanent
Disability"), and it is agreed between the parties that it is likely that such
condition will continue to exist for more than six (6) months, it shall be
considered by the parties to be a Permanent Disability. In addition to all other
amounts due pursuant to this Section, Employee's basic salary shall be continued
for a period of six (6) weeks following the onset of such Permanent Disability.
The weekly amount paid to Employee shall be the average weekly compensation
earned by the Employee based on the collection of the six (6) months immediately
prior to the onset of Permanent Disability. For purposes of this Agreement, the
"onset of Permanent Disability" shall be defined as that point in time when,
pursuant to the provisions of this Agreement, it is deemed that Employee is no
longer able to substantially fulfill his obligations under this Agreement. It is
understood that Employee's occasional sickness or other incapacity of short
duration shall not result in a determination of Permanent Disability. Upon the
death or
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disability of Employee, any salary of Employee hereunder that has been allocated
to Xxxxx Xxxx shall immediately cease unless and until Employer consents thereto
in writing.
11. EMPLOYEE'S REPRESENTATIONS: Employee represents and.
warrants to Employer that no legal, administrative or other proceedings against
the Employee have been threatened or filed in any federal, state or local court
of law or before any administrative body.
12. OTHER BENEFITS AND COMPENSATION:
a. Health insurance coverage shall be provided to
Employee comparable to the coverage being provided to Employee by Employer
immediately prior to the acquisition of Employer's stock by Carnegie
International Corporation ("Carnegie").
b. Employee shall have the benefit of having the cost
of his current vehicle, a BMW, paid for by Employer with a comparable vehicle
replacement two (2) years from the date hereof, with a new vehicle provided
every two (2) years thereafter during the term of Employee's employment.
c. Employee shall be reimbursed for all reasonable and
necessary company expenses attributable to the business of ACC or Carnegie.
d. Employee shall receive disability and life insurance
coverage consistent with the current coverage being provided to Employee by
Employer immediately prior to the
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acquisition of Employer's stock by Carnegie International Corporation
("Carnegie").
e. Employee or his estate shall receive a Seventeen and
one-half percent (17.5 %) commission on the gross profits generated from XXXXX
sales through ACC during the duration of this employment agreement. However, no
such commissions shall be paid until after January 1, 1999 and no amount shall
be paid based on the gross profits generated from XXXXX sales unless adequate
funds are available to satisfy the cash flow needs of ACC or its successor for
the upcoming six (6) month period after each evaluation date. After January 1,
1999, the first evaluation date, Employee shall receive compensation over and
above his base salary, based on seventeen and a half percent (17.5%) of the
gross profit generated from XXXXX sales (hereinafter referred to as the
"Commissions") up to a maximum of Two Hundred Thousand Dollars ($200,000.00) in
Commissions in any one year. Said Commissions shall be paid if financial
projections prepared by ACC or its successor and agreed to by Carnegie as of the
first day of each calendar quarter beginning on January 1, 1999 indicate that
funds will be available to meet the cash flow needs of ACC or its successor for
the next six months and funds are still available over and above said cash flow
needs. Disbursements to Employee for accrued commissions earned shall be made
within thirty (30) days of the first day of each calendar quarter, beginning
with the calendar
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quarter starting on January 1, 1999. The amount of any such commissions earned
in excess of the Two Hundred Thousand Dollar ($200,000.00) limit for any one
calendar year shall be paid at the beginning of the next calendar quarter if
funds are available to satisfy the projected cash flow needs of ACC or its
successor for the next six (6) months following the beginning of said calendar
quarter. All reasonably available funds after payment of said commissions shall
be made available for upstream distribution to the parent company of Employer.
Any commission that would have been due to Employee on gross profit from XXXXX
sales during the five (5) years covered by his employment agreement shall upon
Employee's death or permanent disability be paid to Employee's heirs or his
designees consistent with the manner in which Employee would have been paid for
said commissions, as provided above.
x. XXXXX sales through ACC for the purposes of
calculating the Commissions owed to Employee shall consist of any and all
software and/or hardware product sales by ACC that encompass the Multi-language
Automated Voice Intelligence System (XXXXX). Xxxxx profit on said sales shall be
determined by subtracting from the selling price of said products any and all
costs of software, hardware, sales commissions, labor, materials, parts,
equipment or other identifiable items which are attributable to the XXXXX
product and any related hardware and or software sold as a part thereof.
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g. Employee shall be a voting member or have the
right to appoint a voting member to the Carnegie Board of Directors upon
execution of the Stock Purchase Agreement between Carnegie, Xxxxx Xxxx and Xxxxx
Xxxx.
13. SALE OF XXXXX: If through the direct efforts of Employee,
the rights to XXXXX are sold for a lump sum amount to an entity for which the
lead for such sale was developed by Employee, Employee shall receive as a sales
commission nine percent (9%) of selling price of XXXXX paid by entities with
whom Employee developed the lead for said sale. If said sale of XXXXX is paid on
an installment basis, Employee shall receive the sales commission on the
purchase price as payments thereof are received by Employer.
In the event that the rights to XXXXX are sold for
a lump sum or on an installment basis in North America during the term of this
Agreement, Employee shall receive a three Percent (3%) sales commission on the
selling price if the lead for said sale was not developed directly by Employee.
Notwithstanding anything to the contrary contained herein, no sales commission
whatsoever shall be paid on a sale of the rights to XXXXX to either Nortel or
Nokia during the six (6) month period beginning on the date of this Agreement.
14. RESTRICTIVE COVENANTS: For a period of two (2) years,
after the termination or expiration of this Agreement, the Employee will not,
within the current geographical customer market
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of ACC, directly or indirectly, own, manage, operate, control, be employed by or
participate in any business that competes with and or sell similar products and
or services as the business conducted by the Employer at the time of the
termination of this Agreement. In the event of the Employee's actual or
threatened breach of the provisions of this paragraph, the Employer shall be
entitled to an injunction restraining the Employee therefrom. Nothing shall be
construed as prohibiting the Employer from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages from the
Employee. If Employee buys back the Shares of Employer the provisions hereof
shall no longer apply.
15. OWNERSHIP OF OTHER PUBLIC COMPANIES: Employee may own up
to five percent (5%) of public companies other than Carnegie, provided such
ownership is not inconsistent with the terms and conditions of this Agreement
and or otherwise prohibited by Law.
16. NOTICES: Any Notice required or desired to be given under
this Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of the Employee, or to its principal office in the case of
the Employer.
17. WAVIER OF BREACH: The waiver of the Employer of a breach
of any provision of this Agreement by the Employee shall not operate or be
construed as a waiver of a subsequent breach by the Employee.
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18. ASSIGNMENT: The Employee acknowledges that the services to
be rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights, or delegate any of his duties or obligations under
this Agreement. The rights and obligations of the Employer under this Agreement
shall inure to the benefit and shall be binding upon the successors and assigns
of the Employer.
19. ENTIRE AGREEMENT: This Agreement contains the entire
understanding of the parties. No representations were made or relied upon by
either party, other then those expressly set forth. No agent, employee, or other
representatives of either party are empowered to alter any of the terms hereof,
unless they are in writing and signed by the Employee and an executive officer
of the Employer.
20. CONTROLLING LAW: The validity, interpretation and
performance of this Agreement shall be controlled by and construed under the
Laws of the State of Maryland.
21. FIRST RIGHT OF REFUSAL FOR FINANCING OR LEASING
ARRANGEMENTS: Employer or its designee shall have the first right of refusal for
any leasing and/or financing of software and/or equipment sales through ACC.
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IN WITNESS WHEREOF, the parties have executed this
agreement as of the day and year first above written.
ATTEST: EMPLOYER: HARBOR CITY CORPORATION
/s/ Xxxxx X. Xxxx, Sec. BY: /s/ Xxxxx X. Xxxx, Pres.
----------------------- ---------------------------------
XXXXX X. XXXX, President
WITNESS: Employee:
/s/ Xxxxx X. Xxxx
----------------------- -----------------------------------
XXXXX X. XXXX
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Attachment A
This 18th day of May, 1998, Harbor City Corporation, t/a ACC
Telecom, (the "Employer") hereby agrees that, for valuable consideration
received in the form of Xxxxx Xxxx'x Employment Agreement, on or before June 1,
1998, it will hire Xxxxx Xxxx as an employee of the Employer and will enter into
an employment agreement with Xx. Xxxx containing, without limitation, the
following terms:
1) an employment term of five (5) years;
2) an annual salary of $75,000;
3) part-time duties, to be defined later;
4) twenty (20) paid vacation days per year;
5) termination provisions identical to those in Xxxxx Xxxx'x
Employment Agreement, where applicable.
6) reimbursement of reasonable business expenses; and
7) provision of health, disability, and life insurance
coverage equivalent to such coverage provided to Xxxxx Xxxx.
Notwithstanding any representations contained in the
Employment Agreement between Harbor City Corporation, t/a ACC Telecom, and Xxxxx
Xxxx, the Employer hereby understands and agrees that Xxxxx Xxxx reserves the
right to exercise his option to Buy-Back the Shares of Harbor City Corporation,
t/a ACC Telecom, immediately if an employment agreement is not reached
encompassing the above provisions between the Employer and Xxxxx Xxxx by June
18, 1998. The Employer hereby acknowledges that, to the extent applicable, the
provisions of this attachment are in addition to the employee benefit disclosure
contained in exhibits S and T to the Stock Purchase Agreement.
/s/ Xxxxx X. Xxxx, Pres.
----------------------------
Harbor City Corporation, t/a ACC Telecom
/s/Xxxxx X. Xxxx /s/ Xxxxxx Xxxx
------------------ ----------------
Xxxxx Xxxx Xxxxx Xxxx
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Attachment B
This 18th day of May, 1998, the Employer hereby agrees that it
will in good faith inform the Employee six months prior to the end of the term
of this agreement, in December 2002, of its intentions regarding renewal or
extension of this Agreement. If at that time the Employer intends to extend
Employee's employment, both parties hereby agree to engage in good faith
negotiations regarding the terms of such employment, commencing no later than
ninety (90) days prior to the termination of this Agreement.
/s/Xxxxx X. Xxxx. Pres.
--------------------------
Harbor City Corporation, t/a ACC Telecom
/s/ Xxxxx Xxxx
--------------------------
Xxxxx Xxxx
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