Employment Agreement
Employment Agreement (the "Agreement") dated as of June 30, 1997 between UTG
Communications International, Inc. a Delaware corporation with offices at 00
Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Company") and Xxxxx Xxxx,
residing at 0000 Xxxxxxxxxx Xx.
Xxxxxxx, X.X., XXX ("Employee").
The Company desires to engage Employee to perform services for the Company
and any present or future parent, subsidiary, or affiliate of the Company, and
(subject to Section 11) any successor or assignee of the Company (collectively
called the "UTG Companies") and Employee desires to perform such services, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein and for other good and a valuable considerations, the receipt and
sufficiency of which are hereby acknowledged.
SECTION 1. Term
The Company agrees to employ Employee, and Employee agrees to
serve, on the terms and conditions of this Agreement for a period commencing
July 7, 1997 (the "Commencement Date") and ending on July 7, 2000, or such
shorter period as may be provided for herein.
The period during which Employee is employed hereunder is hereinafter referred
to as the "Employment Period".
SECTION 2. Duties and Services
During the Employment Period, Employment shall serve as Chief
Operating Officer of the Company and shall be elected to the Board of Directors.
Employee shall serve as the Chief Operating Officer of the Company engaged in
direct responsibility for all operations of the Company and subject to the
direction and control of the Board of Directors and persons designated by the
Board of Directors. Employee agrees to devote all of his business time and
efforts to the performance of his duties under this Agreement. Notwithstanding
the foregoing the Employee shall be permitted to render services of up to 40% of
his working time on behalf of affiliated entities which provide consulting
services to UTG Communications (Europe) AG or other non-United States based
operations of UTG Companies for compensation to be agreed upon by such entity.
During the Employment Period, Employee's home office shall be in the U.S.
Employee shall be available to travel as the needs of the business require; but
shall not be required to relocate his place of residence from Hoboken, N.J. USA.
If, at Company request, Employee is asked to relocate his primary residence,
Company shall compensate Employee for reasonable costs directly associated with
the move, including but not limited to real estate costs of selling primary
residence, real estate, legal, and financing expenses associated with the
closing of the sale and purchase, cost of packing, shipping, duties, and
delivery of personal belonging, any increase in tax liability, and any other
costs Company deems reasonable. If Employee is requested by Company to work in a
country other than that of his current home more than fifty percent (50%) per
year, Company will provide Employee, without charge an apartment, either
furnished or with
a reasonable allowance to furnish it. Company will compensate Employee for any
increase in tax liability, if any, as a result of such arrangement.
SECTION 3. Compensation
a. Base Salary. Company shall pay Employee, during the Employment
Period, an annual base salary of $100,000 ("Base Salary"), payable in equal,
bi-weekly installments in U.S. dollars. Base Salary may be increased at the sole
discretion of the Board of Directors of the Company. Payments of Base Salary
shall be reduced to the extent of payments received by Employee as described in
Section 6.
b. Stock Option.
i. The Company shall grant to Employee five year, non
transferable (except to entities affiliated to Employee) non qualified stock
options ("Options") to purchase an aggregate of 200,000 shares at an exercise
price of $1 per share. The Options shall vest during the Employment Period in
accordance with the following schedule:
Options Vesting Date
------- ------------
50,000 6 months after Commencement Date
50,000 12 months after Commencement Date
25,000 18 months after Commencement Date
25,000 24 months after Commencement Date
50,000 30 months after Commencement Date
ii. If required by the underwriter(s) in connection with any
buy out or merger, Employee shall execute a lock-up agreement (i.e. restricting
the sale or transfer of the Common Stock acquired by exercise of the Options
during a period of time following consummation of such offering) if requested by
such underwriter(s). No lock-up agreement will exceed one year of 50% of stock
covered by vested Options, unless approved by Employee.
iii. If Employee's employment hereunder shall be terminated by
Company for a reason set forth in clauses (ii), (iii), or (iv) of Section
10a(1), or by Employee, then any unvested Options shall terminate on the
effective date of such termination, or if Employee's employment hereunder shall
be terminated by the Company for a reason set forth in Section 10a(1)(i) or by
reason of Employee's death, any unvested Options shall cease to vest on the
effective date of termination. All vested Options may be exercised by Employee
during the period commencing on vesting and ending five years after the
Commencement Date or 60 days from the termination date if termination occurs
under clauses (ii), (iii) or (iv) of Section 10a(1). The options shall not be
transferable by Employee other than by operation of law upon death.
c. Benefits. Employee shall be entitled to participate in all
benefits for which Employee qualifies that the Company may make available to
executive employees, on like terms, including all medical, disability, hospital,
health, and life insurance plans and arrangements. Employee shall be entitled to
five weeks of paid holiday per year plus all national bank holidays.
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x. Xxxxxxxxx. If the Company shall give notice of termination of
Employee's services hereunder for reasons other than those described in Section
10a hereof, Employee shall be entitled to receive his full compensation (i.e.,
his Base Salary and the vesting Options) to the effective date of such
termination, plus a severance payment payable on such date, equal to the amount
of his Base Salary at the rate provided in Section 3 prorated to six months,
plus Options that would have vested during the six months following such
effective date. In the event that the Company becomes obligated to pay any
severance pay, the Company may elect to make payments of the Base Salary
component thereof in regular installments not to exceed six months or in a
single payment equal to the present value thereof.
e. Limitations. The Company shall have the right to deduct or
withhold from all compensation, and benefits payable hereunder all social
security taxes, other federal, state, and local taxes, and all other charges and
amounts as may be required by law to be deducted or withheld.
SECTION 4. Expenses
Employee shall be entitled to reimbursement within thirty (30)
days for reasonable travel and other out-of-pocket expense necessarily incurred
in the performance of his duties hereunder, upon submission and approval of
written statements and bills in accordance with the regular procedures of the
Company.
SECTION 5. Representations and Warranties of Employee
Employee represents and warrants to the Company that (a)
Employee is under no contractual or other restriction or obligation which is
inconsistent with the execution of this Agreement, the performance of his duties
hereunder, or the other rights of the Company hereunder and (b) Employee is
under no physical or mental disability that would hinder his performance of
duties under this Agreement.
SECTION 6. Non-Competition
(a) In view of the unique and valuable services it is expected
Employee will render to the Company, Employee's knowledge of the customers,
trade secrets, and other proprietary information relating to the business of the
Company and its customers and suppliers and similar knowledge regarding the
Company it is expected Employee will obtain, and in consideration of the
compensation to be received hereunder, Employee agrees, other that a transition
period of consultation with either Tele Danmark and/or Tele Danmark USA that
will not exceed six months following the Commencement Date, (i) that he will not
during the period he is employed by the Company under this Agreement compete
with or be engaged in the business as, or otherwise Participate in (hereinafter
defined in this Section 6) any other business or organization that now is or
shall then be competing with the nature of the business or organization that now
is or shall then be competing with the nature of the business of the Company
and, (ii) subject to the last sentence of this Section 6(a) for a period of
six(6), months after he ceases to be employed by the Company under the Agreement
or otherwise, he will not compete with or be engaged in the same business as, or
Participate in any other business or organization which during
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such six-month period compete with or is engaged in the same business as, either
the Company, with respect to any product or service sold or activity engaged in
except that in each case the provisions of this Section 6(a) will not be deemed
breached for activities described in Exhibit 1 or merely because Employee owns
not more than 5% of the outstanding common stock of a corporation, if, at the
time of its acquisition by Employee, such stock is listed and regularly traded
in the over-the-counter market. Notwithstanding clause (ii) above, if either the
Company terminates Employee's employment under this Agreement or otherwise for
reasons other than those described in Section 10a hereof, or on or before
scheduled expiration of the Employment Period. Employee is not offered a new
contract of employment with the Company on equal or better terms with respect to
salary only than as set forth herein, then in any such case restrictions set
forth in this Section 6(a) shall not apply from and after the effective date of
such termination. Any compensation paid by Tele Danmark or Tele Danmark USA to
Employee, or an affiliate of Employee, excluding any bonuses or similar payments
which relate to the activities by Employee prior to the Commencement Date, shall
reduce on a dollar for dollar basis The Base Salary payable to Employee.
(b) The term "Participate in" shall mean: "directly or indirectly
for his own benefit or for, with, or through any other person, firm, or
corporation, own, manage, operate, control, loan money to, or participate in the
ownership, management, operation, or control of, or he connected as a director,
officer, employee, partner, consultant, agent, independent contractor, or
otherwise with or acquiesce in the use of his name in."
(c) Employee will not directly or indirectly reveal the name of,
solicit or interfere with, or endeavor to entice away from the Company, any of
its suppliers, customers, or employees. Employee will not directly or indirectly
employ any person who, at any time up to such cessation, was an employee of the
Company, within a period of sic months after such a person leaves the employment
of the Company
SECTION 7. Patents, Etc.
Any interest in patents, patent applications, inventions,
technological innovations, copyrights, copyrightable works, developments,
discoveries, designs, and processes related to the business of the Company
("Such Inventions") which shall belong to the company as soon as Employee owns,
conceives of, or develops any Such Invention, he agrees immediately to
communicate such fact in writing to the Secretary of the Company, but at the
company's expense (except as noted in clause (a) of this Section 7), forthwith
upon request of the Company, Employee shall execute all such assignments and
other documents (including applications for patents, copyrights, trademarks, and
assignments thereof) and take all such other action as the Company may
reasonably request in order (a) to vest int he Company all Employee's right,
title, and interest, pledges, charges, and encumbrances ("Liens") and (b), if
patentable or copyrightable, to obtain patents or copyrights (including
extensions and renewals) therefore in any and all countries in such name as the
company shall determine.
SECTION 8. Confidential Information
All confidential information (including, without limitation,
trade secrets,
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know how, proprietary information, price lists, marketing plans and customer
lists), which Employee may now possess, may obtain during or after the
Employment Period, or may create prior to the end of the Employment Period
relating to the business of the Company or of any customer or supplier of the
Company shall not be published, disclosed, or made accessible by Employee to any
other person, firm, or corporation either during or after the termination of his
employment or used by him except during the Employment Period int he Business
and for the benefit of the Company in each case without prior written permission
of the Company. Employee shall all tangible evidence of such confidential
information to the Company prior to or at the termination of his employment.
SECTION 9. Life Insurance
If requested by the Company, Employee shall submit to such
physical examinations an otherwise take such actions and execute and deliver
such documents as may be reasonably necessary to enable the Company, at its
expense and for its own benefit, to obtain life insurance on the life of
Employee. Employee has not reason to believe that his life is not insurable with
a reputable insurance company at rates now prevailing for healthy men of his
age.
SECTION 10. Termination
a. Notwithstanding anything herein contained, if on or after
the date hereof and prior to the end of the Employment Period.
(1) either (i) Employee shall be physically or mentally
incapacitated or disabled or otherwise unable fully to discharge his duties
hereunder for a period of three months, (ii) Employee shall be convicted of a
crime, (iii) Employee shall commit any act or omit to take any action in bad
faith and to the detriment of the Company of (iv) Employee shall breach any
material term of this Agreement and fail to correct such breach within thirty
days after commission thereof, then, and in each such case, the Company shall
have the right to give notice of termination of Employee's services hereunder as
of a date (not earlier than 30 days from such notice) to be specified in such
notice, and Employee's employment hereunder shall terminate on the date so
specified, or restrictions set forth in this Section 6(a) shall not apply from
and after the effective date of such termination.
(2) Employee shall die, then Employee's employment
hereunder shall terminate on the date of Employee's death. Upon termination of
Employee's employment under this Section 10a., Employee or his estate, as the
case may be, shall be entitled to receive only his Base Salary and vested
Options to the date on which termination shall take effect.
b. Nothing contained in this Section 10 shall be deemed to limit any
other right the Company may have to terminate Employee's employment hereunder
upon any ground permitted by law (determination "without cause"), by giving
notice of termination of Employee's services hereunder. Upon termination of
Employee's employment under this Section 10b, Employee shall be entitled to
Severance Pay pursuant to and in accordance with the terms of Section 3d,
hereof.
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SECTION 11. Merger, Etc.
In the event of a future disposition of (or including) the
properties and business of the Company, substantially as en entirety, by merger,
consolidation, sale of assets, or otherwise, then the Company may elect:
(1) to assign this Agreement and all of its rights and
obligations hereunder to the acquiring or surviving corporation; provided that
such corporation shall assume in writing all of the obligations of the Company
hereunder, and provided, further that the Company (in the event and so long as
it remains in business as an independent going enterprise) shall remain liable
for the performance of its obligations hereunder in the event of an unjustified
failure of the acquiring corporation to perform its obligations under this
Agreement; or
(2) in addition to its other rights of termination, to
terminate this Agreement upon at least 30 days written notice by paying Employee
his compensation at the rate, and subject to the conditions, provided in Section
3 to the last day of the Employment Period or an amount equal to six months of
his compensation at the rate, and subject to the conditions, provided in Section
3, whichever is greater.
SECTION 12. Survival
The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive Employee's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
SECTION 13. Modification
This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
SECTION 14. Notices
Any notices or other communication required or permitted by
this Agreement shall be sufficiently given if delivered in person, by courier,
or if sent by registered or certified mail, postage prepaid, return receipt
requested, or by Express Mail, or similar overnight delivery service, or by
facsimile transmission (followed by telephone communication and hard copy), at
the address set forth in the preamble to this Agreement (or to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section 14). Any such notice or communication shall be deemed
given (1) if sent by certified or registered mail, return receipt requested,
postage prepaid, five calendar days after being deposited int he United States
mail, postage prepaid; (2) if sent by Express Mail, Federal Express or similar
overnight delivery service for next Business Day delivery, the next Business Day
after being entrusted to such service, with delivery charges prepaid or charged
to the sender's account; (3) if sent by
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facsimile transmission, on the date sent and (4) if delivered in person, by
courier, on the date of delivery.
SECTION 15. Waiver
Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
SECTION 16. Binding Effect
Employee's right and obligations under this Agreement shall
not be transferable by assignment or otherwise, such rights shall not be subject
to commutation, encumbrance, or the claims of Employee's creditors, and any
attempt to do any of the forgoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employees and his
heirs and personal representatives and shall be binding upon and inure to the
benefit of the Company and its successors and those who are its assignees under
Section 11.
SECTION 17. No Third Party Beneficiaries.
Except as provided in Section 16, this Agreement does not
create and shall not be construed as creating, any rights enforceable by any
person not a party to this agreement.
SECTION 18. Headings.
The headings in this Agreement are solely for the convenience
of reference and shall be given no effect in the construction or interpretation
of this Agreement.
SECTION 19. Counterparts; Governing Laws
This Agreement may be executed in any number o counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall be governed by and construed in
accordance with the Laws of New Jersey, USA, without giving effect to any
conflict of laws rule which would have the substantive law of any other state or
country apply to the subject matter hereof.
SECTION 20. Specific Performance
Since a breach of the provisions of Sections 6, 7, and 8 could
not adequately be compensated by money damages, the Company shall be entitled,
in addition to any other right and remedy available to it, to an injunction
restraining such breach or a threatened breach, and in either case no bond or
other security shall be required in connection herewith, and Employee hereby
consents to the issuance of such injunction. Employee agrees that the provision
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of Sections 6, 7 and 8 shall be deemed to be invalid, illegal, or unenforceable
by reason of the extent, duration, or geographical scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, geographical scope, or other provisions hereof, an in its
reduced form such restrictions shall then be enforceable in the manner
contemplated hereby.
SECTION 21. Severability
If any provision of this Agreement (including any provision
relating to the scope or term of or geographic area covered by Sections 6, 7 or
8) or the application thereof to any person or circumstance is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid, or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby; provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a final judgment of a court of competent jurisdiction, then
such court may substitute therefore a suitable and equitable provision in order
to carry out, so far as may be valid and enforceable, the intent and purpose of
the invalid, void or unenforceable provision and if such court shall fail or
decline to do so, the parties shall negotiate in good faith a suitable and
equitable substitute provision. To the extent that any provision shall be
judicially unenforceable in any one or more jurisdictions, such provision shall
not be affected with respect to any other jurisdiction, each provision with
respect to each state being construed a several and independent.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
UTG Communications International, Inc.
by: /s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx, President
/s/ Xxxxx X. Xxxx
--------------------------------
Xxxxx X. Xxxx
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Exhibit 1
Telepathy, Inc.
Employee is currently the President and principal shareholder of Telepathy, Inc.
a Delaware Corporation ("Telepathy") developing two-way pager and GSM
application services ("Wireless Application Venture"). Employee will provide
only limited guidance to Telepathy and will not engage in the active conduct of
Telepathy business unless and until directed to do so by Company.
Telepathy will provide Company a business plan for launching its services.
Company will have the first right of refusal to invest in Telepathy based on the
business plan. If Company does not exercise its right of first refusal within 30
days after Telepathy has found a bona fide third party investor, Telepathy shall
have the right to complete such transaction.
