EXHIBIT 10.3
MANAGEMENT AGREEMENT
THIS AGREEMENT is made on May 28, 2005,
BETWEEN
ON THE FIRST PART:
Teleconnect, Inc. , a Florida, USA based telecom company, registered in USA, wi
th a branch located in Spain `Teleconnect Comunicaciones, S.A.' and ` ITS E
urope , S.L. ' , located Edif. Marina Marbella, Avd. Xxxxxx Xxxxx 00, Xxxxxx 0,
00000 Xxxxxxxx (Xxxxxx), Xxxxx and represented by Mr. Xxxxxxx Xxxxx Xxxxxxx in
his capacity as President (hereinafter, the " Company ")
AND OF THE OTHER PART:
Cobrasky, S.L. , a company located at C/Principe de Xxxxxxx 00-00, Xxx X, Xxxx
X, 00000 Xxxxxx Xxxxx with Fiscal Identity Number (C.I.F.) B-84259001
(hereinafter, the "Contractor") and represented by Xx. Xxxxxxx xx Xxxxxx Yordi
of full legal age, of Spanish Nationality, single, and holder of Fiscal Identity
Number 51.063.523-G (hereinafter, the "Professional ")
The parties mutually acknowledge each other's full capacity to formalize this
Management Contract (hereinafter, the " Agreement ")
PREAMBLE
WHEREAS, Professional presently is contracted by Company as its Executive
Vice-President Corporate Development and Sales Director of its subsidiary
Teleconnect Comunicaciones, S.A.;
WHEREAS, Company wishes, as approved by its Board of Directors on May 27th,
2005, to renew the management contract in place today with Contractor and
substitute it with this new Agreement with Contractor, which represents the
Professional;
WHEREAS, Professional, Contractor and Company agree that this Management
Agreement supersedes all other employment agreement(s) and contract(s) for
services between the Contractor, Professional and Company written, implied or
otherwise.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Contractor and Company hereby agree as follows:
AGREEMENT
ARTICLE I
TERM OF MANAGEMENT AGREEMENT
1.1 Contract. The Company agrees to contract the Contractor and the Contractor
agrees to render services to the Company upon the terms and conditions
hereinafter set forth.
1.2 Term. The contracting of the Contractor by the Company as provided herein
shall commence on May 28, 2005 and is set for an unlimited time, unless
terminated by mutual agreement or in accordance with the provisions of Article
IV.
1.3 Office and Support. Contractor shall be provided an office and reasonable
support staff, including but not limited to access to secretarial services, at
Company's head and branch office(s).
1.4 Place of Performance. In connection with Contractor's assignment by the
Company, Professional shall be based at Company's principal place of business in
Spain or in Madrid, Spain, except for required travel on Company's business to
an extent substantially consistent with Professional's customary business travel
obligations.
ARTICLE II
DUTIES OF THE CONTRACTOR
2.1 Duties. The Contractor will be hired and the Professional assigned the
title of Executive Vice-President Corporate Development, with responsibilities
and authority as are customarily performed by such an officer and additional
duties as may from time to time be assigned to Contractor by the Board of
Directors of the Company. Contractor will continue to have for the term of this
Agreement all authority and responsibility that Professional had at the time
this Agreement commenced.
2.2 Extent of Duties. Contractor shall devote sufficient time, attention and
energies to the business of the Company in order to meet the objectives.
2.3 Disclosure of Information.
2.3.1 The Contractor recognizes and acknowledges that the information,
processes, developments, experimental work, work in progress, business, list of
the Company's customers and any other trade secret or other secret or
confidential information relating to Company's business as they may exist from
time to time are valuable, special and unique assets of Company's business.
Therefore, Contractor agrees that:
(i) Contractor will hold in strictest confidence and not disclose, reproduce,
publish or use in any manner, whether during or subsequent to his
employment, without the express authorization of the Board of Directors of
the Company, any information, process, development or experimental work,
work in process, business, customer lists, trade secret or any other
secret or confidential matter relating to any aspect of the Company's
business, except as such disclosure or use may be required in connection
with Contractor's work for the Company.
(ii) Upon request or at the time of leaving the employ of the Company, the
Contractor will deliver to the Company, and not keep or deliver to anyone
else, any and all notes, memoranda, documents and, in general, any and all
material relating to the Company's business.
2.3.2 In the event of a breach or threatened breach by the Contractor of
the provisions of this section 2.3, the Company shall be entitled to an
injunction (i) restraining the Contractor from disclosing, in whole or in part,
any information as described above or from rendering any services to any person,
firm, corporation, association or other entity to whom such information, in
whole or in part, has been disclosed or is threatened to be disclosed; and/or
(ii) requiring that Contractor deliver to Company all information, documents,
notes, memoranda and any and all other material as described above upon
Contractor's leave of the employ of the Company.
ARTICLE III
COMPENSATION OF THE CONTRACTOR
3.1 Fixed Fee. As compensation for services rendered under this Agreement, the
Contractor shall receive an initial fixed fee of EUR 66.000 per annum to be paid
in twelve equal payments accrued at the end of each calendar month. The amount
will be incremented by adding on the Spanish VAT (IVA) required by law if billed
to the local subsidiary; though no VAT tax is applicable if billed to
Teleconnect Inc.. This fixed fee shall be increased annually for cost-of-living
at the applicable rate for the year in question at the beginning of each
calendar year, plus any other increase which may be determined from time to time
at the discretion of the Company's Board of Directors. If increased, this fixed
fee shall not be decreased thereafter during the term of this Agreement without
the consent of the Contractor. The fixed fee provided in this subsection shall
in no way be deemed exclusive and shall not prevent Contractor from
participating in any other compensation or benefit plan of the Company.
3.2 Variable fee. The Contractor shall receive an additional variable fee equal
to 50% of the fixed fee, as defined in Section 3.1 above, at the time the
variable is to be paid. The variable fee shall be accrued at the end of each
fiscal year of the Company and charged through an invoice by the Contractor. In
case of partial achievement of the set objectives the Company will pay a
proportional variable fee. The variable fee is based on the achievement of
objectives to be set with the Company. These objectives will be negotiated
yearly and are subject to formal approval of the Board of Directors of the
Company.
3.3 Long Term Incentive. The Contractor shall participate in all future long
term incentive plans of the Company (shares, stock options, stock bonuses,
convertible bonds, etc.) in similar conditions to any other member of the
executive team with a similar level of responsibility. Long term incentives are
subject to formal approval of the Board of Directors of the Company.
Additional shares, stock bonuses, stock options or other forms of compensation
shall be determined by the Board of Directors from time to time.
3.4 Other Benefits. Contractor and/or the Professional shall be entitled to
participate in all of Company's employee benefit plans including any retirement,
pension, profit-sharing, stock options, insurance, hospital or other plans and
benefits which now may be in effect or which may hereafter be adopted, it being
understood that Contractor and/or the Professional shall have the same rights
and privileges to participate in such plans and benefits as any other executive
employee or contractor during the term of this Agreement. Participation in any
employee benefit plans shall be in addition to the compensation provided in
Section 3.1.
3.5 Expenses. Contractor shall be entitled to prompt reimbursement for all
reasonable expenses incurred by Contractor in the performance of his duties
hereunder. Company shall advance reasonable estimates of such expenses upon
request of the Contractor. Contractor shall not incur an unreasonable
accumulation of expenses per annum as determined by the Company's Board of
Directors.
3.6 Insurance and Liability. The Company will assume all the legal
responsibilities and costs of the Contractor and the Professional being part of,
directly or indirectly, related to their company roles. The Company will bear
the cost of an insurance policy to cover this risk.
3.7 Conversion of Debt into Common Stock. The Contractor has the right to
convert debt, which can consist of for example, but not limited to, accrued and
unpaid fixed and variable fees, and expense allowances, stock appreciation
rights, etc., into free trading Common Stock of the Company at a stock price
equal to 50% of the actual stock price on the date of exercising and at a
dollar/euro exchange rate as per the date of exercising. The Company will bear
the taxes, costs or expenses which arise on the issuance and transfer of the
shares to the Contractor.
ARTICLE IV
TERMINATION OF AGREEMENT
4.1 Termination. The Contractor's employment hereunder may be terminated without
any breach of this Agreement only under the following circumstances:
4.1.1 By Contractor. Upon the occurrence of any of the following events,
this Agreement may be terminated by the Contractor by written notice to Company:
(i) the sale by Company of substantially all of its assets;
(ii) the sale, exchange or other disposition, in one transaction or a
series of related transactions, of at least 40% percent of the
outstanding voting shares of Company;
(iii) a decision by Company to terminate its business and liquidate its
assets;
(iv) the merger or consolidation of Company with another entity or an
agreement to such a merger or consolidation or any other type of
Reorganization;
(v) Company makes a general assignment for the benefit of creditors,
files a voluntary bankruptcy petition, files a petition or answer
seeking a reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any law, there
shall have been filed any petition or application for the
involuntary bankruptcy of Company, or other similar proceeding, in
which an order for relief is entered or which remains not dismissed
for a period of thirty days or more, or Company seeks, consents to,
or acquiesces in the appointment of a trustee, receiver, or
liquidator of Company or any material party of its assets; or
(vi) there are material changes in Contractor's duties and
responsibilities without his written consent.
(vii) There is a change in shareholder control in the Company
4.1.2 Death. This Agreement shall terminate upon the death of the
Professional.
4.1.3 Disability. This Agreement shall not terminate upon the temporary
disability of the Professional, but the Company may terminate this Agreement
upon the permanent disability of the Professional. Professional shall be
considered permanently disabled if: (i) he is disabled as defined in a
disability insurance policy purchased by or for the benefit of the Contractor;
or (ii) if no such policy is in effect, he is incapacitated to such an extent
due to a medically determinable physical or mental condition that he is unable
to perform substantially all of his duties for 9 consecutive months for Company
that he performed prior to such incapacitation.
4.1.4 Cause. The Company may terminate the Contractor's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Contractor's employment hereunder upon the following:
(i) t he willful and continued failure by the Contractor substantially
to perform his duties hereunder (other than any such failure
resulting from the Contractor's incapacity due to physical or mental
illness), after demand for substantial performance is delivered by
the Company that specifically identifies the manner in which the
Company believes the Contractor has not substantially performed his
duties; or
(ii) the willful engaging by the Contractor in misconduct which is
injurious to the Company; or
(iii) the willful violation by the Contractor of the provisions of this
Agreement. For purposes of this paragraph, no act, or failure to
act, on the part of the Contractor shall be considered "willful"
unless done, or omitted to be done, not in good faith and without
reasonable belief by him that his action or omission was in the best
interest of the Company.
Notwithstanding the foregoing, the Contractor shall not be deemed to have been
terminated for Cause without (i) reasonable notice to the Contractor setting
forth the reasons for the Company's intention to terminate for Cause and
granting Contractor 90 days to cure or remedy (if possible) the reasons for
termination; (ii) an opportunity for the Contractor, together with his counsel,
to be heard before the Board, and (iii) delivery to the Contractor of a Notice
of Termination as defined in section 4.2 hereof from the Board finding that in
the good faith opinion of the Board the Contractor was guilty of conduct set
forth above in clause (i), (ii) or (iii) of the preceding paragraph, subsection
4.1.4, and was unable to cure or remedy the reasons for termination, and
specifying the particulars thereof in detail.
4.2 Notice of Termination. Any termination of the Contractor's employment by the
Company or by the Contractor (other than termination pursuant to subsection
4.1.2 above) shall be communicated with 90 days written Notice of Termination to
the other party. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provision so indicated. The termination notice must be delivered by certified
Post or Messenger service such that proof of delivery of notice is available.
4.3 Term "Date of Termination". "Date of Termination" shall mean (i) if the
Contractor's employment is terminated by death of the Professional, the date of
his death; and (ii) if the Contractor's employment is terminated for any other
reason, the date on which a Notice of Termination is received by Company or
Contractor. The Contractor will have 90 days to facilitate the transition
process as per the notice period in section 4.2 above. Contractor may agree in
writing with Company a shorter period of time.
4.4 Payment of Salary/Severance Pay Following Termination.
4.4.1 In the event of temporary or permanent disability of the
Professional as described in subsection 4.1.3 hereof, Contractor shall be
entitled to receive all compensation payable up to the Date of Termination
notwithstanding the temporary or permanent disability of the Professional; any
such payment, however, shall be reduced by disability insurance benefits, if
any, paid to Contractor under policies (other than group policies) for which
Company pays all premiums and Contractor is the beneficiary.
4.4.2 Following the termination of this Agreement by the Company for Cause
as provided in subsection 4.1.4 hereof, the Contractor shall be entitled only to
compensation through to the Date of Termination.
4.4.3 Following the termination of this Agreement by Company for any
reason other than Cause or permanent disability, or termination of this
agreement by Contractor for any cause listed in subsection 4.1.1 above, then
Company shall pay Contractor a lump sum severance payment equal to the
Contractor's fixed fee per annum at the Date of Termination as detailed in
Section 3.1. This amount shall be paid within 5 business days of the date the
Notice of Termination is delivered to Contractor.
4.4.4 Irrespective of the reason for termination of this Agreement, the
Contractor will continue to be entitled to any stock, stock options, stock
appreciation rights or other compensation already awarded to the Contractor
before reception of the Notice of Termination. The Contractor will have 365 days
as from the Date of Termination to exercise all his rights, such as, but not
limited to, stock option rights, stock appreciation rights, right to convert
debt into Common Stock of the Company, as described in Section 3.7.
4.5 Remedies. Any termination of this Agreement shall not prejudice any other
remedy to which the Company or Contractor may be entitled, either at law,
equity, or under this Agreement.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification. To the fullest extent permitted by applicable law, Company
agrees to indemnify, defend and hold Contractor harmless from any and all
claims, actions, costs, expenses, damages and liabilities, including, without
limitation, reasonable attorney's fees, hereafter or heretofore arising out of
or in connection with activities of Company or its Contractors, including other
agents in connection with and within the scope of this Agreement or by reason of
the fact that he is or was a director or officer of Company or any affiliate of
Company. To the fullest extent permitted by applicable law, Company shall
advance to Contractor expenses of defending any such action, claim or
proceeding. However, Company shall not indemnify Contractor or defend Contractor
against, or hold him harmless from any claims, damages, expenses or liabilities,
including attorneys' fees, resulting from the gross negligence or willful
misconduct of Contractor. The duty to indemnify shall survive the expiration or
early termination of this Agreement as to any claims based on facts or
conditions which occurred or are alleged to have occurred prior to expiration or
termination.
ARTICLE VI
GENERAL PROVISIONS
6.1 Governing Law. This Agreement shall be governed by and construed in
accordance with Spanish law. The jurisdiction of the Courts of Madrid, Spain is
applicable on this Agreement.
6.2 Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be submitted to and settled by arbitration
in Madrid, Spain in accordance with the rules then existing of the Spanish
Arbitration Association and judgment upon the award may be entered in any court
having jurisdiction thereof. The prevailing party shall be entitled to the
payment of their arbitration costs, including their attorneys' fees.
6.3 Entire Agreement. This Agreement supersedes any and all other Agreements,
whether oral or in writing, between the parties with respect to the employment
of the Contractor by the Company.
6.4 Successors and Assigns. This Agreement, all terms and conditions hereunder,
and all remedies arising here from, shall inure to the benefit of and be binding
upon Company, any successor in interest to all or substantially all of the
business and/or assets of Company, and the heirs, administrators, successors and
assigns of Contractor. Except as provided in the preceding sentence, the rights
and obligations of the parties hereto may not be assigned or transferred by
either party without the prior written consent of the other party.
6.5 Notices. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed postage prepaid,
addressed as follows:
If to Company: ITS Networks, Inc.
Edif. Marina Marbella
Xxxxxx Xxxxx 28, 0 xx xxxxx
X - 00000 Xxxxxxxx (Xxxxxx)
If to Contractor: Cobrasky X.X.
Xxxxxxxx de Xxxxxxx 00-00 Xxx X, Xxxx X
00000 Xxxxxx , Xxxxx
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6.6 Severability. If any provision of this Agreement is prohibited by or is
unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.
6.7 Section Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement.
6.8 Survival of Obligations. Termination of this Agreement for any reason shall
not relieve Company or Contractor of any obligation accruing or arising prior to
such termination.
6.9 Amendments. This Agreement may be amended only by written agreement of both
Company and Contractor.
6.10 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original but all of which, when taken
together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
original signatures of both parties hereto. It shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
6.11 Fees and Costs. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which that party may be entitled.
AND IN THE WITNESS WHEREOF, the parties, having read this Agreement, ratify and
sign the same on all pages and in duplicate copies, each one being of equal
power, at the place and on the date indicated on the first page of this
document.
/s/ /s/
ITS Networks, Inc. Cobrasky, S.L.
Represented by Xxxxxxx Xxxxx Xxxxxxx Represented by Xxxxxxx xx Xxxxxx Yordi
