Exhibit 10.12
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 15th day of September, 1995, by and between RSL
Communications Inc., a British Virgin Islands corporation (the "Corporation"),
and Xxxxxx Xxxxxx ("Xxxxxx").
WITNESSETH:
WHEREAS, the Corporation wishes to employ Xxxxxx, and Xxxxxx wishes to be
employed by the Corporation, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions contained herein, the parties hereto agree as follows:
1. Position and Responsibilities.
1.1. The Corporation hereby employs Xxxxxx to serve in an executive
capacity as President and Chief Executive Officer of the Corporation. Subject to
the direction and authorization of the Board of Directors of the Corporation,
Xxxxxx shall perform such functions and undertake such responsibilities as are
customarily associated with such a position provided, however, that Xxxxxx shall
only perform services under this Agreement outside of the United States. Except
as contemplated by the Employment Agreement dated as of September 15, 1995
between Xxxxxx and International Telecommunications Group, Ltd., a Delaware
corporation (the "ITG Employment Agreement"), Xxxxxx shall hold, for no
additional consideration, such directorships and executive officerships in the
Corporation and any subsidiary
or affiliate to which, from time to time, he may be elected or appointed during
the term of this Agreement.
1.2. Xxxxxx shall devote his full time and best efforts to the
business and affairs of the Corporation and to the promotion of its interests
provided, however, that nothing contained herein shall preclude Xxxxxx from
fulfilling his obligations under the ITG Employment Agreement
1.3. Xxxxxx will do such travelling as may reasonably be required in
the performance of his duties hereunder, consistent with his level of travel
during the twelve months prior to the date hereof.
2. Term.
2.1. The term of this Agreement shall commence on the date hereof
and terminate on December 31, 1998, unless sooner terminated as provided in this
Agreement. The term shall automatically be extended for successive one-year
periods, on the same terms and conditions as herein provided, unless either
Xxxxxx or the Corporation gives written notice to the contrary to the other
party by September 30 of the year of the then expiration date of this Agreement.
The term of this Agreement and any extension thereof is herein referred to as
the "Term."
2.2. Notwithstanding the provisions of Section 2.1 hereof, the
Corporation shall have the right, on written notice to Xxxxxx given by any
Director of the Corporation pursuant to a determination by a majority of the
Board of Directors of the Corporation, to terminate this Agreement for Cause (as
defined herein), such termination to be effective on the date on which
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notice is given or as of such later date otherwise specified in the notice. The
Corporation shall give such notice only after opportunity has been afforded to
Xxxxxx to make a presentation to a meeting of the Board regarding his conduct or
actions.
2.3. For purposes of this Agreement, the term "Cause" shall mean
fraud or dishonesty or acts of gross negligence in the course of providing his
services herein which are injurious to the Corporation; willful
misrepresentation to shareholders or directors which is injurious to the
Corporation; a willful failure without reasonable justification to comply with a
reasonable written order of the Board of Directors; a willful and material
breach of this Agreement; or the conviction of a felony.
2.4. Xxxxxx shall have the right, on 30 days prior written notice to
the Corporation, to terminate this Agreement for Good Reason, such termination
to be effective 30 days after the occurrence of a Good Reason event. For
purposes of this Agreement, the term "Good Reason" shall mean any of the
following:
(a) The assignment to Xxxxxx by the Corporation of duties
inconsistent with, or a material reduction in the nature of, Xxxxxx'x
responsibilities as President and Chief Executive Officer of the Corporation;
(b) A failure by the Corporation to comply with any of the material
terms of this Agreement, which shall not have been cured within 30 days after
written notice thereof; or
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(c) Xxxxxx shall no longer be President and Chief Executive Officer
of the Corporation (except by reason of Sections 2.2, 4.1 or 4.2).
Notwithstanding the provisions of this Section 2.4, if the Board of
Directors shall during the Term elect a person other than Xxxxxx to be Chief
Executive Officer of the Corporation, such action shall not be deemed a Good
Reason event, and no breach of this Agreement shall be deemed to have occurred
by virtue of the Corporation's appointment of a new Chief Executive Officer or
Xxxxxx'x failure to perform the duties of a Chief Executive Officer hereunder,
provided, that the Corporation has agreed in writing to continue during the Term
to compensate Xxxxxx at a rate no less than that then required by Section 3.1
below and to provide benefits no less than those set forth in Section 3.2 below,
and the Corporation otherwise has complied fully with all of the terms and
provisions of this Agreement.
2.5. If this Agreement shall be terminated by the Corporation other
than pursuant to Sections 2.2, 4.1 or 4.2 hereof or by Xxxxxx pursuant to
Section 2.4 hereof, then the Corporation shall continue to pay to Xxxxxx the
salary to which Xxxxxx is entitled pursuant to this Agreement for the Term and
shall continue for such time to pay for the benefits provided in Section 3.2 of
this Agreement.
3. Salary.
3.1. The Corporation shall pay to Xxxxxx for the services to be
rendered by Xxxxxx hereunder a salary at the rate of $140,000 per annum. The
salary shall be payable in equal
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monthly installments of $11,666.67 each. Such salary will be reviewed at least
annually and shall be increased (but not decreased) by the Board of Directors of
the Corporation in such amount as determined in its sole discretion, but in no
event shall such increase be less than an amount equal to the product of the
prior year's salary and the prior year's U.S. Consumer Price Index increase. The
Board of Directors in its sole discretion may grant to Xxxxxx an annual bonus
from time to time.
3.2. Xxxxxx shall be entitled to participate in, and receive
benefits from any employee benefit plans of the Corporation or any subsidiary
which may be in effect at any time during this Agreement. He shall be entitled
to participate in medical and long-term disability insurance programs
(providing, in his case, for monthly payments of at least 50% of the monthly
salary payments set forth in Section 3.1 above) which, if not in effect on the
date of this Agreement, shall be promptly put in place by the Corporation. In
addition, the Corporation shall pay Xxxxxx'x reasonable legal expenses in
connection with the negotiation and preparation of this Agreement.
3.3. The Corporation agrees to reimburse Xxxxxx for all reasonable
and necessary business expenses incurred by him on behalf of the Corporation in
the course of his duties hereunder upon the presentation by Xxxxxx of
appropriate vouchers therefor.
4. Death; Incapacity.
4.1. If, during the Term, because of illness or other incapacity,
Xxxxxx shall fail for a period of 180 consecutive days, or for shorter periods
aggregating more than 180 days
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during any twelve month period, to render the services contemplated hereunder,
then the Corporation, at its option, may terminate this Agreement by notice from
the Corporation to Xxxxxx, effective on the giving of such notice.
4.2. In the event of the death of Xxxxxx during the Term, this
Agreement shall terminate on the date of such death.
4.3. In the event of termination pursuant to this Section 4, all
amounts accrued to the date of termination shall be promptly paid to Xxxxxx or
his legal representatives, as the case may be.
5. Other Activities During Agreement.
5.1. Xxxxxx agrees to devote his full business time to performing
services under this Agreement; provided, however, that Xxxxxx shall be entitled
to four weeks of paid vacation each year.
5.2. (a) Subject to the provisions of Section 5.2(b), for a one-year
period after the end of the Term, neither Xxxxxx nor any entity in which he may
be interested as a partner, trustee, director, officer, employee, shareholder,
option holder, lender of money or guarantor (each, a "Xxxxxx Affiliate"), shall
be engaged directly or indirectly in the business of international long distance
telecommunication services engaged in by the Corporation in any country where
the Corporation, or any subsidiary, conducts such business at any time during
the Term (a "Competitive Activity"); provided, however, that the foregoing shall
not be deemed to prevent Xxxxxx from (i) investing in not
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more than 5% of the outstanding securities of a public company or (ii)
fulfilling his obligations under the ITG Employment Agreement. It is understood
and agreed that any opportunity directly or indirectly related to any business
engaged in by the Corporation in any country where the Corporation conducts such
business at any time during the Term shall be deemed a corporate opportunity of
the Corporation and Xxxxxx shall promptly make such opportunity available
exclusively to the Corporation.
(b) If, during the period of one year after the Term, Xxxxxx or a
Xxxxxx Affiliate proposes to engage in what may be a Competitive Activity,
Xxxxxx shall so notify the Corporation in a writing which shall fully set forth
and describe in detail the nature of the activity which may be a Competitive
Activity, the names of the companies or other entities with or for whom such
activity is proposed to be undertaken, and whether it is proposed to be engaged
in by Xxxxxx or by a Xxxxxx Affiliate (the "Section 5 Notice"). If, within 30
days after receipt by the Corporation of a Section 5 Notice, the Corporation
shall fail to notify Xxxxxx that it deems the proposed activity to be a
Competitive Activity, then Xxxxxx shall be free to engage in the activities
described in the Section 5 Notice without violation of this Section 5.2. If,
however, the Corporation, within such period, notifies Xxxxxx that the proposed
activities constitute a Competitive Activity, then (i) Xxxxxx shall not engage
in any Competitive Activity for a one-year period following the Term, and (ii)
the Corporation shall pay to Xxxxxx, during such one-year period, in equal
monthly installments, an amount equal to
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his salary for the last year of the Term pursuant to Section 3.1 of this
Agreement.
5.3. Xxxxxx shall not at any time during this Agreement or after the
termination hereof directly or indirectly divulge, furnish, use, publish or make
accessible to any person or entity any Confidential Information (as hereinafter
defined) other than in connection with the performance of his duties hereunder.
It is the specific intent of the Corporation and Xxxxxx that each and all of the
provisions set forth hereinabove shall be valid and enforceable as specifically
set forth hereinabove; and that Xxxxxx acknowledges that the Corporation's
remedies at law are likely to be inadequate, and Xxxxxx consents to the
application of the equitable remedies of specific performance to enforce the
Corporation's rights hereunder. Further, should any person seek to legally
compel Xxxxxx (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demands or otherwise) to disclose any
Confidential Information, Xxxxxx shall provide the Corporation with prompt
notice followed up in writing so that the Corporation may seek a protective
order or other appropriate remedy, failing which Xxxxxx shall be entitled to
make such disclosure as is legally required. In any event Xxxxxx shall use his
best efforts with the advice of counsel to furnish only that portion of the
Confidential Information which is legally required and, with the cooperation of
the Corporation, will exercise his best efforts to obtain reliable assurance
that confidential treatment will be accorded information so disclosed. In the
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event of a breach or a threatened breach by Xxxxxx of the provisions of this
Section 5.3, the Corporation may, in addition to any other remedies it may have,
obtain injunctive relief in any court of appropriate jurisdiction to enforce
this Section 5.3. The provisions of this Section 5.3 shall survive the
expiration or termination, for any reason, of this Agreement and shall be
separately enforceable. Any records of Confidential Information prepared by
Xxxxxx or which come into Xxxxxx'x possession during the Term are and remain the
property of the Corporation and upon termination of this Agreement all such
records and copies thereof shall be either left with or returned to the
Corporation.
5.4. The term "Confidential Information" shall mean information
disclosed to Xxxxxx or known, learned, created or observed by him as a
consequence of or through this Agreement, not generally known in the relevant
trade or industry or known to Xxxxxx prior to his employment by the Corporation,
about the Corporation's business activities, services and processes, including
but not limited to information concerning advertising, sales promotion,
publicity, sales data, research, telecommunications technology, finances,
accounting, methods, processes, business plans (including prospective or pending
licensing applications or investments in license holders or applicants), client
or supplier lists and records, potential client or supplier lists, and client or
supplier billing.
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6. Indemnification.
6.1. The Corporation will indemnify Xxxxxx and pay on his behalf all
Expenses (as defined below) incurred by Xxxxxx in any Proceeding (as defined
below), whether the Proceeding which gave rise to the right of indemnification
pursuant to this Agreement occurred prior to or after the date of this
Agreement. This indemnification shall not apply if it is determined by a court
of competent jurisdiction in a Proceeding that any losses, claims, damages or
liabilities arose primarily out of the gross negligence, willful misconduct or
bad faith of Xxxxxx.
6.2. The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, or any inquiry or investigation, whether
brought in the name of the Corporation or otherwise and whether of a civil,
criminal, administrative or investigative nature, and any threatened, pending or
completed action, suit or proceeding or any inquiry or investigation that Xxxxxx
in good faith believes might lead to the institution of any such action, suit or
proceeding or any such inquiry or investigation, in all cases by reason of the
fact that Xxxxxx is or was a director, officer, employee, agent or fiduciary of
the Corporation, or by reason of the fact that he is or was serving at the
request of the Corporation as a director, officer, employee, trustee, fiduciary
or agent of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, whether or not he is serving in such capacity
at the time any liability or expense is incurred for
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which indemnification or reimbursement can be provided under this Agreement
6.3. The term "Expenses" shall include, without limitation thereto,
expenses (including, without limitation, attorneys' fees and expenses) of
investigations, judicial or administrative proceedings or appeals, damages,
judgments, fines, penalties or amounts paid in settlement by or on behalf of
Xxxxxx and any Expenses of establishing a right to indemnification under this
Agreement.
6.4. The Expenses incurred by Xxxxxx in any Proceeding shall be paid
by the Corporation as incurred and in advance of the final disposition of the
Proceeding at the written request of Xxxxxx. Xxxxxx hereby agrees and undertakes
to repay such amounts if it shall ultimately be decided in a Proceeding that he
is not entitled to be indemnified by the Corporation pursuant to this Agreement
or otherwise.
6.5. The indemnification and advancement of Expenses provided by
this Agreement shall not be deemed exclusive of any other rights to which Xxxxxx
may be entitled under the Corporation's Articles of Incorporation or Bye-Laws,
any agreement, any vote of stockholders or disinterested directors, the laws
under which the Corporation was formed, or otherwise, and may be exercised in
any order Xxxxxx elects and prior to, concurrently with or following the
exercise of any other such rights to which Xxxxxx may be entitled, including
pursuant to directors and officers insurance maintained by the Corporation, both
as to action in official capacity and as to action in
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another capacity while holding such office, and the exercise of such rights
shall not be deemed a waiver of any of the provisions of this Agreement. The
provisions of this Section 6 shall survive the expiration or termination, for
any reason, of this Agreement and shall be separately enforceable.
7. Assignment. The Corporation shall require any successor or assign
to all or substantially all the assets of the Corporation, prior to consummation
of any transaction therewith, to expressly assume and agree to perform in
writing this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession or assignment
had taken place. This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors and assigns.
8. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement, except as provided in Sections 4, 6 and 7 hereof.
9. Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10. Interpretation. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision
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had never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
11. Notices. All notices under this Agreement shall be in writing
and shall be deemed to have been given at the time when mailed by registered or
certified mail or when delivered by hand or recognized overnight courier
service, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Corporation:
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Chairman
With a copy to:
Xxxxxx X. Xxxx, Esq.
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
To Xxxxxx:
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
12. Waivers. If any party should waive any breach of any provision
of this Agreement, it shall not thereby be deemed
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to have waived any preceding or succeeding breach of the same or any other
provision of this Agreement.
13. Complete Agreement; Amendments. The foregoing is the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended, supplemented, canceled or discharged except by written instrument
executed by the parties hereto.
14. Governing Law. This Agreement is to be governed by and construed
in accordance with the laws of New York, without giving effect to principles of
conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
RSL COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
AGREED AND ACCEPTED:
/s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx
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