EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") made and entered into as of March 1,
1999 by and between Teltran International Group, Ltd., a Delaware corporation
(the "Company"), and Xxxxx X. Xxxxxx (the "Executive").
The Executive is being employed by the Company as an executive officer.
The parties desire to enter into an employment agreement and to set forth herein
the terms and conditions of the Executive's continued employment by the Company
and its subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and the mutual benefits to be derived here from, the Company
and the Executive agree as follows:
1. Employment.
(a). Duties. The Company shall employ the Executive, on the
terms set forth in this Agreement, as its Chairman of the Board of Directors
President and Chief Executive Officer. The Executive accepts such employment
with the Company and shall perform and fulfill such duties as are assigned to
him hereunder consistent with his status as a senior executive of the Company,
devoting his best efforts and substantial portion of his professional time and
attention to the performance and fulfillment of his duties and to the
advancement of the interests of the Company, subject only to the direction,
approval, control and directives of the Company's Board of Directors (the
"Board"). Nothing contained herein shall be construed, however, to prevent the
Executive from trading in or managing, for his own account and benefit, in
stocks, bonds, securities, real estate, commodities or other forms of
investments (subject to law and Company policy with respect to trading in
Company securities). Without any additional consideration, Executive shall also
serve as an officer of any or all subsidiaries of the Company. Unless otherwise
indicated by the context, the term "Company" shall include the Company and all
its subsidiaries.
Notwithstanding any provisions to the contrary Executive is retaining
his ownership in and receive passive revenues from any telecommunication he may
have an interest in prior to the date hereof and the time devoted thereto does
not interfere with his duties hereunder.
(b). Place of Performance. In connection with his employment
by the Company, the Executive shall be based at the Company's principal place of
business in the New York, New York, except when required for travel on Company
business.
(c). Nomination as Director. The Company agrees that it will
nominate the Executive as a member of the Board of Directors each year during
the term of this Agreement and will use its best efforts to ensure that the
Executive is elected to the Board of Directors.
2. Term. The Executive's employment under this Agreement shall
commence as of March 1, 1999 (the "Commencement Date") and shall, unless sooner
terminated in accordance with the provisions hereof, continue uninterrupted
until April 30, 2002 ("Term"). As used herein "Year" shall refer to a twelve
month period ending March 31 except the first year shall be a thirteen month
period beginning March 1, 1999 and ending April 30, 2000. Unless notice of
non-renewal is given by either party at least sixty (60) days prior to the end
of the Term or prior to the end of any Year thereafter, the Term of this
Agreement shall be automatically extended for an additional period of one year.
3. Compensation.
(a). Base Salary. Executive shall receive a "Base Salary"
during the Term. For the period March 1, 1999 through July 31, 1999 the Base
Salary shall be at the rate of $150,000 per annum which shall increase to the
rate of $180,000 per annum commencing August 1, 1999. On April 1, 2000 the Base
Salary shall increase to $189,000 per annum for the Year commencing on such date
provided that if Net Income, as hereinafter defined, for the year ended March
31, 2000 is equal to or greater than $200,000 then the Base Salary shall be
increased to $200,000. Every Year after March 31, 2001 the Base Salary shall
increase by an amount equal to ten (10%) percent of the prior year's base
Salary.
(b). Net Income. As used herein the term "Net Income" shall
mean pre-tax income of the Company determined in accordance with generally
accepted accounting principles consistently applied but excluding therefrom (i)
any reduction reflecting amortization of good-will and (ii) any deduction for
any bonus awarded under Paragraph 1(c).
(c). Bonus Pool Participation. Commencing with the first year
beginning April 1, 1999 and ending March 31, 2000 Executive shall be entitled to
participate in bonus pool to be awarded for each year of the Term. The bonus
pool shall equal fifteen (15%) percent of Net Income for such year and shall be
paid on the earlier of the filing of the Company's quarterly report on Form 10-Q
for the quarter ending March 31, 2000 or fifty days after the end of such year.
At the time of payment Execution shall receive a written statement of the
Company's public accountant's calculating the amount of the bonus pool. The
allocation of such bonus pool shall be determined by Xxxxx Xxxxxx and Xxxxx
Xxxxx while they are employed provided each of Messrs. Xxxxxx and Xxxxx shall
receive six (6%) percent of such bonus pool. In addition, each of Messrs. Xxxxxx
and Xxxxx shall participate in such bonus pool to such extent for any year in
which they were employed hereunder except if their employment is terminated by
their voluntary termination or termination for cause. The obligation to pay a
bonus hereunder shall survive termination or expiration of the Agreement.
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4. Insurance
(a). Health Insurance and Other Benefits. During the Term, the
Executive shall be entitled to all employee benefits generally offered by the
Company to its executive officers and key management employees, including,
without limitation, all pension, profit sharing, retirement, stock option,
salary continuation, deferred compensation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement,
survivor income, life insurance or any other benefit plan or arrangement
established and maintained by the Company, subject to the rules and regulations
then in effect regarding participation therein.
(b). Keyman Insurance. The Company may obtain keyman life
insurance upon the life of the Executive. In amounts to be determined from time
to time by Executive and the Company.
5. Expenses.
(a). Reimbursement of Expenses. The Executive shall be
reimbursed for all items of travel, entertainment and miscellaneous expenses
that the Executive reasonably incurs in connection with the performance of his
duties hereunder, provided the Executive submits to the Company such statements
and other evidence supporting said expenses as the Company may reasonably
require.
(b). Automobile Allowance. The Executive shall be reimbursed
for the expenses of owning or leasing an automobile suitable for his position
and consistent with Company practices, including the expenses of operating,
insuring and parking such automobile, provided the Executive submits to the
Company such statements and other evidence supporting such expenses as the
Company may require.
6. Vacation. The Executive shall be entitled to not less than
four (4) weeks of vacation in any calendar year. Any unused vacation time in a
year shall be accumulated and increase the amount of vacation time in subsequent
years.
7. Termination of Employment.
(a). Death or Total Disability. In the event of the death of
the Executive during the Term, this Agreement shall terminate as of the date of
the Executive's death. In the event of the Total Disability (as that term is
defined below) of the Executive for sixty (60) days in the aggregate during any
consecutive nine (9) month period during the Term, the Company shall have the
right to terminate this Agreement by giving the Executive thirty (30) days'
prior written notice thereof, and upon the expiration of such thirty (30) day
period, the Executive's employment under this Agreement shall terminate. If the
Executive shall resume his duties within thirty (30) days after receipt of such
a notice of termination and continue to perform such duties for four (4)
consecutive weeks thereafter,
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this Agreement shall continue in full force and effect, without any reduction in
Base Salary and other benefits, and the notice of termination shall be
considered null and void and of no effect. Upon termination of this Agreement
under this Paragraph 7(a), the Company shall have no further obligations or
liabilities under this Agreement, except to pay to the Executive's estate or the
Executive, as the case may be, (i) the portion, if any, that remains unpaid of
the Base Salary for the Year in which termination occurred, but in no event less
than six (6) months' Base Salary; and (ii) the amount of any expenses
reimbursable in accordance with Paragraph 4 above, and any automobile allowance
due under Paragraph 5 above; and (iii) any amounts due under any Company
benefit, welfare or pension plan. Except as otherwise provided by their terms,
any stock options not vested at the time of the termination of this Agreement
under this Paragraph 7(a) shall immediately become fully vested.
The term "Total Disability," as used herein, shall
mean a mental or physical condition which in the reasonable opinion of an
independent medical doctor selected by the Company renders the Executive unable
or incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement at the time the disabling condition was incurred.
In the event the Executive disagrees with such opinion, the Executive may, at
his sole expense, select an independent medical doctor and, in the event that
doctor disagrees with the opinion of the doctor selected by the Company, they
shall select a third independent medical doctor, and the three doctors shall, by
majority vote, determine whether the employee has suffered Total Disability. The
expense of the third doctor shall be shared equally by the Company and the
Executive. Notwithstanding the foregoing, if the Executive is covered under any
policy of disability insurance under Paragraph 3(c) above, under no
circumstances shall the definition of Total Disability be different from the
definition of that term in such policy.
(b). Discharge for Cause. The Company may discharge the
Executive for "Cause" upon notice and thereby immediately terminate his
employment under this Agreement. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment if the Executive, in
the reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured such
breach or commenced in good faith to correct such breach within thirty (30) days
after notice; (ii) embezzles or converts to his own use any funds of the Company
or any client or customer of the Company; (iii) converts to his own use or
unreasonably destroys, intentionally, any property of the Company, without the
Company's consent; (iv) is convicted of a crime; (v) is adjudicated an
incompetent; or (vi) is habitually intoxicated or is diagnosed by an independent
medical doctor to be addicted to a controlled substance (any disagreement of
Executive shall be resolved using the procedure provided in Paragraph 7(a)
above).
(c). Termination by Executive. Executive may terminate this
Agreement for the failure by the Company to comply with the material provisions
of this Agreement which failure is not cured within thirty (30) days after
notice ("Good Reason").
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(d). No Mitigation. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, not shall the amount of any payment
provided for in this Agreement be reduced by any compensation earned by the
Executive as the result of his employment by another employer.
8. Restrictive Covenant.
(a). Competition. As used herein "Company Business" shall mean
any business which the Company is actively pursuing or actively considering
while the executive was employed by the Company provided that upon termination
or execution of this agreement the term "Company Business" shall refer to any
arrangement or contract or relation of the Company or any subsidiary existing or
actually pursued at the time of termination or expiration of the Agreement. The
Executive undertakes and agrees that during the term of this Agreement and for a
period of two years after the date of termination or expiration of this
Agreement he will not compete, directly or indirectly, with respect to a Company
Business or participate as a director, officer, employee, agent, consultant,
representative or otherwise, or as a stockholder, partner or joint venturer, or
have any direct or indirect financial interest, including, without limitation,
the interest of a creditor, in any business competing with respect to a Company
Business. Executive acknowledges that such prospects represent a corporate
opportunity or are the property of the Company and Executive should have no
rights with respect to such properties on projects. Executive further undertakes
and agrees that during the term of the Agreement and for a period of one year
after the date of termination or expiration of this Agreement he will not,
directly or indirectly employ, cause to be employed, or solicit for employment
any of Company's or its subsidiaries' employees. Notwithstanding the foregoing,
the provisions of the paragraph 7 (a) shall not apply to termination by the
Executive pursuant to Section 7(c) or by the Company without cause.
(b). Scope of Covenant. Should the duration, geographical area
or range or proscribed activities contained in Paragraph 8(a) above be held
unreasonable by any court of competent jurisdiction, then such duration,
geographical area or range of proscribed activities shall be modified to such
degree as to make it or them reasonable and enforceable.
(c). Non-Disclosure of Information.
(i). The Executive shall (i) never, directly or
indirectly, disclose to any person or entity for any reason, or use for his own
personal benefit, any "Confidential Information" (as hereinafter defined) either
during his employment with the Company or following termination of that
employment for any reason (ii) at all times take all precautions necessary to
protect from loss or disclosure by him of any and all documents or other
information containing, referring or relating to such Confidential Information,
and (iii) upon termination of his employment with the Company for any reason,
the Executive shall promptly return to the Company any and all documents or
other tangible property containing, referring or relating to such Confidential
Information, whether prepared by him or others.
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(ii). Notwithstanding any provision to the contrary
in this Paragraph 8(c), this paragraph shall not apply to information which the
Executive is called upon by legal process regular on its face (including,
without limitation, by subpoena or discovery requirement) to disclose or to
information which has become part of the public domain or is otherwise publicly
disclosed through no fault or action of the Executive.
(iii). For purposes of this Agreement, "Confidential
Information" means any information relating in any way to the business of the
Company disclosed to or known to the Executive as a consequence of, result of,
or through the Executive's employment by the Company which consists of technical
and nontechnical information about the Company's products, processes, computer
programs, concepts, forms, business methods, data, any and all financial and
accounting data, marketing, customers, customer lists, and services and
information corresponding thereto acquired by the Executive during the term of
the Executive's employment by the Company. Confidential Information shall not
include any of such items which are published or are otherwise part of the
public domain, or freely available from trade sources or otherwise.
(iv). Upon termination of this Agreement for any
reason, the Executive shall turn over to the Company all tangible property then
in the Executive's possession or custody which belongs or relates to the
Company. The Executive shall not retain any copies or reproductions of computer
programs, correspondence, memoranda, reports, notebooks, drawings, photographs,
or other documents which constitute Confidential Information.
9. Arbitration.
(a). Any and all other disputes, controversies and claims
arising out of or relating to this Agreement, or with respect to the
interpretation of this Agreement, or the rights or obligations of the parties
and their successors and permitted assigns, whether by operation of law or
otherwise, shall be settled and determined by arbitration in New York City, New
York pursuant to the then existing rules of the American Arbitration Association
("AAA") for commercial arbitration.
(b). In the event that the Executive disputes a determination
that Cause exists for terminating his employment hereunder pursuant to paragraph
7(b), or the Company disputes the determination that Good Reason exists for the
Executive's termination of this Agreement pursuant to paragraph 7(c), either
party disputing this determination shall serve the other with written notice of
such dispute ("Dispute Notice") within thirty (30) days after the date the
Executive is terminated for Cause or the date the Executive terminates this
Agreement for Good Reason. Within fifteen (15) days thereafter, the Executive or
the Company, as the case may be, shall, in accordance with the Rules of the AAA,
file a petition with the AAA for arbitration of the dispute, the costs thereof
to be shared equally by the Executive and the Company unless an order of the AAA
provides otherwise. If the Executive serves a Dispute Notice upon the Company,
an amount equal to the portion of the Base Salary Executive would be entitled to
receive hereunder shall be placed by the Company in an interest-bearing escrow
account mutually agreeable to the parties or the Company shall deliver an
irrevocable letter of credit for such amount plus interest containing terms
mutually agreeable to the parties. If the AAA determines that Cause existed
for the termination, the escrowed funds and accrued interest shall be paid
to the Company. However, in the event the AAA determines that the
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Executive was terminated without Cause or that Executive resigned for Good
Reason, the escrowed funds and accrued interest shall be paid to the Executive.
(c). Any proceeding referred to in paragraph 9(a) or (b) shall
also determine Executive's entitlement to legal fees as well as all other
disputes between the parties relating to Executive's employment.
(d). The parties covenant and agree that the decision of the
AAA shall be final and binding and hereby waive their right to appeal therefrom.
10. Indemnity. The Company shall indemnify and hold executive
harmless from all liability to the full extent permitted by the laws of its
state of incorporation.
11. Miscellaneous.
(a). Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below by
registered or certified mail, return receipt requested or sent by overnight
express mail or courier or facsimile to such address, if a party has a facsimile
machine. Notice shall be deemed to have been given and received when so
hand-delivered or after three (3) business days when so deposited in the U.S.
Mail, or when transmitted and received by facsimile or sent by express mail
properly addressed to the other party. The addresses are:
To the Company: Teltran International Group, Ltd.
Xxx Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
cc: Xxxxxx Xxxxxx Xxxxxx & Xxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
To the Executive: Xxxxx X. Xxxxxx
00 Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
The foregoing addresses may be changed at any time by notice given in the manner
herein provided.
(b). Integration; Modification. This Agreement constitutes the
entire understanding and agreement between the Company and the Executive
regarding its subject matter and supersedes all prior negotiations and
agreements, whether oral or written, between them with respect to its subject
matter. This Agreement may not be modified except by a written agreement signed
by the Executive and a duly authorized officer of the Company.
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(c). Enforceability. If any provision of this Agreement shall
be invalid or unenforceable, in whole or in part, such provision shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
(d). Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including and their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
(e). Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one (1) or more
instances shall be deemed or construed as a further or continuing waiver of any
such condition or breach or a waiver of any other condition, or the breach of
any other term or covenant set forth in this Agreement. Moreover, the failure of
either party to exercise any right hereunder shall not bar the later exercise
thereof with respect to other future breaches.
(f). Governing Law. This Agreement shall be governed by the
internal laws of the State of New York.
(g). Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
(h). Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(i). Due Authorization. The Company represents that all
corporate action required to authorize the execution, delivery and performance
of this Agreement has been duly taken.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and, on behalf of the Company, by its duly authorized officer on the day and
year first above written.
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Xxxxx Xxxxxx
TELTRAN INTERNATIONAL GROUP, INC.
By:
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Xxxxx Xxxxx, Executive Vice President
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