EXHIBIT 10.32
EMPLOYMENT AGREEMENT
between
NTC AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
January 6, 1997
This Employment Agreement ("Agreement") is between National Telephone &
Communications, Inc., a Nevada corporation located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("NTC") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇"), and is
entered into by the parties with reference to the following facts.
A. NTC is a rapidly growing telecommunications services company that markets
its products on a nationwide basis with a network of independent sales
representatives.
B. NTC is currently a wholly-owned subsidiary of a public company, Incomnet,
Inc. ("Incomnet") and has recently reached an agreement with Incomnet under
which NTC shall become a separate public company, independent from
Incomnet.
C. NTC's current President and Chief Executive Officer ("CEO") is ▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇") who has been the senior executive at NTC since the middle of
1992 when Incomnet acquired a controlling interest in NTC and who has
announced his plans to retire from NTC no later than July 25, 1999, his
sixty-second birthday.
D. Because of ▇▇▇▇▇▇' planned retirement and NTC's upcoming plans to be a
public company, NTC desires to employ an experienced executive capable of
(i) successfully assisting NTC in implementing and operating its public-
company plans, and (ii) taking over the senior executive position when
▇▇▇▇▇▇ retires.
▇. ▇▇▇▇▇▇ is such an experienced executive and is desirous of assisting NTC
with its public-company plans taking over the senior executive position at
NTC when ▇▇▇▇▇▇ retires.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1.0 OFFER OF EMPLOYMENT
-------------------
1.1 NTC hereby offers to employ ▇▇▇▇▇▇ in an executive position in
accordance with the terms and conditions set forth herein, and ▇▇▇▇▇▇ hereby
accepts such offer of employment in accordance with the terms and conditions set
forth herein.
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2.0 THE EXECUTIVE POSITION
----------------------
2.1 On or before the date on which ▇▇▇▇▇▇'▇ employment at NTC begins, as
set forth hereunder, NTC shall separate the functions and responsibilities of
the company into an operating division ("Operating Division") and a marketing
division ("Marketing Division"). The Operating Division shall include, without
limitation, the responsibilities and functions of NTC's current departments of
Operations, Information Services and Finance and Administration.
2.2 On the date on which ▇▇▇▇▇▇'▇ employment at NTC begins, as set forth
herein, ▇▇▇▇▇▇ shall be employed as the President of the Operating Division
("Executive Position") and shall be appointed as an officer of NTC by NTC's
Board of Directors. Said Executive Position shall report directly to the CEO.
▇▇▇▇▇▇ shall faithfully and competently perform such duties as are prescribed by
the By-Laws of NTC and shall also perform and discharge such other executive
employment duties and responsibilities consistent with the business requirements
of the Executive Position as NTC's CEO and Board of Directors from time to time
reasonably prescribe. ▇▇▇▇▇▇ shall perform his duties in the Executive position
at such places and times as NTC's CEO and/or Board of Directors may reasonably
prescribe. Except as may otherwise by approved in Advance by NTC's CEO or Board
of Directors, and except during vacation periods and reasonable period of
absence due to sickness, personal injury and other disability, ▇▇▇▇▇▇ shall
devote his full time during normal business hours throughout his term of
employment, as set forth herein, and shall use his best efforts, judgment and
energy to improve and advance the business interests of NTC in a manner
consistent with his duties and responsibilities in the Executive Position.
2.3 On or about the date on which ▇▇▇▇▇▇'▇ employment at NTC begins, NTC's
CEO shall nominate ▇▇▇▇▇▇ for the position of Vice Chairman of NTC's Board of
Directors. ▇▇▇▇▇▇ acknowledges that NTC cannot guarantee he will be elected to
such position, however, the CEO shall (i) diligently and in good faith work for
▇▇▇▇▇▇'▇ election as Vice Chairman, and (ii) vote in favor of ▇▇▇▇▇▇'▇ election
as Vice Chairman.
2.4 ▇▇▇▇▇▇ acknowledges and agrees that another individual, who is
currently a senior executive at NTC, shall be appointed as the President of
NTC's Marketing Division and shall be responsible for the marketing functions of
NTC. Said President of the Marketing Division will also report directly to the
CEO and will also be nominated by the CEO to serve on NTC's Board of Directors
as a Vice Chairman, with a status on the Board of Directors equivalent to
▇▇▇▇▇▇'▇ position.
3.0 SALARY
------
3.1 As compensation for ▇▇▇▇▇▇'▇ complete and satisfactory performance of
his services in both the Executive Position and the Vice Chairman position
during the term of his employment set forth herein, NTC shall pay ▇▇▇▇▇▇ a base
salary of forty thousand dollars ($40,000) per month (said amount, together with
any incremental increases
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thereto as may be determined from time to time by the NTC Board of Directors,
being hereinafter referred to as "Salary"). Any Salary payable hereunder shall
be paid in regular intervals, but in no event less frequently than monthly, in
accordance with NTC's payroll practices from time to time in effect.
4.0 INCENTIVE BONUS
4.1 As an incentive for ▇▇▇▇▇▇ to optimize NTC's profits for the benefit
of NTC's shareholders in the performance of his duties set forth herein, NTC
agrees to pay an incentive bonus to ▇▇▇▇▇▇ during the term of ▇▇▇▇▇▇'▇
employment by NTC ("Bonus") subject to ▇▇▇▇▇▇ earning such Bonus in accordance
with the terms and conditions set forth below in Paragraph 4.2.
4.2 During the terms of ▇▇▇▇▇▇'▇ employment as set forth herein, NTC
agrees that for any and all calendar quarters for which NTC achieves a pretax
profit in excess of one million two hundred fifty thousand dollars ($1,250,000)
for such calendar quarter ("Minimum Quarterly Profit"), then ▇▇▇▇▇▇ shall earn a
Bonus of one and one-half percent (1.5%) of NTC's pretax profits over and above
the Minimum quarterly Profit for that calendar quarter, provided (i) that
payment of the Bonus shall not cause NTC's pretax profit to fall below the
Minimum Quarterly Profit for the quarter in which such Bonus is earned, and (ii)
that NTC's pretax profit for the succeeding calendar quarter (i.e., the quarter
immediately following the calendar quarter in which the Bonus is earned) is
reasonably expected to also exceed the Minimum Quarterly Profit. In the event
the Bonus is earned for a calendar quarter but the amount of such Bonus would
cause NTC's pretax profits for that quarter to fall below the Minimum Quarterly
Profit, then the Bonus for that calendar quarter shall be reduced by such an
amount that the pretax profit shall exactly equal one million two hundred fifty
thousand dollars ($1,250,000) after the payment of such reduced Bonus.
4.3 The parties agree that NTC's quarterly pretax profits shall be
established by (i) quarterly, unaudited financial statements internally prepared
by NTC management in accordance with generally accepted accounting principles
for the first three (3) calendar quarters of NTC's fiscal year, and (ii) year-
end, audited financial statements prepared by NTC's outside auditing firm for
the fourth (4th) quarter of NTC's fiscal year.
4.4 The parties agree that the Bonus, if earned for a specific calendar
quarter, shall be paid to ▇▇▇▇▇▇ at the end of the calendar month in which NTC's
quarterly financial statements for that specific quarter are incorporated in
NTC's appropriate 10Q or 10K report and such report has been properly submitted
by NTC to the Securities & Exchange Commission.
4.5 The parties agree that nothing containd herein with regard to any
bonus and no action taken in respect to any bonus, including without limitation
the Bonus and the Hiring Bonus (as defined below in Paragraphs 9.2 and 9.3),
shall create or be construed to create a trust of any kind. ▇▇▇▇▇▇'▇ right to
receive any bonus pursuant to this Agreement shall be no greater than the right
of an unsecured general creditor of NTC to
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receive payment from NTC. Any bonus paid to ▇▇▇▇▇▇ under this Agreement shall
be paid from NTC's general funds, and no special or separate fund shall be
established, and no segregation of assets shall be made, to assure payment of
any bonus set forth herein.
4.6 The parties understand and acknowledge that ▇▇▇▇▇▇ will be executing a
separate agreement with NTC under which, at the time of the Start Date through
the duration of NTC's employment of ▇▇▇▇▇▇ as set forth herein, ▇▇▇▇▇▇ shall
waive one- half of the quarterly incentive bonus to which ▇▇▇▇▇▇ is entitled
under his current employment contract with NTC (i.e., an incentive bonus which
is currently three percent (3%) of the pretax profits of NTC in excess of the
Minimum Quarterly Profits).
5.0 EMPLOYEE BENEFITS
-----------------
5.1 During the term of ▇▇▇▇▇▇'▇ employment hereunder, ▇▇▇▇▇▇ shall; (i) be
eligible to participate in Employee fringe benefits and pension and/or profit
sharing plans that may be provided by NTC for its senior executive employees in
accordance with the provisions of any such plans, as the same may be in effect
from time to time; (ii) be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may be provided by NTC for
its senior executive employees in accordance with the provisions of any such
plans, as the same may be in effect from time to time; (ii) be entitled to
annual paid vacation in accordance with NTC's policy that may be applicable to
senior executive employees, as the same may be in effect from time to time; (iv)
be entitled to sick leave, sick pay and disability benefits in accordance with
NTC's policy that may be applicable to senior executive employees, as the same
may be in effect from time to time; and (v) be entitled to reimbursement for all
reasonable and necessary out-of-pocket business expenses incurred by ▇▇▇▇▇▇ in
the performance of his duties hereunder in accordance with NTC's policy that may
be applicable thereto to senior executive employees, as the same may be effect
from time to time.
6.0 WITHHOLDING
6.1 The payment of any Salary, employee benefits and bonuses hereunder
shall be subject to applicable withholding and payroll taxes and such other
deductions as may be required under NTC's employee benefit program.
7.0 STOCK OPTION PLAN
7.1 Under the execution of this Agreement and subject to the approval of
NTC's Board of Directors, NTC shall grant to ▇▇▇▇▇▇ a non-qualified stock option
to purchase up to six hundred thousand (600,000) shares of NTC common stock at a
per-share purchase price to be established by NTC's Board of Directors in
accordance with a NTC stock option program for executives and employees ("NTC
Stock Option Plan") but in no case to be greater than (i) five dollar ($5.00) or
(ii) fair-market value at the time of grant, whichever is the higher price
("Basic Option").
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7.2 The exercise period for the Basic Option shall be five (5) years from
the date of grant. However, the parties agree that ▇▇▇▇▇▇ shall vest in the
right to purchase such Basic Option shares only in the vent the contingencies
set forth below in Paragraphs 7.3 and 7.4 occur.
7.3 ▇▇▇▇▇▇ shall vest in the right to purchase two hundred fifty thousand
(250,000) shares of the Basic Option stock if and when he completes fifteen (15)
months of employment by NTC in the Executive Position as set forth herein
("Time-Related Option"), subject to the terms and conditions set forth below in
Paragraph 11.1.e, 11.2.d, 11.3.c, 11.4.f, and 11.5.c, and subject to the terms
and conditions of the NTC Stock Option Plan.
7.4 ▇▇▇▇▇▇ shall vest in the right to purchase the remaining three hundred
fifty thousand (350,000) shares of the Basic Option stock ("Profit-Related
Option") only in the event NTC achieves cumulative pretax profits which total a
minimum of ten million dollars ($10,000,000) in any four (4) contiguous calendar
quarters prior to January 1, 1998 ("Minimum Option Profit") in accordance with
the terms and conditions of the NTC Stock Option Plan. ▇▇▇▇▇▇ shall vest in the
right to purchase such Profit-Related Option shares if and when NTC achieves the
Minimum Option Profit, whether or not ▇▇▇▇▇▇ has yet vested in the right to
purchase the Time Related Option stock, subject to the terms and conditions set
forth below in Paragraphs 11.1.e, 11.2.d, 11.3.c, 11.4.f, and 11.5.c.
8.0 FUTURE EXPECTATIONS
-------------------
8.1 On or before January 1, 1997, NTC reasonably expects but does not
guarantee that ▇▇▇▇▇▇ shall enter into a new employment agreement with NTC under
which ▇▇▇▇▇▇ will remain with NTC, in a senior executive position and/or in a
position as a member of NTC's Board of Directors, only until July 25, 1999.
8.2 NTC further reasonably expects but does not guarantee that (i) on or
before January 1, 1999, ▇▇▇▇▇▇ will retire from the position of CEO, and (ii) on
or before July 25, 1999, ▇▇▇▇▇▇ will retire from the position of Chairman of the
Board of Directors.
8.3 In the event that the future occurrences set forth above in Paragraphs
8.1 and 8.2 do occur generally as currently expected, then, subject to the
future exemplary performance of ▇▇▇▇▇▇ in his executive functions at NTC, NTC
plans to (i) submit ▇▇▇▇▇▇ as the nominee for the position of NTC's CEO on or
before the time of ▇▇▇▇▇▇' announcement of his retirement for such position, and
(ii) submit ▇▇▇▇▇▇ as the nominee for the position of Chairman of NTC's Board of
Directors on or before the time of ▇▇▇▇▇▇' announcement of his retirement from
such position. ▇▇▇▇▇▇ acknowledges and agrees that NTC cannot guarantee the
plans set forth in this Section 8.0, et al, will be implemented due to the
normal and usual uncertainties as business has in predicting the future
including without limitation, future events that are unforeseeable by NTC at
this time and future events that may be beyond NTC's control.
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9.0 EMPLOYMENT START DATE
9.1 The parties agree that the date on which ▇▇▇▇▇▇'▇ employment in the
Executive Position shall start shall be January 6, 1997.
9.2 If ▇▇▇▇▇▇ is formally employed by NTC by January 6, 1997, he shall be
entitled to a guaranteed Hiring Bonus to total two hundred twenty-five thousand
dollars ($225,000), and shall be due and payable to ▇▇▇▇▇▇ on a quarterly basis
("Quarterly Hiring Bonus Payments") contingent upon NTC's pretax profits for
each calendar quarter being in excess of the Minimum Quarterly Profit set forth
above in Paragraph 4.2 (i.e., in excess of $1,250,000 for the quarter). The
Hiring Bonus shall be one and one-half percent (1.5%) of NTC's pre-tax profits
in excess of the Minimum Quarterly Profit. In the event that four (4) or more
Quarterly Hiring Bonus Payments are required to fully pay the Hiring Bonus and
the total amount of the first four (4) Quarterly Hiring Bonus Payments are less
than one hundred fifty thousand dollars ($150,000) ("Minimum 1997 Hiring Bonus
Payment"), then the Quarterly Hiring Bonus Payment for the fourth (4th) calendar
quarter of 1997 shall be increased by the amount required for the first four (4)
Quarterly Hiring Bonus Payments to total the Minimum for 1997 Hiring Bonus
Payment. In the event that six (6) Quarterly Hiring Bonus Payments are not
sufficient to fully pay the Hiring Bonus, and the total of the quarterly Hiring
Bonus Payments for the six (6) calendar quarters ending on June 30, 1998,
including any amount paid by NTC in order to meet the Minimum 1997 Hiring Bonus
Payment, do not equal the total amount of the Hiring Bonus (i.e., a total of
$225,000), then the Quarterly Hiring Bonus Payment for the second (2nd) calendar
quarter of 1998 shall be increased by the amount required for the total amount
of the Hiring Bonus to be fully paid to ▇▇▇▇▇▇ no later than the Quarterly
Hiring Bonus Payment due for the second (2nd) calendar quarter of 1998.
9.3 The parties understand and acknowledge that in the event of a January
6, 1997 employment date by ▇▇▇▇▇▇, ▇▇▇▇▇▇ will execute a separate agreement with
NTC under which ▇▇▇▇▇▇ will agree to waive any remaining portion of the
quarterly incentive bonus due to ▇▇▇▇▇▇ under his current employment agreement
with NTC (i.e., the one and one- half percent of NTC pretax profits in excess of
the Minimum Quarterly Profits which is remaining after the bonus payment
reduction described above in Paragraph 4.6) until such time as the Hiring Bonus
is fully paid to ▇▇▇▇▇▇ as set forth above in Paragraph 9.3.
10.0 TERM OF AGREEMENT/EMPLOYMENT
10.1 The parties agree that the term of this Agreement shall be three (3)
years beginning on the Start Date ("Term of Employment").
11.0 EARLY TERMINATION
11.1 TERMINATION OF ▇▇▇▇▇▇ BY NTC FOR "CAUSE"
11.1.a ▇▇▇▇▇▇'▇ employment by NTC, as set forth in this Agreement, shall
immediately terminate upon ▇▇▇▇▇▇'▇ receipt of written notice from NTC that NTC
is
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terminating ▇▇▇▇▇▇'▇ employment for "cause", as "cause" is defined below in
Paragraphs 11.1.b and 11.1.c ("For-Cause Termination").
11.1.b The parties agree that "cause" for termination within the meaning of
Paragraph 11.1.a, above, shall constitute any one or more of the following
reasons: (i) ▇▇▇▇▇▇'▇ conviction for having committed a felon; (ii) acts of
dishonesty or moral turpitude by ▇▇▇▇▇▇ that a reasonable person would agree are
materially detrimental to NTC; (iii) acts or omissions by ▇▇▇▇▇▇ that ▇▇▇▇▇▇
knew or reasonably should have known would be likely to materially damage NTC's
business; (iv) gross negligence by ▇▇▇▇▇▇ in the performance of his obligations
as set forth in this Agreement, (v) willful disregard by ▇▇▇▇▇▇ of his
obligations set forth in this Agreement ("Willful Disregard"); and/or (vi)
failure by ▇▇▇▇▇▇ to obey the reasonable and lawful orders of NTC's Board of
Directors ("Failure to Obey").
11.1.c The parties also agree that, provided a Willful Disregard and/or a
Failure to Obey do not also constitute "cause" under any of clauses (i) through
(iv) of Paragraph 11.1.b, above, then a Willful Disregard and/or a Failure to
Obey shall not constitute "cause" for termination within the meaning of
Paragraph 11.1.b, above, unless and until ▇▇▇▇▇▇ shall have received written
notice of such Willful Disregard or Failure to Obey and shall have been (i)
given a reasonable opportunity to discuss the matter with the NTC Board of
Directors, followed by a written notice that the NTC Board of Directors adheres
to its position, and (ii) given a reasonable opportunity to cure such Willful
Disregard or comply with such Failure to Obey, as the case may be.
11.1.d In the event ▇▇▇▇▇▇'▇ termination is a For-Cause Termination,
notwithstanding anything to the contrary expressed or implied herein, except as
required by applicable law, NTC shall not be obligated to make any payments to
▇▇▇▇▇▇ or make any payments on ▇▇▇▇▇▇'▇ behalf of any kind or nature whatsoever
by reason of ▇▇▇▇▇▇'▇ For-Cause Termination, other than (i) such amounts, if
any, of the Salary and Bonus as shall have accrued and remain unpaid as of the
date of such For-Cause Termination, (ii) such amounts, if any, of the Hiring
Bonus as shall remain unpaid, and (iii) such other amounts, if any, which may be
then otherwise payable to ▇▇▇▇▇▇ from NTC's benefit plans or reimbursement
policies. The parties agree that at NTC's option, amounts due to ▇▇▇▇▇▇ for the
unpaid Hiring Bonus, if any, may be paid on a quarterly basis in accordance with
the payment plan set forth above in Paragraph 9.3.
11.1.e In the event ▇▇▇▇▇▇'▇ termination is a For-Cause Termination, then on
the date of such termination (i) any and all of the Time-Related Options and/or
the Profit-Related Options in which ▇▇▇▇▇▇ has not yet vested shall be
immediately null and void, and (ii) any and all of the Time-Related Options
and/or Profit-Related Options in which ▇▇▇▇▇▇ has vested but has not yet
exercised shall also be immediately null and void.
11.2 TERMINATION OF ▇▇▇▇▇▇ DUE TO DEATH OR DISABILITY
11.2.a ▇▇▇▇▇▇'▇ employment by NTC, as set forth in this Agreement, shall be
immediately terminated upon the occurrence of (i) ▇▇▇▇▇▇'▇ death ("Death"), or
(ii)
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▇▇▇▇▇▇'▇ inability to perform his duties as set forth in this Agreement on
account of his disability or incapacity for a period of one hundred eighty (180)
or more days, whether or not consecutive, occurring within any period of twelve
(12) consecutive calendar months ("Disability").
11.2.b The parties agree that in the event of the termination of ▇▇▇▇▇▇'▇
employment by NTC due to Death or Disability, then NTC shall pay to ▇▇▇▇▇▇ or
shall cause to be paid to ▇▇▇▇▇▇, or to ▇▇▇▇▇▇'▇ personal representative, as the
case may be, the amount of the Salary, if any, that ▇▇▇▇▇▇ would have otherwise
been entitled to receive, as set forth above in paragraph 3.1, from the date of
such termination through the end of the Term of Employment. At NTC's option,
any amounts payable to ▇▇▇▇▇▇ by NTC pursuant to this Paragraph 11.2.b may be
paid in equal monthly installment through the end of the Term of Employment.
11.2.c The parties also agree that NTC shall pay to ▇▇▇▇▇▇, or to ▇▇▇▇▇▇'▇
personal representative, as the case may be, (i) such amounts, if any, of the
Bonus as shall have accrued and remain unpaid as of the date of such termination
due to Death or Disability, (ii) such amounts, if any, of the Hiring Bonus as
shall remain unpaid, and (iii) such other amount, if any, which may be then
otherwise payable to ▇▇▇▇▇▇, or to ▇▇▇▇▇▇'▇ personal representative, as the case
may be, from NTC's benefit plans or reimbursement policies through the date of
such termination due to Death or Disability. The parties agree that at NTC's
option, amounts due to ▇▇▇▇▇▇ for the unpaid Hiring Bonus, if any, may be paid
on a quarterly basis in accordance with the payment plan set forth above in
Paragraph 9.3.
11.2.d The parties further agree that in the event of the termination of
▇▇▇▇▇▇'▇ employment by NTC due to Death or Disability, then any and all of the
Time-Related Options and/or the Profit-Related Options in which ▇▇▇▇▇▇ has not
yet vested shall be immediately null and void.
11.3 TERMINATION OF ▇▇▇▇▇▇ BY NTC OTHER THAN FOR "CAUSE"
11.3.a The parties agree that in the event of the early termination of
▇▇▇▇▇▇'▇ employment by NTC prior to the end of the Term of Employment for any
reason other than (i) for reason of a For-Cause Termination, or (ii) for reason
of Death or Disability, (collectively, "Not-For-Cause Termination"), then NTC
shall pay to ▇▇▇▇▇▇ the amount of the monthly Salary that ▇▇▇▇▇▇ would have
otherwise been entitled to receive, as set forth above in Paragraph 3.1, (i) for
a period of twenty-four (24) months from the date of such For-Cause
Termination, or (ii) for a period from the date of such Not-For-Cause
Termination, or (ii) for a period from the date of such Not-For-Cause
Termination through the end of the Term of Employment, whichever period is the
greater. Any amounts payable to ▇▇▇▇▇▇ pursuant to this Paragraph 11.3.a shall
be paid to ▇▇▇▇▇▇ by NTC in equal monthly installment, unreduced by any
compensation or other income received by ▇▇▇▇▇▇ from other sources following the
date of such Not-For-Cause Termination.
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11.3.b The parties also agree that NTC shall pay ▇▇▇▇▇▇ (i) such amounts, if
any, of the Bonus as shall have accrued and remain unpaid as of the date of such
Not-For-Cause Termination, (ii) such amounts, if any, of the Hiring Bonus as
shall remain unpaid, and (iii) such other amounts, if any, which may be then
otherwise payable to ▇▇▇▇▇▇ from NTC's benefit plans or reimbursement policies
through the date of such Not-For-Cause Termination. The parties agree that at
NTC's option, amounts due to ▇▇▇▇▇▇ for the unpaid Hiring Bonus, if any, may be
paid on a quarterly basis in accordance with the payment plan set forth above in
Paragraph 9.3.
11.3.c The parties further agree that in the event of a Not-For-Cause
Termination, ▇▇▇▇▇▇ shall immediately vest in the ownership rights of any of the
Time-Related Options and Profit-Related Options, as set forth above in Section
7.0, et al, in which ▇▇▇▇▇▇ has not already vested.
11.4 RESIGNATION BY ▇▇▇▇▇▇ FOR "GOOD CAUSE"
11.4.a ▇▇▇▇▇▇'▇ employment by NTC, as set forth in this Agreement, shall
immediately terminate upon NTC's receipt of written notice from ▇▇▇▇▇▇ that
▇▇▇▇▇▇ is resigning his employment for "good cause", as "good cause" is defined
below in Paragraphs 11.4.b and 11.4.c ("Good-Cause Resignation").
11.4.b The parties agree that ▇▇▇▇▇▇'▇ resignation for "good cause" within
the meaning of Paragraph 11.4.a, above, shall occur when notice of such
resignation is given because (i) a material reduction in the duties and
responsibilities of ▇▇▇▇▇▇, as set forth in this Agreement ("Reduction of
Duties"), has taken place, and/or (ii) a material breach of this Agreement by
NTC ("Breach") has taken place, provided that in either such event ▇▇▇▇▇▇ shall
have given NTC written notice specifying such Reduction in Duties and/or Breach,
stating that ▇▇▇▇▇▇ intends to resign by reason thereof, and such Reduction of
Duties and/or Breach shall continue without cure for thirty (30) days
thereafter.
11.4.c The parties agree that that ▇▇▇▇▇▇'▇ resignation for "good cause"
within the meaning of Paragraph 11.4.a, above, shall also occur when notice of
such resignation is given within six (6) months following a material change in
the ownership of NTC's common stock ("Ownership Change"). The parties agree
that such Ownership Change shall occur when an individual, entity or group
acquires a sufficient number of shares of NTC's common stock so as to be
reasonably able to exercise control over the make-up of NTC's Board of Directors
("Controlling Interest") other than such Controlling Interest as may be owned by
NTC's current parent company, Incomnet.
11.4.d The parties agree that in the event of the termination of ▇▇▇▇▇▇'▇
employment due to ▇▇▇▇▇▇'▇ Good Cause Resignation, then NTC shall pay to ▇▇▇▇▇▇
the amount of the monthly Salary that ▇▇▇▇▇▇ would have otherwise been entitled
to receive, as set forth above in Section 3.1, (i) for a period of twenty-four
(24) months from the date of such Good Cause Resignation, or (ii) for a period
from the date of such Good Cause Resignation through the end of the Term of
Employment, whichever period is the greater. Any amounts payable to ▇▇▇▇▇▇
pursuant to this Paragraph 11.4.d shall be paid to ▇▇▇▇▇▇
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by NTC in equal monthly installments, unreduced by any compensation or other
income received by ▇▇▇▇▇▇ from other sources following the date of such Good
Cause Resignation.
11.4.e The parties also agree that NTC shall pay ▇▇▇▇▇▇ (i) such amounts, if
any, of the Bonus as shall have accrued and remain unpaid as of the date of such
Good Cause Resignation, (ii) such amounts, if any, of the Hiring Bonus as shall
remain unpaid, and (iii) such other amounts, if any, which may be then otherwise
payable to ▇▇▇▇▇▇ from NTC's benefit plans or reimbursement policies through the
date of such Good Cause Resignation. The parties agree that at NTC's option,
amounts due to ▇▇▇▇▇▇ for the unpaid Hiring Bonus, if any, may be paid on a
quarterly basis in accordance with the payment plan set forth above in Paragraph
9.3.
11.4.f The parties further agree that in the event of a Good Cause
Resignation, ▇▇▇▇▇▇ shall immediately vest in the ownership rights of any of the
Time-Related Options and Profit-Related Options, set forth above in Section 7.0,
et al, in which ▇▇▇▇▇▇ has not already vested.
11.5 RESIGNATION BY ▇▇▇▇▇▇ OTHER THAN FOR "GOOD CAUSE"
11.5.a ▇▇▇▇▇▇'▇ employment by NTC, as set forth in this Agreement, shall
immediately terminate upon NTC's receipt of written notice from ▇▇▇▇▇▇ that
▇▇▇▇▇▇ is resigning his employment for reasons other than "good cause", as "good
cause" is defined above in Paragraphs 11.4.b and 11.4.c ("Not-For-Cause
Resignation").
11.5.b In the event ▇▇▇▇▇▇'▇ termination is a Not-For-Cause Resignation,
notwithstanding anything to the contrary expresses or implied herein, except as
required by applicable law, NTC shall not be obligated to make any payments to
▇▇▇▇▇▇ or make payments on ▇▇▇▇▇▇'▇ behalf of any kind or nature whatsoever by
reason of ▇▇▇▇▇▇'▇ Not-For-Cause Resignation, other than (i) such amounts, if
any, of the Salary and Bonus as shall have accrued and remain unpaid as of the
date of such Not-For Cause Resignation, (ii) such amounts, if any, of the Hiring
Bonus as shall remain unpaid, and (iii) such other amounts, if any, which may be
then otherwise payable to ▇▇▇▇▇▇ from NTC's benefit plans or reimbursement
polices. The parties agree that at NTC's option, amounts due to ▇▇▇▇▇▇ for the
unpaid Hiring Bonus, if any, may be paid on a quarterly basis in accordance with
the payment plan set forth above in Paragraph 9.3.
11.5.c In the event ▇▇▇▇▇▇'▇ termination is a Not-For-Cause Resignation, then
on the date of such termination (i) any and all of the Time-Related Options
and/or the Profit-Related Options in which ▇▇▇▇▇▇ has not yet vested shall be
immediately null and void, and (ii) any and all of the Time-Related Options
and/or Profit-Related Options in which ▇▇▇▇▇▇ has vested but has not yet
exercised shall also be immediately null and void.
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12.0 CONFIDENTIAL INFORMATION
12.1 ▇▇▇▇▇▇ acknowledges and agrees that he will have access to and will
participate in the development of or be acquainted with confidential and/or
proprietary information and trade secrets related to the business of NTC or used
in the business and operations of NTC which are not made publicly available,
including but not limited to: (i) business plans, financial reports, operating
data, budgets, wage and salary rates, pricing strategies and information, terms
of agreements with suppliers or bankers and others, customer lists, lists of
independent sales representatives, patents, devices, software programs, reports,
correspondence, tangible property and specifications owned or used by NTC's
businesses; (ii) information pertaining to future developments such as but not
limited to potential acquisition of other companies or product lines, potential
strategic alliance agreements for products or market segments, research and
development, public offerings, marketing, distribution, delivery or
merchandising plans or ideas, and potential new business locations; and (iii)
other tangible and intangible property (collectively, "Confidential
Information").
12.2 ▇▇▇▇▇▇ agrees that all Confidential Information shall be the exclusive
properties of NTC. ▇▇▇▇▇▇ further agrees and warrants that he shall not
disclose, use or make known for his or another's benefit any Confidential
Information in any way except in the best interests of NTC in the performance of
▇▇▇▇▇▇'▇ duties under this Agreement. However, NTC agrees ▇▇▇▇▇▇ may disclose
Confidential Information when required by applicable law or judicial process,
but only after notice to NTC of ▇▇▇▇▇▇'▇ intention to do so and opportunity for
NTC to challenge or limit the scope of the disclosure.
12.3 ▇▇▇▇▇▇ acknowledges and agrees that a remedy at law for any breach or
threatened breach of the provisions of this Section 12.0, et al, would be
inadequate. Therefore, ▇▇▇▇▇▇ agrees that NTC shall be entitled to injunctive
relief in addition to any other available rights and remedies in case of any
such breach or threatened breach, provided, however, that nothing contained
herein shall be construed as prohibiting NTC from pursuing any other rights and
remedies available for any such breach or threatened breach.
12.4 ▇▇▇▇▇▇ agrees that upon termination of his employment by NTC for any
reason, ▇▇▇▇▇▇ shall forthwith return to NTC any and all Confidential
Information obtained in any way by ▇▇▇▇▇▇ during the period of his employment by
NTC which in any way relates to the business of NTC including not limited to
documents, correspondence, notebooks, reports, computer programs, computer discs
and other electronic media, and all other materials and copies thereof.
12.5 ▇▇▇▇▇▇ agrees that his obligations under this Section 12.0, et al,
shall survive the termination of the Terms of Employment and the expiration or
termination of this Agreement and shall terminate three (3) years after the last
to occur of such events.
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13.0 AGREEMENT NOT TO COMPETE
13.1 During ▇▇▇▇▇▇'▇ employment by NTC and during a one (1) year period
immediately following the termination of ▇▇▇▇▇▇'▇ employment hereunder, for any
reason whatsoever, ▇▇▇▇▇▇ will not directly or indirectly, as a director,
officer, employee, manager, consultant, contractor, advisor or otherwise, engage
in competition with, or own any interest in, perform any services for,
participate in or be connected with any business or organization which engages
in competition with NTC (i) in any geographical area where any business is
presently carried on by NTC, or (ii) in any geographical area where any
business, during the period of ▇▇▇▇▇▇'▇ employment by NTC, shall be hereafter
carried on by NTC, if such business is then being carried on by NTC in any such
geographical area. The parties agree, however, that the provisions of this
Paragraph 13.1 shall not be deemed to prohibit ▇▇▇▇▇▇'▇ ownership of not more
than four percent (4%) of the total shares of all classes of stock outstanding
of any publicly held company.
13.2 During ▇▇▇▇▇▇'▇ employment by NTC and during a one (1) year period
immediately following the termination of ▇▇▇▇▇▇'▇ employment hereunder, ▇▇▇▇▇▇
shall not for any reason whatsoever, (i) directly or indirectly solicit for
employment any employee of NTC, or (ii) directly or indirectly advise or
recommend to any other person that they employ or solicit for employment any
employee of NTC.
13.3 During ▇▇▇▇▇▇'▇ employment by NTC and during a one (1) year period
immediately following the termination of ▇▇▇▇▇▇'▇ employment hereunder, for any
reason whatsoever, ▇▇▇▇▇▇ shall not (i) directly or indirectly solicit for
employment, or solicit for services, or solicit for any other business reason
any person who was or is an independent sales representative in NTC's marketing
program during the period of ▇▇▇▇▇▇'▇ employment by NTC, or (ii) directly or
indirectly advise or recommend to any other person that such other person,
directly or indirectly, solicit for employment, or solicit for services, or
solicit for any other business reason any person who was or is, during the
period of ▇▇▇▇▇▇'▇ employment by NTC, an independent sales representative in
NTC's marketing program.
13.4 During ▇▇▇▇▇▇'▇ employment by NTC and during a one (1) year period
immediately following the termination of ▇▇▇▇▇▇'▇ employment hereunder, for any
reason whatsoever, ▇▇▇▇▇▇ shall not directly or indirectly hire, engage, send to
work to, place orders with, or in any manner be associated with any supplier,
contractor, subcontractor, or other person or firm which rendered services to,
or sold products to NTC if such actions by ▇▇▇▇▇▇ would have a material adverse
effect on the business, assets or financial condition of NTC.
13.5 For the purposes of this Section 13.0, et al, a person or entity,
including without limitation, ▇▇▇▇▇▇, shall be deemed to be a competitor of NTC,
or a person or entity, including without limitation, ▇▇▇▇▇▇, shall be deemed to
be engaging in competition with NTC if such person or entity in any way
conducts, operates, carries out or engages in (i) the business of marketing long
distance telephone services or pager services or Internet access services,
and/or (ii) such other business or businesses as NTC
12
may conduct in the future in such geographical areas or area as such business or
businesses are conducted.
13.6 In connection with all the above provisions of this Section 13.0, et
al, ▇▇▇▇▇▇ represents to NTC that his experience, capabilities and circumstances
are such that such provisions will not prevent ▇▇▇▇▇▇ from earning a livelihood.
▇▇▇▇▇▇ agrees and understands that the Covenants he has made in this Section
13.0, et al, shall survive the termination of the Term of Employment and the
expiration or termination of this Agreement and shall terminate one (1) year
after the last to occur of such events. ▇▇▇▇▇▇ further agrees that the
limitation, any time or territorial limitations, are reasonable and properly
required for the reasonable and adequate protection of the business of NTC.
13.7 ▇▇▇▇▇▇ acknowledges and agrees that a remedy at law for any breach or
threatened breach by ▇▇▇▇▇▇ of any of the provisions of this Section 13.0, et
al, would be inadequate. ▇▇▇▇▇▇ therefore agrees that NTC shall be entitled to
injunctive relief of any such breach or threatened breach, provided however,
that nothing contained herein shall be construed as prohibiting NTC from
pursuing any other rights and remedies available for any such breach or
threatened breach.
14.0 RIGHT TO PAYMENTS
14.1 Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null and
void and of no effect.
15.0 APPROVAL BY BOARD OF DIRECTORS
15.1 ▇▇▇▇▇▇ understands and agrees that NTC has entered into this Agreement
subject to the approval and ratification of NTC's Board of Directors.
16.0 GENERAL PROVISIONS
16.1 DISPUTES AND SELECTION OF VENUE. In the event of any dispute,
controversy or claim ("Disputed Matter") between the parties to this Agreement
or the breach thereof, the parties agree to and are obligated to submit the
Disputed Matter to binding arbitration in accordance with the Rules of the
American Arbitration Association. The parties further agree that such
arbitration shall be held in the County of Orange in the State of California
("Venue"). By execution of this Agreement, the parties irrevocably and
unconditionally submit to the jurisdiction of said arbitration in any such
Disputed Matter. Nothing herein shall be construed to limit or restrict the
rights of the parties to obtain equitable remedies and relief from any court of
competent jurisdiction in said Venue.
16.2 APPLICABLE LAW. This Agreement shall be construed, governed and
enforced in accordance with the laws of the State of California.
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16.3 ATTORNEY FEES. In the event of any Disputed Matter between the
parties hereto in connection with this Agreement, the prevailing party or
parties shall be entitled to receive from the losing party or parties all of its
reasonable costs, fees and expenses including but not limited to court costs and
reasonable attorneys' fees.
16.4 AMENDMENT. No amendment, modification, waiver, discharge or change
("Amendment") to this Agreement shall be valid unless such Amendment is in
writing and signed by all parties hereto.
16.5 ADDITIONAL DOCUMENTS. Each of the parties hereto specifically agrees
to execute such other and further instruments and documents as may reasonably be
required to effectuate the terms, conditions and objectives of this Agreement.
16.6 SEVERABILITY AND COMPLIANCE. If any term, condition or provisions of
this Agreement is found to be invalid, contrary to law or otherwise
unenforceable ("Invalid Provision"), such finding shall in no way affect the
validity or enforceability of the other terms, conditions and provisions herein.
Such other terms, conditions and provisions shall be valid and enforceable as if
the Invalid Provision was never a part hereof. Each party hereto shall be
excused without further liability from the performance of any duty, obligation
or responsibility hereunder to the extent it is prevented from such performance
by applicable laws, rules or regulations or by the order or decision of any
regulatory authority.
16.7 WAIVER OF BREACH. The waiver of one party of a breach of any term,
condition or provision of this Agreement by the other party or parties shall not
operate or be construed as a waiver of any subsequent breach of any type whether
of similar or dissimilar nature.
16.8 NOTICES. Any and all notices, demands or other communications
("Notice") given hereunder shall be delivered to the party to whom such Notice
is addressed by delivery in person or by delivery through United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to ▇▇▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o NTC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to NTC: National Telephone & Communications, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman
If delivery is by United States mail, notice shall be deemed to have been given
three (3) working days after being placed in such mail, as evidenced by a
mailing receipt. Any
14
party may change its address for the purpose of this Agreement by giving the
other parties written notice of its new address.
16.9 ASSIGNMENTS. Unless specifically granted in a term, condition or
provision hereinabove, this Agreement and the rights and obligations granted or
agreed to hereunder may not be assigned by any party or parties to this
Agreement by sale of business, operation of law or otherwise without first
obtaining the written consent of the other party which all parties agree will
not be unreasonably withheld unless such an assignment is specifically
disallowed in a term, condition or provision hereinabove. The parties further
agree that nothing in this Paragraph 16.9 or in Paragraph 14.1 above shall
preclude ▇▇▇▇▇▇ from designating a beneficiary to receive any benefit payable
hereunder upon ▇▇▇▇▇▇'▇ death or incapacity.
16.10 VALID ENTITY. Each party of this Agreement which is a legal entity
such as a partnership, corporation or trust or the like represents that it is a
validly formed and existing entity, that it has the authority to enter into this
Agreement and that all acts necessary to make this Agreement valid and binding
have been done. The person or persons executing this Agreement on behalf of
such entity represents that they have the right and authority to do so.
16.11 REPRESENTATION BY COUNSEL OF OWN CHOOSING. By executing this
Agreement, each party to this Agreement represents and warrants that said party
is either represented by counsel of his, her or its choosing, or has been
advised to seek such representation, advice or counsel, and has voluntarily and
knowingly declined to do so.
16.12 CONSTRUCTION. Any rule of law to the contrary notwithstanding, this
Agreement shall be construed as if drafted by all parties regardless of which
part or which party's legal counsel either actually drafted this Agreement or
printed or physically memorialized this Agreement between the parties.
16.13 CAPTIONS. The captions in this Agreement are inserted for convenience
of reference only and do not define, describe or limit the scope or the intent
of this Agreement or any of the terms, conditions or provisions hereof.
16.14 NUMBER AND GENDER. The use of neuter, masculine or feminine gender
and the singular or plural number in any terms, condition or provision of this
Agreement shall be deemed to include the other whenever the context so requires.
16.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed an original; but all of
such counterparts taken together shall constitute one and the same agreement.
16.16 SURVIVAL. In the event this Agreement provides for a closing or a
transfer of possession to or title of property, all terms, covenants, warranties
and conditions of this Agreement shall survive such closing or transfer except
for payments actually fully made or acts fully performed before or at the time
of such closing or transfer.
15
16.17 ENTIRE AGREEMENT. This Agreement sets forth and constitutes the
entire agreement between the parties with respect to the subject matter herein
and supersedes all previous agreements, promises and representations, either
oral or in writing, between the parties hereto with respect to the transactions
covered hereby, and contains all the covenants and agreements between the
parties.
16.18 BENEFITS. Subject to the restrictions on assignment and transfers, if
any, which may be set forth in this Agreement, the terms, conditions and
provisions of this Agreement shall inure to the benefit of and be binding on
the parties hereto and all their respective successors including but not limited
to permitted assigns, executors, administrators, heirs and representatives; and
no other person or entity shall have any rights whatsoever under this Agreement.
This Agreement is now therefore agreed to on this 6th day of January, 1997 in
the County of Orange, State of California.
NTC: ▇▇▇▇▇▇:
National Telephone &
Communications, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and CEO
16
