EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into this 15th day
of December, 1997 by and between ILD TELESERVICES, INC., a Delaware
corporation (hereinafter referred to as the "ILD" or the "Corporation") and
XXXXXXXX X. XXXXXXXXX, an individual resident of the State of Georgia
("Executive").
STATEMENT OF BACKGROUND
A. The Corporation is engaged in the telecommunications business,
and Executive has unique experience as an executive in the telecommunications
business.
B. ILD desires to employ Executive to assist in its
telecommunications operations as Senior Vice President of Network Operations.
C. Executive is willing and able to provide services to ILD on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
EMPLOYMENT
1.01 JOB TITLE AND DESCRIPTION. Executive shall serve the
Corporation in an executive capacity in the management of the operations of the
Corporation. Executive shall be formally designated Senior Vice President --
Network Operations for the Corporation and shall have such powers and perform
such duties as may be designated by the Board of Directors of the Corporation.
Executive's duties are expected to focus on managing and enhancing all network
operations of the Corporation and participating as a senior executive in
strategic management issues. Executive agrees, during the term of this Agreement
(as described in section 1.02 below), to devote Executive's full professional
and business-related time, skills and best efforts to the business of the
Corporation. Executive shall not, during his employment, unless otherwise
agreed to in advance in writing by the Chairman of the Board of the
Corporation, accept other employment, become self-employed in any other capacity
during the term of Executive's employment, or engage in any activities that are
detrimental to the Corporation; provided, however, that nothing herein shall
prohibit or affect Executive's capacity as owner or employee in Stratacom, Inc.
and to supervise the conduct of the consulting activities contemplated by that
certain Consulting Agreement dated even date herewith by and between such entity
and ILD.
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Executive shall at all times while this Agreement is in effect be based in the
metropolitan Atlanta area unless otherwise agreed to by Executive.
1.02 TERM. The term of employment of Executive hereunder shall
commence on the date hereof and terminate on December 31, 1999 (the "Initial
Term") and shall automatically renew for successive one (1) year periods as of
January 1 of each year commencing with January 1, 2000 (subject of Section 1.04
hereof).
1.03 COMPENSATION.
(a) SALARY. The Corporation shall pay to Executive, as
compensation for Executive's services hereunder during the Initial Term, a
salary of $140,000.00 per annum, payable in accordance with the Corporations's
standard payroll practices. It is understood that the Corporation may, in the
discretion of the Board of Directors of the Corporation, increase the
aforementioned salary , and the Corporation shall provide, prior to September 1
of each year this Agreement is in effect commencing with September 1, 1999 , the
proposed compensation for Executive for the following year.
(b) REASONABLE EXPENSES. The Corporation shall reimburse
Executive for all ordinary and necessary expenses incurred by Executive that the
Corporation determines are reasonable business expenses in the performance of
his services hereunder, upon presentation of appropriate documentation therefor
to the Corporation.
(c) OTHER BENEFITS. Executive shall be eligible to
participate in: (i) benefits and perquisites available at the Corporation from
time to time, including group health, vacation (at 4 paid weeks per year),
pension, disability, group life, sickness, accident and health insurance
programs and (ii) incentive compensation plans (including without limitation
stock option plans or bonus plans) instituted after the date hereof for the
benefit of management of the Corporation, in each instance on terms at least as
favorable as that available to any Vice President of the Corporation; provided,
however, that Executive agrees and acknowledges that: (A) the Corporation has
in effect certain incentive compensation plans instituted prior to the date
hereof as described on ATTACHMENT A hereto in which Executive shall not be
entitled to participate, (B) certain of the incentive compensation plans to be
made available to management of the Corporation may be based on performance
criteria tailored to the responsibilities of each such manager (as reasonably
determined by the Board of Directors or Compensation Committee thereof with
the expectation that any performance criteria designated for Executive shall be
those provided for the Chairman and the President of the Corporation such as
EBITDA thresholds or stock price set by an initial public offering) which could
result in disparate results among management, and (C) the Corporation may make
available incentive compensation to persons who become managers or consultants
to the Corporation in connection with the consummation of an acquisition or
merger which incentive compensation may be more favorable than made available to
similarly situated members of management (possibly including Executive).
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1.04 TERMINATION OF EMPLOYMENT. This Agreement may be terminated
with respect to the obligations due hereunder as follows:
(a) In the event that Executive dies, Executive's employment is
terminated for "Cause" (as defined in (c) below), Executive suffers a
"Disability" (as defined in (d) below), or Executive exercises his right to
terminate this Agreement for certain payment defaults as described in (e) below,
then the Corporation shall pay to Executive (or the estate of Executive) the
compensation that would otherwise be payable to Executive up to the end of the
calender month following the month in which such event occurs or is effective.
(b) During any year after the Initial Term (years commencing on or
after January 1, 2000), the Agreement may be terminated by any party upon ninety
(90) days prior written notice (with the earliest date such may given being
October 2, 1999). In the event that Executive is at least sixty-two years old
and retires from active employment or Executive voluntarily terminates his
employment in accordance with the above sentence, then the Corporation shall pay
to Executive the compensation that would otherwise be payable to Executive up to
the end of the third calender month following the month in which such event
occurs.
(c) During the Initial Term, the Board of Directors of the
Corporation shall have the right to terminate the employment relationship only
for "Cause". For the purposes of this Agreement, the term "Cause" shall mean:
(a) dishonesty of Executive detrimental to the best interests of the Corporation
or conviction of Executive of a crime that constitutes a felony or involves
moral turpitude; (b) alcohol or substance abuse dependency which adversely
impacts the performance of Executive's duties; (c) reasonable dissatisfaction
with the efforts or diligence of Executive's performance which continues after
notice from the Company, and (d) any material act or omission by Executive
involving malfeasance or negligence or substantial deviation from any of the
written policies or directives of the Corporation; provided that as to
subparagraph (c) and (d) hereof the Board of Directors of the Corporation shall
have first provided Executive written notice stating with specificity the
duties, policy or directive Executive has failed to perform and Executive shall
not have, in the reasonable opinion of the Chairman of the Board of the
Corporation, corrected the acts or omissions complained of within thirty (30)
days of delivery of such notice. The termination of the employment relationship
for Cause shall be the sole and exclusive remedy of ILD under this Agreement for
an event constituting "Cause" hereunder.
(d) In the event Executive has been absent from his duties hereunder
for a period of sixty (60) consecutive days ("Disability Period") as a result of
Executive's bona fide incapacity due to illness or accident ("Disability") prior
to the expiration of this Agreement, then either the Corporation or Executive
may terminate the employment of Executive hereunder and the provisions of
subsection (a) of this Section 1.04 shall govern compensation due.
(e) In the event that the Corporation at any time from time to time
defaults (after giving effect to any notice requirement and applicable cure
period) under either of those certain Promissory Notes issued as of the date
hereof by ILD to Executive in the respective principal
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amounts of $1,000,000 and $2,700,000, then for so long as such default is
continuing Executive shall have the option, exercisable by written notice to
the Corporation, to terminate this Agreement, effective as of the date thereof
or as otherwise provided by Executive in such notice. This provision shall not
be construed, affected or limited in any manner by the terms of that certain
Subordination Agreement dated as of the date hereof made by Executive in favor
of NationsBank, N.A.
(f) Any salary or payments due under this Section 1.04 shall be
payable at times and in installments consistent with the Corporation's payroll
practices at the rate of Executive's then base salary.
ARTICLE II
COVENANTS AND AGREEMENTS OF EXECUTIVE
2.01 ACTIVITIES DURING EMPLOYMENT. Executive covenants and agrees
that he will perform his duties faithfully, competently, diligently and to the
best of his ability and subject to all of the Corporation's policies, rules, and
regulations from time to time applicable to him.
2.02 NON-DISCLOSURE & NON-USE OF TRADE SECRETS OR CONFIDENTIAL
INFORMATION.
(a) Executive covenants and agrees, which covenants and
agreements are of the essence of this Agreement, that upon termination of his
employment, for any reason whatsoever, he will immediately deliver to the
Corporation all property, formulas, customer lists, manuals, records, sales
information, memoranda, notes and other documents pertaining to the performance
of Executive's services for the Corporation or containing Trade Secrets or
Confidential Information of the Corporation (as such terms are defined below),
and all other property belonging to the Corporation whether made or compiled by
Executive or furnished to him from any source by virtue of his employment with
the Corporation.
(b) Executive further covenants and agrees, which covenants
and agreements are of the essence of this Agreement, that he will not, either
during the term of this Agreement or for a period of twenty-four (24) months
after termination of this Agreement, for any reason whatsoever, either use for
his own benefit or for the benefit of others or divulge or disclose to any
person, firm, corporation, partnership, association or any other entity, the
Corporation's Confidential Information. "Confidential Information" shall be
defined as the Corporation's methods of operation, personnel data, customer
lists, customer information, survey records or files, sources of supply, and
other confidential business and customer information.
(c) Executive further agrees that he shall not, either
during the term of this Agreement or at any time thereafter either use for his
own benefit or for the benefit of others or
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disclose or divulge to any person, firm, corporation, partnership, association
or other entity, any Trade Secrets of the Corporation. "Trade Secrets" shall be
defined as any technical information, design, process, procedure, formula,
computer program or improvement that is valuable to the Corporation and not
publicly known.
2.03 NO INTERFERENCE WITH PERSONNEL RELATIONS. During his term of
employment with the Corporation and for a period of twenty-four (24) months
thereafter, Executive will not knowingly solicit, entice, or persuade any other
employees of the Corporation to leave the service of the Corporation for any
reason.
2.04 SEVERABILITY OF PROVISIONS; REMEDIES. The covenants of
Executive contained in this Article II are severable and separate. The
unenforceability of any specific covenants therein shall not affect the validity
of any other covenants set forth therein. Each of these covenants on the part of
Executive shall be construed as an agreement independent of any other provision
in this Agreement. The parties agree that any breach of this Agreement by
Executive may result in irreparable injury to the Corporation, and therefore, in
addition to all other remedies provided by law, Executive agrees and consents
that the Corporation shall be entitled to an injunction to prevent a breach or
contemplated breach of any of the covenants of Executive contained herein.
ARTICLE III
MISCELLANEOUS
3.01 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be (as elected by the person giving such
notice) (a) personally delivered, (b) transmitted by postage prepaid registered
mail, or (c) transmitted by telex or telecopy (with appropriate confirmation) to
the parties as follows:
if to ILD to:
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxxxxx
AND
13000 Sawgrass Xxxxxxx Xxxxxx
Xxxxx 0
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxx
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with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxx
Two Midtown Plaza, Suite 1900
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attention: C. Read Xxxxxx, Jr., Esq.
if to Executive:
Xx. Xxxxxxxx X. XxXxxxxxx
000 Xxxxxxx 000
Xxxxxx Xxxxxx, Xxxxxxx 00000
with a copy to:
XXXXX, FRIEND & SAPRONOV, LLP
Xxxxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
Except as otherwise specified herein, all notices and other
communications shall be deemed to have been duly given on (a) the date of
receipt if delivered personally, (b) five days after posting if transmitted by
mail, or (c) the next business day after the date of transmission if transmitted
by telex or telecopy, whichever shall first occur. Any party hereto may change
its address by notice to all other parties.
3.02 BINDING EFFECT. This Agreement shall inure to the benefit of
and shall be binding upon Executive, his executor, administrator, heirs,
personal representatives and assigns, and the Corporation and its successors and
assigns.
3.03 ASSIGNMENT. The Assignment by Executive of this Agreement or
any interest herein, or of any money due or to become due by reason of the terms
hereof, without the prior written consent of the Corporation shall be void. This
Agreement may be assigned by the Corporation only to any successor in interest.
3.04 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
of the parties hereto relating to the subject matter hereof and supersedes all
prior agreements and understandings concerning Executive's employment by the
Corporation. No amendment or modification of this Agreement shall be valid or
binding upon the Corporation unless made in
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writing and signed by a duly authorized officer of the Corporation, or upon
Executive unless made in writing and signed by him.
3.05 GOVERNING LAW. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of, the State of Georgia.
3.06 WAIVER OF BREACH. The waiver by the Corporation of a breach of
any provision of this Agreement by Executive shall not operate or be construed
as a waiver of any subsequent breach of the same or any other provision by
Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
have affixed their seals the day and year first above written.
"EXECUTIVE"
/s/ Xxxxxxxx X. XxXxxxxxx
-----------------------------
XXXXXXXX X. XXXXXXXXX
("ILD")
ILD TELESERVICES, INC.
BY: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------
NAME: XXXXXX X. XXXXXXXXXXXX
TITLE: PRESIDENT
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