CONFIDENTIAL AND LEGALLY PRIVILEGED
EMPLOYMENT AGREEMENT
between
DIGITEC 2000 INC.
and
XXXXXXX XXXXXX XXXXXX
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective as of the 8th day of June,
1998, by and between DIGITEC 2000 INC., a Nevada corporation having its
principal place of business at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Corporation") and XXXXXXX XXXXXX XXXXXX, an individual residing at 00 Xxxxxx
Xxxx Xxxxxx, Xxx Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Executive"),
WITNESSETH THAT:
WHEREAS, the parties desire to provide for a comprehensive
employment agreement pursuant to which the terms and conditions of the
Executive's employment would be set forth; and
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree;
ARTICLE I. Term and Duties
Section 1.1 Term. The Corporation hereby agrees to employ the Executive as
Vice President and Chief Financial Officer of the Corporation and the Executive
hereby agrees to serve in such capacity, upon the terms and conditions herein
contained. The initial term of this Agreement is for a period (the "Initial
Term") commencing as of the date first above written (the "Effective Date") and
continuing until June 30, 2000. Thereafter, this Agreement shall be renewed
automatically for one additional year on each June 30 (the Initial Term, as so
extended, the "Active Employment Period") unless (i) the Board of Directors of
the Corporation (the "Board") or the President of the Corporation gives written
notice to the Executive at least three
months prior to any such renewal date or (ii) this Agreement otherwise has been
terminated in accordance with its provisions.
Section 1.2 Duties. As Vice President and Chief Financial Officer of the
Corporation, the Executive shall have and perform those duties on behalf of the
Corporation which are required by its By-Laws and the directives of the Board,
committees thereof or the President and which are reasonable and customary for
an individual holding such offices to perform, such duties to include, without
limitation, all of the following:
(a) Being responsible for developing, subject to approval by the
Board and the President, overall financial strategy and planning;
(b) Developing the basic financial objectives, policies, and
operating procedures of the business and submitting them to the President for
approval;
(c) Implementing the financial plans and policies adopted by the
Board or the President through Executive's personal efforts and through his
delegation of the performance of duties to subordinate employees of the
Corporation and to other persons or companies;
(d) Interpreting organizational policies and supervising the
administration thereof by subordinates and reviewing and approving proposed
internal policies of subordinate units;
(e) Supervising and directing the Corporation's financial reporting
and accounting functions; and
(f) Preparing and presenting operating and capital expenditure
budgets for review and approval by the Board.
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The duties of the Executive may be changed from time-to-time by the mutual
consent of the Executive and the Corporation without terminating this Agreement
and, in such event, the employment of the Executive shall continue under this
Agreement as so modified.
ARTICLE II. Compensation
Section 2.1 Basic Compensation
(a) During the Active Employment Period, the Corporation shall pay
to the Executive an annual base salary (which shall accrue proportionately from
day to day) of $162,500 payable in equal semi-monthly installments on the same
dates the other officers of the Corporation are paid. The Executive's base
annual salary shall be adjusted to $212,500 concurrently with the adjustment of
the base annual salary of the President of the Corporation by $5,000 or more.
The Executive's base annual salary payable pursuant to this Section 2.1
(including any increases thereof pursuant to Section 2.1(b)) is hereinafter
referred to as the Executive's "Basic Compensation."
(b) The Corporation and the Executive acknowledge that the
Compensation Committee shall, from time to time, but no less frequently than
annually, review the Executive's Basic Compensation and may increase (but in no
event decrease) such compensation by such amounts as the Compensation Committee
deems proper. The criteria which the Compensation Committee may take into
consideration in providing for any such increases are the basic compensation
payable to the individuals holding like offices of comparable telecommunications
companies, the scope of the Executive's duties, the Executive's experience,
ability and performance, the success achieved by the Corporation, the total
economic return to the
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Corporation's shareholders, increases in the cost of living, and such other
criteria as the Compensation Committee may deem relevant.
Section 2.2 Signing Bonus. Simultaneously with Executive's commencement of
employment hereunder, he shall receive a $25,000 bonus.
Section 2.3 Annual Bonus. In addition to Basic Compensation, the Executive
shall receive such annual bonuses as shall be awarded to him by the Compensation
Committee based upon his performance and the Corporation's performance. Each
such annual bonus shall be paid within a reasonable time after the end of the
fiscal year for which the annual bonus is awarded, unless the Executive shall
elect to defer the receipt of such annual bonus.
Section 2.4 Stock Options. Concurrent with the Executive's commencing
employment hereunder the Executive shall be granted options for a term of ten
years from commencement of employment hereunder to purchase 150,000 shares of
the Corporation's Common Stock, $.001 par value per share, at the closing price
per share of the Common Stock on the Effective Date, pursuant to the
Corporation's Stock Compensation Plan (the "Stock Compensation Plan"), vesting
50,000 shares upon the Effective Date and the remainder to vest quarterly over
the initial two year term of this Agreement.
Section 2.5 Incentive, Savings and Retirement Plans. During the Active
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other executives of the Corporation.
Section 2.6 Welfare Benefit Plans. During the Active Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in
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and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Corporation (including, without limitation,
medical, prescription, dental, disability, salary continuance, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other executives of the Corporation.
Section 2.7 Expenses. During the Active Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Corporation as in effect generally with respect
to other executives of the Corporation.
Section 2.8 Vacation. During the Active Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Corporation as in effect generally with
respect to other executives of the Corporation.
Section 2.9 Total Compensation. The Executive's "Total Compensation" means
the total of (i) Basic Compensation, including amounts the Executive has
electively deferred under an arrangement qualified under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"), to any cafeteria plan
under Section 125 of the Code or otherwise, plus (ii) an amount equal to the
aggregate cash amounts paid to the Executive in respect of bonuses over the
three most recent fiscal years of the Corporation divided by three.
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ARTICLE III. Termination of Employment
Section 3.1 Events of Termination
(a) Death. The Executives's employment shall terminate automatically
upon the Executive's death.
(b) Without Cause. Notwithstanding any other provision hereunder,
the Corporation shall have the right to terminate the Executive's employment
hereunder without "Cause" (as defined in Section 3.1(c)) at any time during the
Active Employment Period for any reason in the sole discretion of the
Corporation upon not less than ninety (90) days' prior written notice to the
Executive.
(c) Cause. The Corporation may terminate the Executive's employment
during the Active Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) The continued failure of the Executive to perform the
Executive's duties with the Corporation (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the President, which
demand shall identify the manner in which he believes that the Executive has not
substantially performed the Executive's duties, or
(ii) The engaging by the Executive in illegal conduct or gross
misconduct in connection with the performance of his duties hereunder which is
injurious to the Corporation.
(d) Retirement. The Executive may terminate his employment by
reasons of "Retirement" at the end of the fiscal year of the Corporation in
which the Executive attains the
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age of 65 or such later date as the Board shall set with the consent of the
Executive (the "Retirement Effective Date").
(e) Voluntary Termination. The Executive shall have the right at any
time after the Effective Date to voluntarily terminate his employment by the
Corporation (a "Voluntary Termination") for any reason in the sole discretion of
the Executive by not less than thirty (30) days' prior written notice to the
Corporation; provided however, a termination without Cause, by reason of Death,
Disability or Retirement shall not be treated for any purpose hereunder as a
Voluntary Termination.
(f) Good Reason. The Executive may terminate his employment for
"Good Reason" if the Corporation shall relocate its principal place of business
more than fifty miles from Executive's residence as set forth above and the
Executive is required to work full time at such new location.
Section 3.2 Termination Procedures and Certain Definitions
(a) Notice of Termination. Any termination by the Corporation for
Cause, without Cause or by the Executive in a Voluntary Termination, Good Reason
or Retirement, shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 5.7 of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date. The failure by the Executive or the Corporation to set
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forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Cause shall not waive any right of the Executive or the
Corporation, respectively, hereunder or preclude the Executive or the
Corporation, respectively, from asserting such fact or circumstance in enforcing
the Executive's or the Corporation's rights hereunder. The Executive's continued
employment with the Corporation after a Notice of Termination is provided shall
not constitute consent to, or a waiver of any rights with respect to, any
circumstance constituting Good Reason hereunder.
(b) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Corporation for Cause, the date of
receipt of the Notice of Termination or any later date specified therein, as the
case may be, (ii) if the Executive's employment is terminated by the Corporation
other than for Cause, the date on which the Corporation notifies the Executive
of such termination, (iii) if the Executive terminates his employment in a
Voluntary Termination, the date not less than thirty (30) days after the date on
which the Executive notifies the Corporation of such termination and (iv) if the
Executive's employment is terminated by reason of death, Good Reason or
Retirement, death of the Executive, the date designated by the Corporation with
ten days of receipt of Executive's Notice of Good Reason or the Retirement
Effective Date, as the case may be. In the case of a Voluntary Termination, the
Corporation shall have the option, exercisable by written notice to the
Executive within ten (10) days after the Executive's Notice of Termination is
provided to the Corporation, to designate any date prior to the expiration of
the aforesaid notice as the date on which the Executive shall cease to be an
officer of the Corporation, and the effective date of termination hereunder
shall be any earlier date so designated by the Corporation.
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Section 3.3 Obligations of the Corporation on Termination
(a) Termination Upon Death or Without Cause or for Good Reason.
If the Executive's employment is terminated upon his death or
for Good Reason or without Cause:
(i) In general.
The Corporation shall immediately pay the Executive in cash
the amount of Basic Compensation previously earned but not yet paid.
(ii) Severance benefits.
(1) All stock options and awards of restricted common
stock of the Executive under the Stock Compensation Plan, which have not already
vested, shall immediately vest and all performance shares and other awards under
the Stock Compensation Plan and other compensatory plans, programs or
arrangements, if any, shall vest and be paid in full, computed on the assumption
that 100% (or, if greater, the maximum percentage) of the targeted level of
Corporation's or the Executive's performance has been met, using the Date of
Termination as the valuation date;
(2) Except as otherwise determined by the Executive, the
period during which any stock options granted to the Executive under the Stock
Compensation Plan may be exercised shall be extended for an additional six
months following the end of the exercise period otherwise applicable to such
options;
(3) The Executive shall continue to participate in all
the Executive welfare benefit plans, including health and medical plans, for 18
months after
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termination upon payment to the Company of reimbursement of COBRA continuation
payments to maintain medical and dental insurance coverage and be entitled to
the use of one or more executive out-placement services, designated by the
Executive and paid for by the Corporation; and
(4) The Corporation shall pay the Executive in a lump
sum a "Severance Benefit" in cash equal to one (1) times the Executive's Total
Compensation as of the time of such termination. Such payment shall be made
within thirty (30) days following said termination. In the event of the
Executive's death, any amounts payable under this Agreement shall be paid to the
beneficiary (or beneficiaries) designated by the Executive and in such amounts
or proportions as the Executive shall so designate. If no beneficiary is
designated by the Executive or if none shall survive the Executive, then any
amounts payable under this Agreement shall be paid to the Executive's surviving
spouse, if any, or, if no such surviving spouse exists, to the Executive's
estate.
(b) Voluntary Termination, Termination for Cause or Expiration of
Active Employment Period
In case of a Voluntary Termination, a termination for Cause or
the expiration of the Initial Term or any extension thereof without renewal of
this Agreement, the Executive shall be entitled to his Basic Compensation
accrued to the Date of Termination and any benefits or awards vested prior to
such date, including, without limitation, his right to exercise any vested stock
options. Except as otherwise provided in this Agreement or under any employee
benefit plan maintained by the Corporation, the Corporation shall have no
further obligations to the Executive.
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(c) Retirement.
(i) Upon the Retirement of the Executive, the Executive shall
receive the payments set forth in Sections 3.3(a)(i), 3.3(a)(ii)(1), (2) and
(3). In addition, the Executive shall receive all retirement benefits he is
eligible to receive under the Corporation's employee benefit plans, subject to
the terms and conditions of such plans.
(ii) The Executive shall have the right in his sole discretion
after his Retirement to engage in regular employment (whether as an employee of
another entity or as a self-employed person) and shall have no obligation to
perform further services for the Corporation.
ARTICLE IV. Noncompetition
Section 4.1 Confidential Information. In the Executive's position of
responsibility with the Corporation he has access to, and familiarity with, all
of the business methods and confidential information of the Corporation and its
affiliates, including, but not limited to, its sales and promotion techniques
and information, its service and organizational techniques, carrier and platform
agreements or arrangements and distribution agreements and arrangements.
Therefore, in order to protect the business and good will of the Corporation,
the Executive shall be bound by the following provisions for the periods
prescribed below.
Section 4.2 Noncompetition. During the Active Employment Period, the
Executive shall not, without the prior written consent of the Corporation,
directly or indirectly engage in, or assist or have an active interest in
(whether as proprietor, partner, investor, shareholder, officer, director or any
type of principal whatsoever; provided that ownership of not more than 2% of the
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outstanding stock of a corporation traded on a national securities exchange or
quoted on NASDAQ shall not of itself be viewed as assisting or having an active
interest), or be employed by, or act as an agent for, advisor or consultant to,
any person, firm, partnership, association, corporation or business
organization, entity or enterprise that is, or is about to become, directly or
indirectly engaged in any business that competes substantially with, or is
substantially similar to, any business or proposed business of the Corporation
or any subsidiary or affiliate of the Corporation, provided that the
restrictions set forth in this Section 4.2 shall not apply to any geographical
area in which the Corporation or a subsidiary or affiliate of the Corporation
has not conducted any business, or has not had any business in the planning or
development stage, within one year prior to the date of the Executive's
activities otherwise referred to in this Section 4.2. Nothing in this Section
4.2 shall prohibit Executive from obtaining new employment or entering into any
new business relationship following this termination of this Agreement in
accordance with its terms.
Section 4.3 Corporate Opportunity. Except as to such actions within the
ordinary course of the Executive's employment by the Corporation which the
Executive in good faith believes to be in the best interests of the Corporation,
the Executive shall not at any time during his Active Employment Period, without
the prior written consent of the Corporation: (i) request or advise any
supplier, or other person, firm, partnership, association, corporation or
business organization, entity or enterprise having business dealings with the
Corporation or any subsidiary or affiliate of the Corporation to withdraw,
curtail or cancel such business dealings; or (ii) disclose to any competitor or
potential competitor of the Corporation or any subsidiary or affiliate of the
Corporation any trade secret, know-how or knowledge relating to costs, products,
equipment,
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merchandising and marketing methods, business plans, or research results used
by, or useful to, the Corporation or any subsidiary or affiliate of the
Corporation; or (iii) induce or attempt to influence any executive of the
Corporation or any subsidiary or affiliate of the Corporation to terminate, or
in any way violate the terms of, his or her employment.
ARTICLE V. Miscellaneous
Section 5.1 Enforceability.
If the scope of any provision of this Agreement is too broad to
permit enforcement of such provision to its fullest extent, then such provision
shall be enforced to the maximum extent permitted by applicable law, and, if
necessary, the scope of any such provision may be judicially modified (to the
extent necessary in any proceeding brought to enforce such provision) and
thereafter fully enforced.
Section 5.2 Remedies
The parties acknowledge that the remedy at law for any breach of any
of a party's obligations hereunder would be inadequate and consent to the
granting of temporary and permanent injunctive relief in any proceeding brought
to enforce any of such provisions without the necessity of proof of actual
damages; provided, however, that the foregoing shall not be construed to limit
any other right or remedy available to the Corporation or the Executive at law
or in equity, and all such rights and remedies shall be cumulative to the extent
permitted by applicable law, and the exercise of any one or more of such rights
or remedies shall be without prejudice to the exercise of any other such right
or remedy.
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Section 5.3 Assignment by the Executive; Successors
(a) This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) Except as is otherwise herein expressly provided, this Agreement
shall inure to the benefit of and be binding upon the Corporation, its
successors and assigns, and upon the Executive, his spouse, heirs, executors and
administrators, provided, however, that the obligations of the Executive
hereunder shall not be delegated.
(c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, "Corporation" shall mean
Corporation as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
Section 5.4 Waiver
Failure of either party hereto to insist upon strict compliance by
the other party with any term, covenant or condition hereof shall not be deemed
a waiver of such term, covenant or condition, nor shall any waiver or
relinquishment or failure to insist upon strict compliance of any right or power
hereunder at any one time or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
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Section 5.5 Notice
Any notice required or desired to be given pursuant to this
Agreement shall be sufficient if in writing sent by registered or certified mail
to the addresses hereinafter set forth above or to such other address as any
party hereto may designate in writing, transmitted by hand delivery or by
registered or certified mail to the other; provided, the failure by the
Executive to observe the notice provisions hereof shall not in any way limit,
reduce or effect the Executive's rights and benefits hereunder.
Section 5.6 Applicable Law
This Agreement shall be governed by the laws of the State of New
York, without regard to New York choice of law provisions.
Section 5.7 Arbitration.
Any dispute between the parties concerning the meaning or intent of
this Agreement, or any of its terms, shall be submitted to arbitration in New
York, New York to the American Arbitration Association in accordance with its
rules then in effect. The arbitration determination shall be final and binding.
Judgment upon any arbitration award may be entered in any court pf competent
jurisdiction.
Section 5.8 Taxes
The Corporation may deduct from all amounts paid under this
Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments.
Section 5.9 Entire Agreement
The parties hereto agree that this Agreement (together with, to the
extent benefits or rights are otherwise affected by this Agreement, any employee
benefit plan maintained or
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sponsored by the Corporation) contains the entire understanding and agreement
between them and supersedes all previous agreements and arrangements, if any,
relating to the employment of the Executive. This Agreement shall not be
amended, modified or supplemented in any respect except by an agreement in
writing signed by the Executive and the Corporation.
IN WITNESS WHEREOF, the Corporation and the Executive have duly
executed this Agreement as of the day and the year first above written.
DIGITEC 2000, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
EXECUTIVE
/s/ Xxxxxxx Xxxxxx Xxxxxx
--------------------------------------
Xxxxxxx Xxxxxx Xxxxxx
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TABLE OF CONTENTS
Page
ARTICLE I. Term and Duties................................................. -1-
Section 1.1 Term..................................................... -1-
Section 1.2 Duties................................................... -2-
ARTICLE II. Compensation................................................... -3-
Section 2.1 Basic Compensation....................................... -3-
Section 2.2 Signing Bonus............................................ -4-
Section 2.3 Annual Bonus............................................. -4-
Section 2.4 Stock Options............................................ -4-
Section 2.5 Incentive, Savings and Retirement Plans.................. -4-
Section 2.6 Welfare Benefit Plans.................................... -4-
Section 2.7 Expenses................................................. -5-
Section 2.8 Vacation................................................. -5-
Section 2.9 Total Compensation....................................... -5-
ARTICLE III. Termination of Employment..................................... -6-
Section 3.1 Events of Termination.................................... -6-
Section 3.2 Termination Procedures and Certain Definitions........... -7-
Section 3.3 Obligations of the Corporation on Termination............ -9-
ARTICLE IV. Noncompetition................................................ -11-
Section 4.1 Confidential Information................................ -11-
Section 4.2 Noncompetition.......................................... -11-
Section 4.3 Corporate Opportunity................................... -12-
ARTICLE V. Miscellaneous.................................................. -13-
Section 5.1 Enforceability.......................................... -13-
Section 5.2 Remedies................................................ -13-
Section 5.3 Assignment by the Executive; Successors................. -14-
Section 5.4 Waiver.................................................. -14-
Section 5.5 Notice.................................................. -15-
Section 5.6 Applicable Law.......................................... -15-
Section 5.7 Arbitration............................................. -15-
Section 5.8 Taxes................................................... -15-
Section 5.9 Entire Agreement........................................ -15-
(i)
