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Exhibit 10.7
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 1, 1995, between Xxxxxxxx Xxxxxxxxx (the
"Employee"), and Long Distance International Inc., a Florida corporation (the
"Corporation").
Preliminary Statements
A. The Corporation provides long distance and other telephone
services and conducts business in the telecommunications field.
B. The Employee has been instrumental in forming and organizing the
Corporation and its business and has extensive business experience in the field
of telecommunications.
C. The Corporation wishes to retain the Employee, and the Employee
wishes to be employed by the Corporation, on the terms and conditions set forth
in this Agreement.
In consideration of the foregoing and the terms, conditions and
mutual covenants contained in this Agreement, the parties hereby agree as
follows.
Section 1. Engagement
The Corporation hereby agrees to employ the Employee during the Term
of this Agreement (as defined below) and the Employee agrees to work for and be
employed by the Corporation during the Term, on the terms and subject to the
conditions contained in this Agreement.
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Section 2. Term
This Agreement shall have a term of effectiveness that shall begin
on July 1, 1995, shall terminate on June 30, 1998 and shall be subject to
extension and earlier termination as provided in this Agreement (such period of
effectiveness and any renewal term hereunder, the "Term"). At the end-of the
Term, this Agreement shall renew for successive one year periods unless either
party gives the other written notice of termination of this Agreement at least
120 days before the end of such a one-year renewal term.
Section 3. Position and Duties
During the Term, the Employee shall serve as Chairman and co-chief
executive officer of the Corporation with Xxxxx Xxxxxxxx or as the sole chief
executive officer if Xx. Xxxxxxxx shall cease to be employed in such capacity by
the Corporation. The Employee shall have and perform such additional or other
duties and responsibilities not inconsistent with such position and this
Agreement as may be prescribed from time to time by the Board of Directors of
the Corporation. The Employee shall carry out the policies and directives of the
Board of Directors of the Corporation and shall act in the interests of and on
behalf of the Corporation. He shall devote substantially all of his business
time and attention to his employment pursuant to this Agreement and to the
business of the Corporation.
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Section 4. Compensation
4.01. In consideration of the services to be rendered by the
Employee under this Agreement, the Corporation shall pay, and the Employee shall
be entitled to receive from the Corporation, the compensation provided for in
this Section 4, subject to the terms of this Agreement and the withholding and
other required deductions provided for in this Section. The Base Salary and
other compensation and benefits provided for herein may be increased by the
Board of Directors of the Corporation.
4.02. The Corporation shall pay the Employee a base salary during
the Term (the "Base Salary"), in equal installments every two (2) weeks or on
such other days as may be established by the Board of Directors of the
Corporation as the regular day for payment of salaries of employees of the
Corporation. The Base Salary shall be paid by the Corporation at the following
rates on account of the following periods, unless such salary is increased by
action of the Board of Directors of the Corporation:
(i) for the period from July 1, 1995 through June 30, 1996,
$108,000;
(ii) for the period from July 1, 1996 through June 30, 1997,
$120,000; and
(iii) for the period from July 1, 1997 through the end of the Term,
an annual Base Salary of $150,000.
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If any amount of Base Salary is not paid by the Corporation as provided in this
Section, or is not requested or demanded by the Employee, payment of such amount
of Base Salary shall not be deemed to be waived by the Employee but shall accrue
and remain due and payable by the Corporation promptly upon demand by the
Employee. The obligation of the Corporation to pay such amount to the Employee
shall remain in effect and binding on the Corporation. The obligation of the
Corporation to pay the Employee any Base Salary due on account of any period
during the Term shall survive any termination of this Agreement and shall remain
in effect after such termination.
4.03. The Employee shall have the right to participate in and to
receive compensation under any and all bonus, profit sharing and other
compensation arrangements or plans that may be established by the Corporation on
terms and in amounts that are commensurate with the chief executive position of
the Employee and that are not less favorable than the terms and amounts
conferred on any other employee, officer or director of the Corporation.
4.04. The Corporation shall have the right to deduct or withhold
from all compensation and benefits payable to the Employee under this Agreement
social security taxes, other federal, state and local taxes and all other
charges and amounts that shall be required by law to be deducted or withheld.
Section 5. Benefits
5.01. The Corporation shall pay the Employee a vehicle allowance of
$500 per month during the Term for use and maintenance of a vehicle used by the
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Employee in connection with the performance of his duties hereunder, including
costs of insurance, maintenance, mileage, fuel and repairs.
5.02. The Employee shall be entitled to participate in all benefits
that the Corporation may make available to its executive or administrative
employees, on terms no less favorable than are provided to such employees,
including all stock option, incentive, pension, retirement and benefits plans
and arrangements and all medical, disability, hospital, health and life
insurance plans and arrangements. The Employee and his wife and children shall
be entitled to participate in any group health insurance plans adopted or
maintained by the Corporation, on terms no less favorable than are provided to
other executive and administrative employees and their immediate families, as
such plans may be approved, modified and in effect from time to time.
5.03. If the Employee's employment by the Corporation or this
Agreement is terminated for any reason, the Employee shall have the right to
purchase from the Company any insurance policies on his life owned by the
Company for a price equal to the cash surrender value of the policies at the
date of termination, plus prepaid premiums. Such right shall be exercised by the
Employee by written notice to the Corporation given not later than sixty (60)
days after such termination. The purchase price for such policies provided for
in this Section 5.03 shall be paid by the Employee to the Corporation upon the
giving of such notice.
5.04. The Employee shall be entitled to take fifteen (15) business
days of vacation annually during the Term, with full payment of his salary and
other
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compensation and benefits by the Corporation under this Agreement during such
annual vacation. The Employee shall receive as paid days off all national
holidays that the Company recognizes and observes.
Section 6. Expenses
The Corporation shall reimburse the Employee for all reasonable and
necessary business expenses incurred by the Employee during the Term in the
furtherance of the Corporation's business pursuant to this Agreement, including
expenses of travel, meals, equipment, supplies and lodging.
Section 7. Termination
7.01. The Corporation shall have the right to terminate this
Agreement and the employment of the Employee hereunder for Cause (as defined in
this Section 7.01), upon sixty (60) days' prior written notice to the Employee.
"Cause" under this agreement shall mean any of the following:
(i) any material breach of this Agreement by the Employee or any
material and intentional illegal conduct by the Employee,
unless such breach or conduct is cured within such sixty (60)
day period;
(ii) any intentional and material act of fraud, embezzlement,
larceny or conversion by the Employee affecting the
Corporation; or
(iii) absence of the Employee from the performance of his duties
hereunder for more than ninety (90) consecutive business days,
other than absence caused by vacation, death or Disability of
the
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Employee and other than absence that occurs due to causes
beyond the control of the Employee that are deemed by the
Board of Directors of the Corporation, in its reasonable
discretion, to be reasonable causes for such absence.
7.02. The Corporation shall have the right to terminate this
Agreement and the employment of the Employee hereunder for Good Reason (as
defined in this Section 7.02), upon ninety (90) days' prior written notice to
the Employee. "Good Reason" hereunder shall mean any of the following:
(i) the death of the Employee, upon the occurrence of which the
Term of this Agreement shall terminate without any requirement
for the giving of written notice hereunder; or
(ii) any physical or mental incapacity, injury, disability or
illness of the Employee that shall give rise to any
substantial impairment of his effective performance of his
obligations or duties under this Agreement for any continuous
period of 180 days or that shall give rise to any absence of
the Employee from the performance of his duties or obligations
hereunder for any continuous period of 180 days (any such
physical or mental incapacity injury, disability or illness, a
"Disability").
7.03. (a) The Employee shall have the right to terminate this
Agreement and his employment hereunder in the event of the occurrence of any of
the following, by giving the Corporation thirty (30) days' prior written notice
of such
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termination:
(i) any material breach of this Agreement by the Corporation;
(ii) any death or Disability of the Employee; or
(iii) any Change of Control of the Corporation, as defined in
Section 7.03(b).
(b) If (i) any Change of Control (as defined below) shall occur at
any time during Employee's employment hereunder and (ii) the Employee shall not
vote in favor of such Change of Control as either a director or shareholder of
the Corporation, then Employee may by at least thirty (30) days prior written
notice to the Corporation given within six (6) months of the occurrence of such
Change of Control, elect to terminate his employment with the Corporation as of
the end of such thirty-day period or the end of such six-month period. If
Employee elects to terminate his employment pursuant to this Section 7.03(b),
the Corporation shall promptly pay him either (A) two and nine-tenths (2.9)
times his current annual compensation payable under Sections 4.02 and 4.03
within thirty (30) days of receipt of Employee's notice of termination, if a
majority of the Corporation's Board of Directors opposed the Change of Control,
or (B) two and one-half (2.5) times such current compensation within thirty (30)
days of receipt of Employee's notice of termination, if a majority of the
Corporation's Board of Directors voted in favor of the Change of Control;
provided, however, that this Section 7.03(b) shall not apply to any change in
control that the Employee votes in favor of either as an officer, director or
shareholder of the Corporation. The current compensation of the Employee for
purposes of this Section
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7.03(b) shall be deemed to be not less than $108,000 per annum for each period
during which the Employee was not paid reasonable compensation for his services
to the Corporation, in order to reflect reasonable compensation for such
periods. A "Change of Control" hereunder shall be deemed to be (x) a change in
ownership or effective control of the Corporation, as defined in the Code or the
regulations or proposed regulations promulgated thereunder or (y) a change in
ownership of a substantial portion of the assets of the Corporation, as defined
in the Code or the regulations or proposed regulations promulgated thereunder.
7.04. In the event of any termination of this Agreement under
Section 7.01, the Corporation shall pay the Employee all Base Salary and other
compensation, and shall continue to provide to the Employee all benefits
provided for in this Agreement, through the end of the sixty-day notice period
specified in Section 7.0l, which compensation and benefits shall be paid or
provided to the Employee at the times specified in Section 4.
7.05. In the event of the termination of this Agreement for any
reason specified in Sections 7.02 or 7.03(a)(ii), the Corporation shall pay to
the Employee or to his heirs; administrators or estate, twice the amount of all
Base Salary that would have been payable to the Employee through the end of the
Term during which such termination occurs. Such payment shall not be deemed to
be liquidated damages in connection with any breach by the Corporation of this
Agreement and shall not affect or be deemed to release or waive any other rights
or remedies of the Employee in connection with any such breach. All compensation
required to be paid on any
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termination of employment under this Section 7.05 shall be paid by the
Corporation to the Employee no later than the earlier of the end of the notice
period required in connection with such termination or sixty (60) days after the
death of the Employee.
7.06. In the event of any termination of this Agreement by the
Corporation without cause and without Good Reason or otherwise in breach of this
Agreement, the Corporation shall immediately pay the Employee an amount equal to
ten (10) times the compensation that would have been payable to the Employee
through the end of the Term under Sections 4.02 and 4.03 of this Agreement.
7.07. The Corporation shall pay all legal fees and expenses incurred
by the Employee in connection with any litigation or proceeding relating to the
payment of any compensation or amounts referred to in this Section, provided
that the Employee prevails in part or all of such litigation or proceeding.
Section 8. Miscellaneous
8.01. This Agreement shall be governed by and interpreted and
enforced in accordance with the law of the State of Florida applicable to
contracts negotiated, entered into and to be performed in that State, without
regard to the choice or conflicts of law principles of such State. The parties
hereto consent to the jurisdiction of the federal and state courts located in
Broward County, Florida over the parties hereto and over any disputes, actions,
proceedings or claims relating to or arising in connection with this Agreement.
8.02. If any part of this Agreement is held to be unenforceable or
invalid under, or in conflict with, the applicable law of any jurisdiction, then
the
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unenforceable, invalid or conflicting part shall be narrowed or replaced, to the
extent possible, by a judicial construction in such jurisdiction that
effectuates the intent of the parties regarding this Agreement and the
unenforceable, invalid or conflicting part, and such part shall be deemed to be
amended by such construction. Notwithstanding the unenforceability, invalidity
or conflict with applicable law of any part of this Agreement, the remaining
parts shall be valid, enforceable and binding on the parties.
8.03. This Agreement shall be binding upon, enforceable by and shall
inure to the benefit of each of the parties and their respective permitted
successors. This Agreement and all rights and obligations hereunder are personal
to the Employee and shall not be assignable or delegable, and any purported
assignment or delegation in violation hereof shall be null and void. Any person,
firm or corporation succeeding to the business of the Corporation by merger,
consolidation, purchase of assets or otherwise, shall assume by contract or
operation of law the obligations of the Company hereunder; provided, however,
that the Corporation shall, notwithstanding such assumption or assignment,
remain liable and responsible for the fulfillment of the terms and conditions of
the Agreement on the part of the Corporation.
8.04. This Agreement may be amended only by a writing signed by both
parties hereto. This Agreement constitutes the entire agreement among parties
hereto relating to the subject matter of this Agreement. Neither any failure nor
any delay on the part of any party to this Agreement in exercising any right,
power or privilege hereunder shall operate as a waiver of any rights of any such
party, unless
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such waiver is explicitly expressed by a writing executed by such party and
delivered to the other parties, nor shall a single or partial exercise of any
right preclude any other or further exercise of any other right, power or
privilege accorded to any party to this Agreement.
8.05. (a) All notices permitted or required hereunder shall be in
writing and shall be delivered by hand, by recognized, national, overnight
courier or by deposit in the United States mail, postage prepaid, by registered
or certified mail, return receipt requested, addressed to the Corporation or the
Employee, as the case may be, at the address of such party set forth below:
(i) if to the Corporation to:
Long Distance International Inc.
000 Xxxxx Xxxxxxx Xxxxxx - Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chairman and President
(ii) if to the Employee to:
Xxxxxxxx Xxxxxxxxx
0000 Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
(b) Notices given by mail shall be deemed effective on the earlier
of the date shown on the proof of receipt of such mail or, unless the recipient
proves that the notice was received later or not received, three (3) days after
the date of mailing thereof. Other notices shall be deemed given on the date of
receipt. Any party hereto may change the address specified above by written
notice to the other parties hereto.
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8.06. The headings appearing in this Agreement are for convenience
in reference only and shall not affect the meaning or interpretation of this
Agreement.
8.07. This Agreement may be-executed in multiple counterpart copies,
each of which shall be considered an original and all of which shall be deemed
to be one and the same agreement.
8.08. The provisions of Sections 7 and 8.01 of this Agreement shall
survive any termination of this Agreement and shall remain in effect after any
such termination.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.
LONG DISTANCE INTERNATIONAL INC.
By
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Xxxxx Xxxxxxxx, President
EMPLOYEE
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Xxxxxxxx Xxxxxxxxx
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