AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is made
effective as of this 1st day of June 1999 between COMMUNICATION TELESYSTEMS
INTERNATIONAL, a California Corporation, having its principal office at 0000
Xxxxxx Xxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, (hereinafter referred to as
"CTS") and XXXXXXX XXXXXXX (hereinafter referred to as "Employee").
In consideration of the mutual promises of the parties hereto, and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT: The parties agree that the terms of this Agreement shall
govern Employee's employment by CTS effective as of June 1, 1999 (the
"Effective Date").
2. GENERAL DUTIES OF EMPLOYEE: Employee shall have the title of Senior
Vice-President Chief Financial Officer. Employee shall perform such duties as
requested by CTS and, upon request, serve on the Board of Directors of CTS
and/or its subsidiaries and affiliates.
3. CONDUCT OF EMPLOYEE: Employee shall use his best efforts to promote
the interests of CTS and shall refrain from any acts which may adversely
affect the reputation or business of CTS. Employee shall adhere to all laws
and ethical standards applicable to his conduct as an Employee for CTS, shall
abide by and observe all rules, regulations and policies of CTS presently in
effect and any amendments and additions thereto made from time to time and
shall perform in a manner consistent with generally accepted procedures for
his profession.
4. COMPENSATION: As Employee's sole and complete compensation, CTS will
pay to Employee, subject to the conditions and limitations set forth in this
Agreement and all applicable withholding requirements and authorized
deductions, the following compensation:
(a) SALARY: CTS shall pay Employee a salary of Eighteen Thousand
Three Hundred Thirty Three Dollars and Thirty Three Cents ($18,333.33) per
month.
(b) HEALTH INSURANCE: Employee shall participate in such medical
programs or plans that are generally available to employees of CTS.
(c) VACATION: Employee shall receive fifteen (15) days of paid
vacation per year.
(d) BONUS: Employee shall be eligible to earn the bonus set forth on
Addendum "A" hereto.
5. ADVANCES: CTS may, in its sole discretion, make payments to Employee
as advances on compensation expected to become earned pursuant to this
Agreement. Employee agrees that each such advance constitutes a personal
indebtedness of Employee to CTS, repayable by Employee in full immediately
upon demand by CTS, until such time as the compensation on which the advance
is made becomes fully earned.
6. RECORDS TO REMAIN PROPERTY OF CTS: All records of CTS, all records
pertaining or relating to clients of CTS, and all records and documents
prepared or generated by Employee, CTS or any other person or entity in
connection with the performance of Employee under this Agreement, including
but not limited
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to account cards, invoice copies, customer lists, leads and all
documents containing the names or addresses of or information relating to
clients who have done business with CTS, are and shall remain the property of
CTS at all times during the term of Employee's employment with CTS, and after
termination of such employment for any reason. None of such records, nor any
part of them may be used by Employee either in original form or in
computerized, duplicated, or copied form except for the purpose of conducting
the business of CTS and the names, addresses, and other information and data
in such records are not to be transmitted verbally, in writing, or in
computerized form by Employee except in the ordinary course of conducting
business for CTS. All of said records or any part of them are the sole
proprietary information of CTS and shall be treated by Employee as
confidential information of CTS. In the event of the termination of
Employee's employment with CTS for any reason, Employee shall return to CTS
all such records and any copies or summaries thereof in computerized,
duplicated, copied or any other form.
7. LIMITATIONS ON EMPLOYEE'S USE OF PROPRIETARY INFORMATION: Employee
shall not at any time, or in any manner, directly or indirectly divulge,
disclose or communicate to any other person, firm or corporation, nor shall
Employee use for his own benefit other than in connection with the performance
of Employee's duties under this Agreement: (i) any of the names, addresses,
telephone numbers of or other data relating to clients of CTS, prospective
customers of CTS or persons, firms or corporations to whom Employee may have
provided services in his capacity as a representative of CTS or to whom other
representatives of CTS have provided such services at any time; (ii) any of
the records or documents referred to in Paragraph 6 of this Agreement; or
(iii) any other information acquired by Employee as a consequence of his
employment with CTS.
8. INVENTIONS: All improvements, discoveries, inventions, designs,
documents or other data related to the Company's business (whether or not
deemed patentable) conceived, developed, made, perfected, acquired, or first
reduced to practice, in whole or in part, during off-duty hours and away from
the Company's premises as well as in the regular course of employment by
Employee during development and research, of the Company or its subsidiaries
and affiliates shall be promptly disclosed to the Company, and Employee shall
hereby assign and transfer his right, interest and title thereto and such
improvements, discoveries, inventions, designs, documents, or other data
shall become the property of the Company. During the term of Employee's
employment and anytime thereafter, upon request of the Company, Employee will
join and render assistance in any proceedings, and execute any papers
necessary to file and prosecute applications for, and to acquire, maintain
and enforce letters, patent, trademarks, registrations and/or copyrights,
both domestic and foreign, with respect to such improvements, discoveries,
inventions, designs, documents, or other data as required for vesting title
to same in the Company.
9. COMPENSATION AFTER TERMINATION OF EMPLOYMENT: Except as otherwise
expressly provided in any written option agreement or plan, Employee shall
have no further right to salary or any other compensation after termination
of Employee's employment with CTS, irrespective of the time, manner or cause
of such termination.
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10. TERMINATION OF EMPLOYMENT:
(a) EXCEPT AS EXPRESSLY PROVIDED IN PARAGRAPH 10(b) BELOW EMPLOYEE
AND CTS SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINATE EMPLOYEE'S EMPLOYMENT
WITH CTS, WITH OR WITHOUT CAUSE, BY WRITTEN NOTIFICATION TO THE OTHER PARTY;
(b) In the event that CTS terminates the employment of employee
other than for "cause" as defined below, CTS shall, at its option, either:
(i) provide Employee with at least ninety (90) days advance notice of such
termination; or (ii) pay Employee a severance payment in the amount of Fifty
Thousand Dollars ($50,000.00). As used herein "cause" shall mean personal
dishonesty, incompetence, willful misconduct, abandonment of employment or
extensive absences, conflict of interest or breach of fiduciary duty
involving intent for or obtainment of material personal or family profit,
violation of any law rule or regulation (other than minor traffic offenses
or the like), a court order prohibiting Employee's continued employment with
CTS, a final cease-and-desist order issued by a regulatory agency, or a
material breach by Employee of any provision of this Agreement which is not
cured within ten (10) days after written notice thereof is provided to
Employee by CTS.
11. ASSIGNMENT: Neither this Agreement nor any other benefits to
accrue hereunder shall be assigned or transferred by Employee, either in
whole or in part (except a transfer effective upon the death of Employee of
any payments due hereunder), without the written consent of CTS, and any
purported assignment in violation hereof shall be void.
12. INDEMNITY: CTS and Employee shall have such indemnity rights and
obligations as provided by California law. Additionally, CTS and Employee
shall indemnify, defend and hold harmless each other from, against and with
respect to any claim, liability, obligation, loss, damage, assessment,
judgement, cost or expense (including without limitation, reasonable
attorneys' fees and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim), in any action, suit, proceeding or demand, of any kind or character,
arising out of or in any manner, incident, relating or attributable to any
breach of this Agreement.
13. CHOICE OF LAW: This Agreement is executed and intended to be
performed in the State of California and the laws of the State of California
shall govern its interpretation and effect.
14. PARTIAL INVALIDITY: If any term, provision, covenant, or condition
of this Agreement is held by a Court of competent jurisdiction to be invalid,
void or unenforceable, the rest of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. In the
event any provision contained in Paragraphs 6, 7 or 8 of this Agreement should
ever be deemed to exceed the law in any respect, then the parties hereto agree
that such provision shall be amended automatically to provide CTS with the
maximum protection permitted by law.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties concerning the subject matter of this Agreement. It
supersedes all negotiations, statements, promises, or understandings, if any,
made prior to the execution of this Agreement. Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.
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16. GENDER: As used in this Agreement, the masculine, feminine or neuter
gender, and the singular or plural number, shall each be deemed to include
the others whenever the context so indicates.
17. OUTSIDE EMPLOYMENT: During the term of Employee's employment with
CTS, Employee shall not engage in any other employment or outside business
activity without the prior written consent of CTS.
18. VENUE: The venue of any civil action, arbitration or other legal
proceeding between Employee, on one hand, and CTS and/or its officers,
directors and employees, on the other hand, arising out of or relating to
this Agreement, the employment of Employee by CTS, the termination of
Employee's employment with CTS, or any other dealings between Employee and
CTS, lies only in San Diego, California, and Employee and CTS waive any right
they may have under any statute or law to cause such action or proceeding to
be transferred to any other venue.
19. AMENDMENT AND WAIVER: The terms of this Agreement may be amended,
modified or eliminated, or the observance or performance of any term,
covenant or provision herein may be omitted or waived (either generally or in
a particular instance, and either prospectively or retroactively) only by a
writing signed by Employee and CTS. The waiver by CTS of any breach by
Employee of any term or provision of this Agreement shall not be construed as
a waiver of any subsequent breach.
20. SURVIVAL OF PROVISIONS: The provisions contained in Paragraphs 6, 7,
8, 12, 18, 24 and 25 of this Agreement, and the other provisions hereof to
the extent applicable, shall survive the termination of Employee's employment
with CTS.
21. INUREMENT: This Agreement shall be binding upon and inure to the
benefit of all heirs, assigns (to the extent permitted) and successors in
interest of the parties hereto.
22. HEADLINES: The titles and headlines herein are for convenience only
and shall not be used to interpret this Agreement.
23. EFFECTIVE DATE: This Agreement shall be effective as of the date
written on the first page hereof.
24. ARBITRATION: Any claim or controversy arising out of or relating to
this Agreement or any dealings between Employee, on one hand, and CTS and/or
CTS' officers, directors, employees or agents, on the other hand, shall be
settled before J.A.M.S/ENDISPUTE ("JAMS") in accordance with the then
obtaining Comprehensive Arbitration Rules and Procedures of JAMS, as modified
herein. The arbitrator may not limit, expand or otherwise modify the terms of
this Agreement. The award in such arbitration proceeding may be entered in
any Court of competent jurisdiction specified in paragraph 18 of this
Agreement.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK]
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IT IS SO AGREED:
THIS IS A BINDING LEGAL AGREEMENT WHICH SETS FORTH THE TERMS AND
CONDITIONS OF YOUR EMPLOYMENT, INCLUDING COMPENSATION MATTERS.
READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT.
THIS AGREEMENT ALSO CONTAINS AN ARBITRATION AGREEMENT, WHICH YOU
SHOULD STUDY CAREFULLY. ARBITRATION IS GENERALLY FINAL AND BINDING
ON THE PARTIES. BY AGREEING TO ARBITRATION, YOU ARE WAIVING YOUR
RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY
TRIAL. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND
DIFFERENT FROM COURT PROCEEDINGS. ADDITIONALLY, THE ARBITRATORS'
AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND ANY PARTY'S RIGHT TO APPEAL OR SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxx
------------------------------
(Signature)
XXXXXXX XXXXXXX
-----------------------------
(PRINT NAME)
CTS:
Communication TeleSystems International
By:/s/ Xxxxxx X. Xxxxx
--------------------------
Its: Executive Vice President
-------------------------
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ADDENDUM "A"
TO EMPLOYMENT AGREEMENT OF XXXXXXX XXXXXXX
1. Employee shall be eligible to earn Bonus Payments of up to One
Hundred Fifty Thousand Dollars ($150,000.00) (the "Bonus Payments") during
the period from June 1, 1999 through May 30, 2000 (the "Bonus Period").
2. The following general terms and conditions apply to each of the
bonus incentives provided herein:
(A) In order to earn a Bonus Payment, the event which gives rise to
payment entitlement must actually occur and be completed during the
Bonus Period. With respect to the raising of equity, consummation of an
liquidity event or public offering and the arrangement of a strategic
partner investment, the event must actually close and fund during the
Bonus Period in order for Employee to earn the bonus compensation.
(B) With respect to each of the bonus incentives listed below, no Bonus
Payment will be earned unless Employee was still actually employed by
CTS on the date or within sixty (60) days prior to the date when the
event which gives rise to the bonus compensation was completed (i.e.,
the date of the actual close of the liquidity event). In the event that,
for any reason, Employee is terminated more than sixty (60) days prior
to the completion of the event, Employee will not be entitled to any
Bonus Payment or other compensation on account thereof, notwithstanding
the fact that Employee may have devoted substantial time and effort
thereto prior to the termination of his employment.
(C) Any and all Bonus Payments earned by Employee will be due and
payable by CTS to Employee when earned, except that CTS may, in its
discretion, withhold from Bonus Payments for the duration of the Bonus
Period the sum of Forty Thousand Dollars ($40,000.00) as a reserve with
respect to the Foothill Default contingency described in Section 3(D)
below.
(D) Nothing in this bonus program shall in any way alter the at-will
nature of Employee's employment with CTS.
(E) In all cases, CTS shall have sole and absolute discretion with
respect to whether or not to enter into any equity sale, liquidity
event, public offering, strategic partner arrangement or other
transaction which would make Employee eligible for a Bonus Payment. In
the event that CTS determines, for any reason in its sole discretion, not
to consummate any proposed transaction Employee shall not be entitled to
any Bonus Payment or other compensation on account thereof.
3. Employee shall earn a Bonus Payment in the amount specified below,
upon the successful completion of the events listed below prior to the end of
the Bonus Period:
(A) Employee will earn a bonus payment in the amount of Ten Thousand
Dollars ($10,000) for each $5 million of equity (as opposed to debt)
raised by CTS during the Bonus Period, from sources other than, Xxx
Xxxxxxx, Atocha, L.P., Telecom Venture Group, Xxxx Xxxxxxxx, Gold &
Xxxxx Transfer S.A., Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxx Xxxxxxxx or any of
their affiliates (the "Excluded Investors") or an initial public
offering. The maximum bonus which Employee may earn under this
sub-paragraph 3(A) is Thirty Thousand Dollars ($30,000).
(B) Employee will earn a bonus payment in the amount of Ten Thousand
Dollars ($10,000) for each $5 million of new capital leasing capacity
obtained and utilized by CTS during the Bonus Period. The maximum bonus
which may be earned by Employee under this sub-paragraph 3(B) is Thirty
Thousand Dollars ($30,000).
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(C) Employee will earn a Bonus Payment in the amount of Twenty-Five
Thousand Dollars ($25,000.00) in the event of a consummation of a
successful public offering of the common stock of CTS or the
consummation of a merger of CTS into public company, prior to the end of
the Bonus Period.
(D) Employee shall earn a bonus payment in the amount of Twenty
Thousand Dollars ($20,000.00) if an event of default does not occur at
any time during the Bonus Period with respect to the Loan and Security
Agreement with Foothill Capital Corporation or any replacement facility
("Foothill Default"). In the event, however, that an event of default
does occur at any time during the Bonus Period under such Loan and
Security Agreement, the amount of Forty Thousand Dollars ($40,000.00)
shall be deducted from any other Bonus Payment compensation earned by
Employee pursuant to this Addendum. For purposes of this provision, an
event of default shall be as defined in the Loan and Security Agreement,
and shall be deemed to have occurred regardless of whether or not
Foothill waives the default or elects to enforce available remedies.
(E) Employee shall earn a Bonus Payment in the amount of Twenty-Five
Thousand ($25,000.00) if CTS, on a consolidated basis calculated
according to generally accepted accounting principals consistently
applied, reports a net after-tax loss not to exceed $61,000,000 for the
fiscal year ending September 30, 1999.
(F) Employee will earn a Bonus Payment of Twenty Thousand Dollars
($20,000.00) upon the consummation of a business transaction with a
strategic partner engaged in the telecommunications business (other than
the Excluded Investors), which results in investment by such strategic
partner of at least $25 million in CTS during the Bonus Period.
(G) Employee will earn a Bonus of Twenty Thousand ($20,000) upon
delivery to CTS of an unqualified opinion without a going concern
exception in the opinion, by its independent auditors for the financial
statements for the fiscal year ending September 30, 1999.
IT IS SO AGREED:
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxx
-----------------------------
(Signature)
XXXXXXX XXXXXXX
-----------------------------
(PRINT NAME)
CTS:
Communication TeleSystems International
By:/s/ Xxxxxx X. Xxxxx
--------------------------
Its: Executive Vice President
-------------------------
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