1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT effective as of the 1st day of
October, 1996, by and between NACT TELECOMMUNICATIONS, INC. ("NACT" or the
"Corporation"), a Utah corporation with its principal offices at 000 Xxxx 000
Xxxxx, Xxxx, Xxxx 00000 and Xxxxxxxx Xxxxx, residing at 000 X. Xxxxxxx Xxxxxx,
Xxxxxx, Xxxx 00000 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Corporation desires to employ Executive, and
Executive desires to undertake such employment, upon the terms and subject to
the conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Employment of Executive. The Corporation hereby employs
Executive as its Vice President of Sales and Marketing to perform the duties and
responsibilities incident to such position, subject at all times to the control
and direction of the Board of Directors of the Corporation (the "Board") and the
Chief Executive Officer of the Corporation.
2. Acceptance of Employment; Time and Attention. Executive
hereby accepts such employment and agrees that throughout the period of his
employment hereunder, except as hereinafter provided, he will devote
substantially all his time, attention, knowledge and skills, faithfully,
diligently and to the best of his ability, in furtherance of the business of the
Corporation, and
2
will perform the duties and responsibilities assigned to him pursuant to
Paragraph 1 hereof, subject, at all times, to the direction and control of the
Board [and the Chief Executive Officer of the Corporation]. As an executive
officer, Executive shall perform such specific duties and shall exercise such
specific authority related to the management of the day-to-day operations of the
Corporation consistent with his position as Vice President of Sales and
Marketing as may be assigned to Executive from time to time by the Board and the
Chief Executive Officer of the Corporation. Executive shall at all times be
subject to, observe and carry out such rules, regulations, policies, directions
and restrictions as the Corporation shall from time to time establish. During
the period of his employment hereunder, Executive shall not, directly or
indirectly, accept employment or compensation from, or perform services of any
nature for, any business enterprise other than the Corporation. Notwithstanding
the foregoing, the Corporation acknowledges that Executive proposes to engage in
charitable activities and such engagement shall not constitute a breach of this
Agreement. Executive shall be elected to such offices of the Corporation as may
from time to time be determined by the Board. During the period of Executive's
employment hereunder, he shall not be entitled to additional compensation for
serving in any offices of the Corporation to which he is elected or appointed.
3. Term. Except as otherwise provided herein, the term of
Executive's employment hereunder shall commence as of October 1,
-2-
3
1996 and shall continue to and include the 30th day of September, 1999.
4. Compensation. As compensation for his services hereunder,
the Corporation shall pay to Executive (i) a base salary at the rate of $74,400
per annum, or such greater amount as may be determined from time to time by the
Board, payable in equal installments no less frequently than semi-monthly, (ii)
sales commissions at rates to be determined by the Corporation and Executive and
(iii) such incentive compensation and bonuses as the Board may from time to time
determine to award Executive. All compensation paid to Executive shall be
subject to withholding and other employment taxes imposed by applicable law.
5. Additional Benefits. In addition to such base salary and
any incentive compensation and bonuses awarded Executive, he (and his family)
shall be entitled to participate, to the extent he is (and they are) eligible
under the terms and conditions thereof, in any profit sharing, pension,
retirement, hospitalization, insurance, disability, medical service, stock
option, bonus or other employee benefit plan available to the executive officers
of the Corporation that may be in effect from time to time during the period of
Executive's employment hereunder. The Corporation shall be under no obligation
to institute or continue the existence of any such employee benefit plan.
6. Reimbursement of Expenses. The Corporation shall reimburse
Executive in accordance with applicable policies of the Corporation for all
expenses reasonably incurred by him in
-3-
4
connection with the performance of his duties hereunder and the business of the
Corporation, upon the submission to the Corporation of appropriate receipts or
vouchers.
7. Facilities and Personnel. Executive shall be provided a
private office, secretarial services and such other facilities, supplies,
personnel and services as shall be required or reasonably requested for the
performance of his duties hereunder.
8. Vacation. Executive shall be entitled to four weeks' paid
vacation in respect of each 12-month period during the term of his employment
hereunder, such vacation to be taken at times mutually agreeable to Executive
and the Board. Vacation time shall not be cumulative from one 12-month period to
the next, but Executive shall receive vacation pay at the then current salary
rate for any vacation time not taken by him.
9. Restrictive Covenant. In consideration of his employment
hereunder, Executive agrees that during the period of his employment hereunder
and, in the event of termination of this Agreement (i) by Executive otherwise
than for Employer Breach (as such term is defined herein) or (ii) by the
Corporation for Cause (as such term is defined herein), for a further period
ending on the earlier of two years after such termination or September 30, 1999,
he will not (a) directly or indirectly own, manage, operate, join, control,
participate in, invest in, or otherwise be connected with, in any manner,
whether as an officer, director, employee, partner, investor or otherwise, any
business entity that is engaged
-4-
5
in the design, development, manufacturing of advanced telecommunications
switching platforms, the provision of facilities management and network carrier
services and the provision of long distance or other telecommunications services
or in any other business in which the Corporation is engaged during such period,
(1) in all locations in which the Corporation is doing business, and (2) in all
locations in respect of which the Corporation is actively planning for and/or
pursuing a business opportunity, whether or not the Corporation has theretofore
has submitted any bids, (b) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of the Corporation for
the purpose of soliciting, diverting or taking away any customer from the
Corporation (1) in all locations in which the Corporation is doing business, and
(2) in all locations in respect of which the Corporation is actively planning
for and/or pursuing a business opportunity, whether or not the Corporation,
theretofore has submitted any bids, or (c) induce, influence or seek to induce
or influence any person engaged as an employee, representative, agent,
independent contractor or otherwise by the Corporation, to terminate his or her
relationship with the Corporation. Nothing herein contained shall be deemed to
prohibit Executive from (x) investing his funds in securities of an issuer if
the securities of such issuer are listed for trading on a national securities
exchange or are traded in the over-the-counter market and Executive's holdings
therein represent less than 2% of the total number of shares or principal amount
of the securities of such
-5-
6
issuer outstanding, or (y) owning securities, regardless of amount, of
Corporation.
Executive acknowledges that the provisions of this Paragraph 9
are reasonable and necessary for the protection of the Corporation, and that
each provision, and the period or periods of time, geographic areas and types
and scope of restrictions on the activities specified herein are, and are
intended to be, divisible. In the event that any provision of this Paragraph 9,
including any sentence, clause or part hereof, shall be deemed contrary to law
or invalid or unenforceable in any respect by a court of competent jurisdiction,
the remaining provisions shall not be affected, but shall, subject to the
discretion of such court, remain in full force and effect and any invalid and
unenforceable provisions shall be deemed, without further action on the part of
the parties hereto, modified, amended and limited to the extent necessary to
render the same valid and enforceable.
10. Confidential Information. Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all information, knowledge
and data relating to or concerned with its operations, sales, business and
affairs, and he shall not, at any time, use, disclose or divulge any such
information, knowledge or data to any person, firm or corporation (unless the
Corporation no longer treats such information as confidential) other than to the
Corporation or its designees and employees or except as may otherwise be
required in connection with the business and affairs of the Corporation;
provided, however, that Executive may use,
-6-
7
disclose or divulge such information, knowledge or data that (i) was known to
Executive at the commencement of his employment by the Corporation; (ii) is or
becomes generally available to the public through no wrongful act on Executive's
part; or (iii) becomes available to Executive from a person or entity other than
the Corporation or its agents not bound by this or a similar agreement with the
Corporation; and provided, further, that the provisions of this Paragraph 10
shall not apply to Executive's know how to the extent utilized by him in
subsequent employment so long as such employment is not in breach of this
Agreement.
11. Equitable Relief. The parties hereto acknowledge that
Executive's services are unique and that, in the event of a breach or a
threatened breach by Executive of any of his obligations under this Agreement,
the Corporation will not have an adequate remedy at law. Accordingly, in the
event of any such breach or threatened breach by Executive, the Corporation
shall be entitled to such equitable and injunctive relief as may be available to
restrain Executive and any business, firm, partnership, individual, corporation
or entity participating in such breach or threatened breach from the violation
of the provisions hereof. Nothing herein shall be construed as prohibiting the
Corporation from pursuing any other remedies available at law or in equity for
such breach or threatened breach, including the recovery of damages and the
immediate termination of the employment of Executive hereunder.
-7-
8
12. Survival of Provisions; Death. Neither the termination of
this Agreement, nor of Executive's employment hereunder, shall terminate or
affect in any manner any provision of this Agreement that is intended by its
terms to survive such termination.
In the event of termination of Executive's employment
hereunder by reason of his death, the Corporation shall pay a benefit (the
"Benefit Payment") to such person or persons as Executive shall, at his option,
from time to time designate by written instrument delivered to the Corporation,
each subsequent designation to revoke all prior designations, or if no such
designation is made, to Executive's estate (the "Payment Beneficiary"). The
Benefit Payment shall be in an amount equal to one and one-half times
Executive's then current base salary, and shall be payable to the Payment
Beneficiary in equal quarterly installments over a period of one and one-half
years, provided that if the Corporation then maintains a life insurance policy
on the life of Executive under which they are the beneficiary, the amount of the
death benefit payable thereunder, to a maximum amount equal to the Benefit
Payment, less installments of the Benefit Payment theretofore paid, shall be
paid to the Payment Beneficiary on the Benefit Payment installment payment date
next succeeding the date on which the Corporation receives such death benefit
proceeds and the remainder of the Benefit Payment, if any, shall be paid in
equal quarterly installments as provided above.
-8-
9
13. Disability. In the event that during the term of his
employment by the Corporation Executive shall become Disabled (as such term is
hereinafter defined) he shall continue to receive the full amount of the base
salary to which he was theretofore entitled for a period of six months after he
shall be deemed to have become Disabled (the "First Disability Payment Period").
If the First Disability Payment Period shall end prior to September 30, 1999,
Executive thereafter shall be entitled to receive salary at an annual rate equal
to one-half of his then current base salary for a further period ending on the
earlier of (i) one year thereafter, or (ii) September 30, 1999, (the "Second
Disability Payment Period"). Upon the expiration of the Second Disability
Payment Period, Executive shall not be entitled to receive any further payments
on account of his base salary until he shall cease to be Disabled and shall have
resumed his duties hereunder and provided that the Corporation shall not have
theretofore terminated this Agreement as hereinafter provided. The Corporation
may terminate this Agreement and Executive's employment hereunder at any time
after Executive is Disabled, upon at least 10 days' prior written notice. For
the purposes of this Agreement, Executive shall be deemed to have become
Disabled when (x) by reason of physical or mental incapacity, Executive is not
able to perform a substantial portion of his duties hereunder for a period of
135 consecutive days or for 135 days in any consecutive 225-day period or (y)
when Executive's physician or a physician designated by the Corporation shall
have determined that Executive shall not be able,
-9-
10
by reason of physical or mental incapacity, to perform a substantial portion of
his duties hereunder. In the event that Executive shall dispute any
determination of his Disability pursuant to clauses (x) or (y) above, the matter
shall be resolved by the determination of three physicians qualified to practice
medicine in the United States of America, one to be selected by each of the
Corporation and Executive and the third to be selected by the designated
physicians. If Executive shall receive benefits under any disability policy
maintained by the Corporation, the Corporation shall be entitled to deduct the
amount equal to the benefits so received from base salary that it otherwise
would have been required to pay to Executive as provided above.
14. Termination for Cause. The Corporation may at any time
upon written notice to Executive terminate Executive's employment for Cause. For
purposes of this Agreement, the following shall constitute Cause: (i) the
willful and repeated failure of Executive to perform any material duties
hereunder or gross negligence of Executive in the performance of such duties,
and if such failure or gross negligence is susceptible of cure by Executive, the
failure to effect such cure within 20 days after written notice of such failure
or gross negligence is given to Executive; (ii) excessive use of alcohol or
illegal drugs interfering with the performance of Executive's duties hereunder;
(iii) theft, embezzlement, fraud, misappropriation of funds, other acts of
dishonesty or the violation of any law or ethical rule relating to Executive's
employment; (iv) the conviction of a felony
-10-
11
or other crime involving moral turpitude by Executive; or (v) the breach by
Executive of any other material provision of this Agreement, and if such breach
is susceptible of cure by Executive, the failure to effect such cure within 30
days after written notice of such breach is given to Executive. For purposes of
this Agreement, an action shall be considered "willful" if it is done
intentionally, purposely or knowingly, distinguished from an act done
carelessly, thoughtlessly or inadvertently. In any such event, Executive shall
be entitled to receive his base salary to and including the date of termination.
Should Executive in good faith dispute his termination for cause, he shall give
prompt written notice thereof to the Corporation, in which event such dispute
shall be submitted to and determined by arbitration in San Francisco, California
before an arbitrator appointed pursuant to the rules of the American Arbitration
Association (the "Arbitrator"). Such arbitration shall be conducted in
accordance with such rules as shall be promulgated by the Arbitrator, which may
include any or all of the rules then obtaining of the American Arbitration
Association. Any award or decision of the Arbitration shall be conclusive in the
absence of fraud and judgment thereon may be entered in any court having
jurisdiction thereof. The costs of such arbitration shall be borne by the party
against whom any award or decision is rendered. Executive shall not be entitled
to receive any compensation for periods subsequent to his dismissal pursuant to
this Xxxxxxxxx 00.
-00-
00
00. Termination for Employer Breach. Executive may upon
written notice to the Corporation terminate this Agreement (a termination for
"Employer Breach") in the event of the breach by the Corporation of any material
provision of this Agreement and if such breach and is susceptible of cure, the
failure to effect such cure within 30 days after written notice of such breach
is given to the Corporation.
16. Insurance Policies. The Corporation shall have the right
from time to time to purchase, increase, modify or terminate insurance policies
on the life of Executive for the benefit of the Corporation, in such amounts as
the Corporation shall determine in their sole discretion. In connection
therewith, Executive shall, at such place or places as the Corporation may
reasonably direct, submit himself to physical examinations on an annual basis
(or more frequently) should an insurer or prospective insurer so require, and
execute and deliver such documents as the Corporation may deem necessary to
obtain such insurance policies.
17. Entire Agreement; Amendment. This Agreement constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and any other prior agreement between the Corporation and Executive with
respect to the subject matter hereof is hereby superseded and terminated
effective immediately and shall be without further force or effect. No amendment
or modification himself shall be valid or binding unless made in writing and
signed by the party against whom enforcement thereof is sought.
-12-
13
18. Notices. Any notice required, permitted or desired to be
given pursuant to any of the provisions of this Agreement shall be deemed to
have been sufficiently given or served for all purposes if delivered in person
or by responsible overnight delivery service or sent by certified mail, return
receipt requested, postage and fees prepaid as follows:
If to the Corporation, at the address set forth
above, Attention: Chief Executive Officer, with a
copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
If to Executive, at his address set forth above. Any of
the parties hereto may at any time and from time to time change the address to
which notice shall be sent hereunder by notice to the other parties given under
this Paragraph 18. The date of the giving of any notice hand delivered or
delivered by responsible overnight carrier shall be the date of its delivery and
of any notice sent by mail shall be the date five days after the date of the
posting of the mail.
19. No Assignment; Binding Effect. Neither this Agreement, nor
the right to receive any payments hereunder, may be assigned by Executive or the
Corporation without the prior written consent of the other parties hereto. This
Agreement shall be binding upon Executive, his heirs, executors and
administrators and upon the Corporation, their respective successors and
permitted assigns.
-13-
14
20. Waivers. No course of dealing nor any delay on the part of
the Corporation in exercising any rights hereunder shall operate as a waiver of
any such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
21. Invalidity. If any clause, paragraph, section or part of
this Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
22. Further Assurances. Each of the parties shall execute such
documents and take such other actions as may be reasonably requested by the
other party to carry out the provisions and purposes of this Agreement in
accordance with its terms.
23. Attorneys' Fees. If any action, suit or proceeding is
filed by any party to enforce or rescind this Agreement or otherwise with
respect to the subject matter of this Agreement, the party prevailing on an
issue shall be entitled to recover with respect to such issue, in addition to
costs, reasonable attorneys' fees incurred in preparation or in prosecution or
defense of such action, suit or proceeding as fixed by the arbitrator or trial
court, and if any appeal is taken from the decision of the trial court,
reasonable attorneys' fees as fixed on appeal.
-14-
15
24. Governing Law. This Agreement shall be governed,
interpreted and construed in accordance with the terms of the State of Utah,
except that body of law relating to choice of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be duly executed as of the day and year first above
written.
NACT TELECOMMUNICATIONS, INC.
By:
-----------------------------------
Name:
Title:
-----------------------------------
Xxxxxxxx Xxxxx
-15-
