EXHIBIT 10.12
FORM OF
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of the
__th day of _____, 1997 between Telegroup, Inc., an Iowa corporation (the
"Company"), and _____________ (the "Executive").
W I T N E S S E T H :
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WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs the Executive as
_______________________ and the Executive hereby accepts such employment,
on the terms and subject to the conditions hereinafter set forth.
(b) Executive shall report directly to the Chief Executive
Officer, and shall perform such duties consistent with his position as
__________________ pursuant to the direction of the Chief Executive
Officer.
(c) Attention and Effort. The Executive shall be required to
devote his full business time, attention and effort to the Company's
business and affairs except for vacation time and reasonable periods of
absence due to sickness, personal injury or other disability and shall
perform diligently such duties as are customarily performed by executives
in similar positions with companies similar in character or size to the
Company, all subject to the direction of the Chief Executive Officer,
together with such other duties as may be reasonably requested from time
to time by the Chief Executive Officer, which duties shall be consistent
with his positions as set forth above. The Executive agrees to use all
of his skills and business judgment and render services to the best of
his ability to serve the interests of the Company. Subject to the terms
of Section 6, this shall not preclude Executive from serving on community
and civic boards, participating in industry associations, pursuing his
personal financial and legal affairs, or otherwise engaging in other
activities, so long as such activities do not unreasonably interfere with
his duties to the Company.
(d) Support Services. The Executive shall be entitled to all of
the administrative, operational and facility support customary for a
similarly situated
executive. This support shall include, without limitation, a suitably
appointed private office, a secretary or administrative assistant, and
payment of or reimbursement for reasonable cellular telephone expenses,
business, travel and entertainment expenses, expenses of the Executive
maintaining his professional license and standing and any and all other
business expenses reasonably incurred on behalf of or in the course of
performing duties for the Company, all in accordance with the expense
reimbursement policies established from time to time by the Company. The
Executive agrees to provide such documentation of these expenses as may
be reasonably required.
2. TERM. Subject to the provisions for termination hereinafter
provided, the Term shall begin on the date hereof and shall continue for a
period of one (1) year. Thereafter, at the discretion of the Board of
Directors (the "Board"), the Term may be extended for one (1) year periods.
The Board will provide Executive at least three (3) months notice prior to the
end of each one (1) year period whether it intends to extend the Term.
3. COMPENSATION.
Throughout the Term the Company shall pay or provide, as the case may be,
to the Executive the compensation and other benefits and rights set forth in
this Section 3.
(a) The Company shall pay to the Executive a "Base Salary,"
payable in accordance with the Company's usual pay practices (and in any
event no less frequently than monthly), of $__________ per annum. The
Board shall annually review Executive's Base Salary and may, in its
discretion, increase such Base Salary by an amount it determines is
appropriate.
(b) The Company shall pay to the Executive bonus compensation
for each fiscal year, or part thereof that he is employed by the Company,
to be determined at the discretion of the Board.
(c) The Company shall provide medical, hospitalization,
disability and dental insurance for Executive, his spouse and eligible
family members, subject to and in accordance with the Company's policy,
the proportion of the cost thereof to be borne by the Company and the
Executive to be in accordance with such policy.
(d) The Executive shall participate in all retirement and other
benefit plans of the Company generally available from time to time to
employees of the Company and for which the Executive qualifies under the
terms thereof (and nothing in this Agreement shall, or shall be deemed
to, in any way affect the Executive's right and benefits thereunder
except as expressly provided herein).
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(e) The Executive shall be entitled to at least twenty two (22)
days of vacation allowance each year and a sick leave allowance as
provided under the Company's vacation and sick leave policy for executive
officers.
(f) The Executive shall be entitled to participate in any equity
or other employee benefit plan that is generally available to senior
executive officers, as distinguished from general management, of the
Company, at the highest level provided for any employee. The Executive's
participation in and benefits under any such plan shall be on the terms
and subject to the conditions specified in the governing document of the
particular plan.
4. PERMANENT DISABILITY.
(a) For purposes of this Agreement, the Executive's "Permanent
Disability" shall be deemed to have occurred one day after one hundred
eighty (180) days in the aggregate during any consecutive twelve (12)
month period, or one day after one hundred twenty (120) consecutive days,
during which one hundred eighty (180) or one hundred twenty (120) days,
as the case may be, the Executive, by reason of his physical or mental
disability or illness, shall have been unable to discharge fully his
duties under this Agreement.
(b) If either the Company or the Executive, after receipt of
notice of the Executive's Permanent Disability from the other, disputes
that the Executive's Permanent Disability shall have occurred, the
Executive shall promptly submit to a physical examination by the chief of
medicine of any major accredited hospital in the metropolitan Chicago,
Illinois area, and, unless such physician shall issue his written
statement to the effect that, in his opinion, based on his diagnosis, the
Executive is capable of resuming his employment and devoting his full
time and energy to discharging fully his duties hereunder within thirty
(30) days after the date of such statement, such Permanent Disability
shall be deemed to have occurred on the day above specified.
5. TERMINATION.
(a) The Executive's employment under this Agreement and the Term
shall be terminated immediately on the death of the Executive and may be
terminated by the Board, with the concurrence of the Chief Executive
Officer:
(i) at any time after the Permanent Disability of the
Executive;
(ii) at any time for "Cause" (as defined below); or
(iii) at any time without Cause.
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For purposes hereof, Cause shall mean:
(A) Active participation by the Executive in fraudulent conduct
against the Company, a felony involving moral turpitude, an
act or series of deliberate acts which were not taken in good
faith by Executive and which, in the reasonable judgment of
the Board, results or will likely result in material
injury to the business, operations or business reputation of
the Company, or an act or series of acts constituting willful
malfeasance or gross misconduct or the Executive's continued
willful failure to perform any of his duties under this
Agreement.
(B) A substantial and continual refusal by Executive in breach of
this Agreement to perform the duties, responsibilities or
obligations assigned to Executive pursuant to the terms
hereof, which breach has not been cured (if it is of a nature
that can be cured) to the Board's reasonable satisfaction
within ten (10) days after the Company gives written notice
thereof to the Executive;
(C) Excessive absenteeism by the Executive; provided that
absenteeism (i) related to illness or otherwise covered by
Section 4(a) hereof, (ii) required to be permitted under
applicable federal or state laws, or (iii) permitted under
Company policy, shall not be deemed to be excessive; or
(D) The voluntary resignation of the Executive without Good Reason
(as defined below) and without the prior consent of the Board.
Executive shall be permitted to respond and defend himself before
the Board within thirty (30) days after delivery to Executive of written
notification of any proposed termination for Cause which specifies in
detail the reasons for such termination. If the majority of the members
of the Board (excluding Executive) do not confirm that the Company had
grounds for a Cause termination, Executive shall have the option to treat
his employment as not having terminated or as having been terminated
pursuant to a termination without Cause.
(b) TERMINATION BY DEATH. If the Executive's employment is
terminated by death, the Executive's estate shall be entitled to receive
(i) life insurance benefits pursuant to any life insurance purchased by
the Company and any other benefits, payable within ninety (90) days after
the date of death, accrued by him hereunder up to and including the date
of Executive's death and (ii) reimbursement for all expenses incurred by
Executive pursuant to Section 1(d) prior to his death.
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(c) TERMINATION FOR CAUSE. If the Executive's employment is
terminated by the Company for Cause, the Company shall not have any other
or further obligations to the Executive under this Agreement except (i)
as to that portion of any unpaid Base Salary accrued and earned under
this Agreement through the date of such termination, (ii) as to benefits,
if any, provided by any insurance policies in accordance with their terms
and any other benefits, payable within ninety (90) days after
termination, accrued by him hereunder up to and including the date of
termination, and (iii) reimbursement for all expenses incurred by
Executive pursuant to Section 1(d) prior to his termination. In
addition, if the Executive's employment is terminated by the Company for
Cause at any time during the Term, the Executive shall immediately
forfeit any and all other unvested stock rights and stock options and
other such unvested incentives or awards previously granted to him by the
Company. The foregoing sentence shall be in addition to, and not in lieu
of, any and all other rights and remedies which may be available to the
Company under the circumstances, whether at law or in equity.
(d) TERMINATION WITHOUT CAUSE. If the Executive's employment is
terminated by the Company without Cause (including a termination resulting
from the lapse of the Term specified in Section 1), the Executive shall be
entitled to receive (i) severance compensation equal to what would have
been his Base Salary under Section 3(a), payable at such times as his Base
Salary would have been paid if his employment had not been terminated, for
a period of one (1) year following such termination; provided, that if the
Executive obtains employment at any time during such period, such severance
payments shall cease at the later to occur of (A) the date that is three
months from the date of termination and (B) the date such Executive is
first employed by a third party, (ii) as to other benefits, if any,
provided by any insurance policies in accordance with their terms, and
other benefits, payable within ninety (90) days after the date of such
termination, accrued by him hereunder up to and including the date of such
termination, and (iii) reimbursement for all expenses incurred by Executive
pursuant to Section 1(d) prior to his termination. In the event that
Executive's employment is terminated by the Company within ninety (90) days
following a "Change in Control," then the severance compensation referred
to in Subsection (d)(i) above shall be paid for a period of one (1) year
following such termination of employment. For purposes of this Agreement a
"Change in Control" shall be deemed to occur if, at any time any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act), other than Xxxx Xxxxxxx and Xxxxxxxx Xxxx become
the beneficial owners of more than 50% of the total voting power of the
common stock of the Company.
(e) TERMINATION FOR PERMANENT DISABILITY. If the Executive's
employment is terminated by the Company for Permanent Disability, the
Executive shall be entitled to receive (i) severance compensation equal
to what would have been his Base Salary under Section 3(a) for the longer
of one (1) year or the remainder of what would have been the Term (but
not longer than two (2) years), payable at such times as his Base Salary
would have been paid if his employment had not been terminated, less any
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disability insurance benefits pursuant to any disability insurance
provided by the Company or purchased by Executive, the cost of which is
reimbursed by the Company, which are payable in respect of the period
after such termination, (ii) other benefits, payable within ninety (90)
days after termination for Permanent Disability, accrued by him hereunder
up to and including the date of termination for Permanent Disability,
and (iii) reimbursement for all expenses incurred by Executive pursuant
to Section 1(d) prior to his termination.
(f) TERMINATION BY EXECUTIVE FOR GOOD REASON. If the Executive
terminates his employment for Good Reason, the Executive shall be
entitled to receive (i) severance compensation equal to his Base Salary
under Section 3(a), payable at such times as his Base Salary would have
been paid if his employment had not been terminated, for one (1) year
following the date of termination, (ii) as to benefits, if any, provided
by any insurance policies in accordance with their terms, and as to any
other benefits, payable within ninety (90) days after the date of such
termination, accrued by him hereunder up to and including the date of
such termination and (iii) reimbursement for all expenses incurred by
Executive pursuant to Section 1(d) prior to his termination. Good Reason
means a termination of Executive's employment by Executive within ninety
(90) days following (i) a material reduction in Executive's annual Base
Salary or incentive compensation or equity participation opportunity,
(ii) a material reduction or change in Executive's positions, duties and
responsibilities or reporting lines from those described in Section 1
hereof where such reduction or change occurs within ninety (90) days
following a "Change in Control", (iii) a change in the location of the
Company's headquarters or of the office of the Executive from the
Fairfield, Iowa area, (iv) a material breach of this Agreement by the
Company. In addition, if Executive terminates his employment within
ninety (90) days following a Change in Control, even if there has been
non-material reduction in the Executive's positions, duties,
responsibilities or reporting lines, then such termination shall be
treated as for Good Reason pursuant to this Section 5(f) except that the
Executive shall receive Base Salary only for three (3) months following
employment termination. Notwithstanding the foregoing, a termination
shall not be treated as a termination for Good Reason (i) if Executive
shall have consented in writing to the occurrence of the event giving
rise to the claim of termination for Good Reason or (ii) unless Executive
shall have delivered a written notice to the Board within thirty (30)
days of his having actual knowledge of the occurrence of one of such
events stating that he intends to terminate his employment for Good
Reason and specifying the factual basis for such termination, and such
event, if capable of being cured, shall not have been cured within ten
(10) days of the receipt of such notice.
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(g) MITIGATION. The Executive is not required to mitigate the
amount of any payments to be made by the Company pursuant to this
Agreement following his termination by seeking other employment or
otherwise. In addition, except so provided in Section 5(d), the amount of
any post-termination payments provided for in this Agreement shall not be
reduced by any remuneration earned by the Executive during the period
following the termination of his employment as a result of employment by
another employer or otherwise after the date of termination of his
employment with the Company.
6. COVENANTS AND CONFIDENTIAL INFORMATION.
(a) The Executive acknowledges the Company's reliance on and
expectation of the Executive's continued commitment to performance of his
duties and responsibilities during the Term. In light of such reliance
and expectation on the part of the Company, during the applicable period
hereafter specified in Section 6(b), the Executive shall not, directly or
indirectly, do or suffer either of the following:
(i) Own, manage, control or participate in the ownership,
management or control of, or be employed or engaged by or
otherwise affiliated or associated as a consultant,
independent contractor or otherwise with, any other
corporation, partnership, proprietorship, firm, association
or other business entity engaged in the business of, or
otherwise engage in the business of, marketing or providing
telecommunication services within the United States in
competition with the Company; provided, however, that the
beneficial and/or record ownership of not more than four and
nine-tenths percent (4.9%) of any class of publicly traded
securities of any entity shall not be deemed a violation of
this covenant; or
(ii) Disclose, divulge, discuss, copy or otherwise use or suffer
to be used in any manner, other than in accordance with the
Executive's duties hereunder, any confidential or
proprietary information relating to the Company's business,
prospects, finances, operations, properties or otherwise to
its particular business or other trade secrets of the
Company, it being acknowledged by the Executive that all
such information regarding the business of the Company
compiled or obtained by, or furnished to, the Executive
while the Executive shall have been employed by or
associated with the Company is confidential and/or
proprietary information and the Company's exclusive
property; provided, however, that the foregoing restrictions
shall not apply to the extent that such information:
(A) is clearly obtainable in the public domain;
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(B) becomes obtainable in the public domain, except by
reason of the breach by the Executive of the terms
hereof or by another person barred by a similar duty
of confidentiality; or
(C) is required to be disclosed by rule of law or by
order of a court or governmental body or agency.
(b) The applicable periods shall be: (i) so long as the
Executive is an employee of the Company; (ii) as to clause (ii) of
Section 6(a), at any time after the Executive is no longer an employee of
the Company; and (iii) as to clause (i) of Section 6(a), for a period of
one (1) year after termination of employment by the Company or
Executive; provided, that the Board may, in its sole discretion, waive or
shorten such one (1) year period.
(c) The Executive agrees and understands that the remedy at law
for any breach by him of this Section 6 will be inadequate and that the
damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, it is acknowledged that the
Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing in
this Section 6 shall be deemed to limit the Company's remedies at law or
in equity for any breach by the Executive of any of the provisions of
this Section 6 which may be pursued or availed of by the Company.
(d) THE EXECUTIVE HAS CAREFULLY CONSIDERED THE NATURE AND EXTENT
OF THE RESTRICTIONS UPON HIM AND THE RIGHTS AND REMEDIES CONFERRED UPON
THE COMPANY UNDER THIS SECTION 6, AND HEREBY ACKNOWLEDGES AND AGREES THAT
THE SAME ARE REASONABLE IN TIME AND TERRITORY, ARE DESIGNED TO ELIMINATE
COMPETITION WHICH OTHERWISE WOULD BE UNFAIR TO THE COMPANY, DO NOT STIFLE
THE INHERENT SKILL AND EXPERIENCE OF THE EXECUTIVE, WOULD NOT OPERATE AS
A BAR TO THE EXECUTIVE'S SOLE MEANS OF SUPPORT, ARE FULLY REQUIRED TO
PROTECT THE LEGITIMATE INTERESTS OF THE COMPANY AND DO NOT CONFER A
BENEFIT UPON THE COMPANY DISPROPORTIONATE TO THE DETRIMENT TO THE
EXECUTIVE.
(e) The Executive acknowledges that the Executive's obligations
under this Section 6 shall survive in accordance with paragraph (b) above
regardless of whether the Executive's employment by the Company is
terminated, voluntarily or involuntarily, by the Company or the
Executive, with Cause or without Cause, or the Executive with or without
Good Reason.
7. INDEMNIFICATION. During the Term, the Company shall indemnify
Executive and hold Executive harmless from and against any claim, loss or
cause of action arising from or out of Executive's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including any fiduciary capacity, in which Executive serves at the
request of the Company to the maximum extent permitted by applicable law. If
any claim is asserted hereunder with respect to which Executive reasonably
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believes in good faith he is entitled to indemnification, the Company shall
pay Executive legal expenses (or cause such expenses to be paid) on a monthly
basis, provided that Executive shall reimburse the Company for such amounts if
Executive shall be found by a court of competent jurisdiction not to have been
entitled to indemnification. In addition, the Company agrees to provide
Executive with coverage under a directors and officers liability insurance
policy.
8. MISCELLANEOUS.
(a) The Executive represents and warrants that he is not a
party to any agreement, contract or understanding, whether employment or
otherwise, which would restrict or prohibit him from undertaking or
performing employment in accordance with the terms and conditions of this
Agreement.
(b) The provisions of this Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any
jurisdiction nevertheless shall be binding and enforceable.
(c) The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding on, the
Company and, if in connection with a transfer of substantially all of its
business, its successors and assigns, and the rights and obligations
(other than obligations to perform services) of the Executive under this
Agreement shall inure to the benefit of, and shall be binding upon, the
Executive and his heirs, personal representatives and assigns.
(d) Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by mediation, and if
not settled within 14 days of the submission to mediation, by arbitration
in accordance with the Voluntary Labor Arbitration Rules of the American
Arbitration Association, and the arbitration shall be held in the
metropolitan Kansas City area. The arbitrator shall be acceptable to
both the Company and Executive. If the parties cannot agree on an
acceptable arbitrator, the dispute shall be heard by a panel of three (3)
arbitrators, one appointed by each of the parties and the third appointed
by the other two arbitrators. Judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. The arbitrator or arbitrators shall be deemed to possess the
powers to issue mandatory orders and restraining orders in connection
with such arbitration; provided, however, that nothing in this Section(d)
shall be construed so as to deny the Company the right and power to seek
and obtain injunctive relief in a court of equity for any breach or
threatened breach by the Executive of any of his covenants contained in
Section 6 of this Agreement.
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(e) All notices and other communications required or permitted
under this Agreement shall be in writing, and shall be deemed properly
given if delivered personally, mailed by registered or certified mail in
the United States mail, postage prepaid, return receipt requested, sent
by facsimile, or sent by Express Mail, Federal Express or other
nationally recognized express delivery service, as follows:
If to the Company or the Board:
The Corporation System
0000 Xxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
If to the Executive:
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With a copy to:
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Notice given by hand, certified or registered mail, or by Express
Mail, Federal Express or other such express delivery service, shall be
effective upon actual receipt. Notice given by facsimile transmission
shall be effective upon actual receipt if received during the recipient's
normal business hours, or at the beginning of the recipient's next
business day after receipt if not received during the recipient's normal
business hours. All notices by facsimile transmission shall be confirmed
promptly after transmission in writing by certified mail or personal
delivery.
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Any party may change any address to which notice is to be given to
it by giving notice as provided above of such change of address.
(f) The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations
thereof, nor prevent that party thereafter from enforcing each and every
other provision of this Agreement. The rights granted the parties herein
are cumulative and the waiver of any single remedy shall not constitute a
waiver of such party's right to assert all other legal remedies available
to it under the circumstances.
(g) This Agreement supersedes all prior agreements and
understandings between the parties as to the subject hereof and may not
be modified or terminated orally. No modification or attempted waiver
shall be valid unless in writing and signed by the party against whom the
same is sought to be enforced.
(h) This Agreement shall be governed by, and construed in
accordance with the provisions of, the law of the State of Iowa, without
reference to provisions that refer a matter to the law of any other
jurisdiction. Each party hereto hereby irrevocably submits itself to the
non-exclusive personal jurisdiction of the federal court sitting in Des
Moines, Iowa and state courts sitting in Jefferson County, Iowa;
accordingly, subject to the provisions for mediation and arbitration
provided in Section 8(d), any justiciable matters involving the Company
and the Executive with respect to this Agreement may be adjudicated only
in a federal or state court sitting in the aforementioned jurisdictions..
(i) All payments required to be made by the Company hereunder to
the Executive shall be subject to the withholding of such amounts
relating to taxes and other government assessments as the Company may
reasonably determine it should withhold pursuant to any applicable law,
rule or regulation.
(j) Captions and section headings used herein are for
convenience and are not a part of this Agreement and shall not be used in
construing it.
(k) Where necessary or appropriate to the meaning hereof, the
singular and plural shall be deemed to include each other, and the
masculine, feminine and neuter shall be deemed to include each other.
(l) If the Company fails to make any payment to Executive within
ten (10) days of the date due, the payment shall be made with interest
from the date due to the date of payment, at the rate, compounded
annually, from time to time specified as its prime rate by Citibank, N.A.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
Telegroup, Inc.,
an Iowa corporation
By:
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Name:
Title:
