EXHIBIT 6.16
Employment Agreement with Xxxxxx X. Xxxxxxxx
EMPLOYMENT AGREEMENT
This Agreement is entered into effective this 106 day of January, 2000 (the
"Effective Date"), by and among Global Telephone Communication, Inc., a
Nevada corporation, (hereafter referred to as the "Employer") and XXXXXX
XXXXXXXX, 00 Xxxxxxx Xxxx, Xxx Xxxxxx, Xxxxxxxxxxx 00000 (hereafter referred
to as the "Employee").
WITNESSETH:
WHEREAS, the Employer is a corporation engaged in the telecommunications
business and desires to employ the Employee; and
WHEREAS, the Employee is willing to accept such employment on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. POSITION AND DUTIES. Employer hereby agrecs to employ Employee on the
terms and conditions set forth herein in the position of Chief Operating
Officer. The Board of Directors may appoint Employee to additional corporate
offices. Employee shall use his best eforts and such time as may be required
to perform the duties of those positions as may be established by the Board
of Directors arid the By-Laws of Employer. Employee may concurrently with
this Agreement continue to perform consulting services in the
telecommunications industry or other industries so long as the duties to be
performed under his consulting agreements (i) do not require Employee to use
or to reveal trade secrets or confidential information of Employer as those
terms are defined in Subsection 8(a) below and (ii) do not prevent Employee
from performing his duties under this Agreement in a satisfactory manner-
Employee shall report directly to the Chief Executive Officer.
2. TERM.
a. Unless renewed by the mutual agreement of the Employer and
Employee. Employer shall employ Employee for the period beginning on
the Effective Date and ending on the third anniversary of the
Effective Date (the "Employment Period"); provided that the
Employment Period shall terminate prior to such third anniversary
(i) upon Employee's resignation, death, mental or physical
disability (as determined by the Board in its good faith judgment
pursuant to Section 7 below), (ii) by action taken by Employer at
any time prior to such third anniversary for Cause (as defined
below) or without Cause, (iii) by ACTION TAKEN BY Employee at time
prior to such third anniversary for "Good REASON" (AS DEFINED below)
or (iv) upon the Employee's election to convert the third year of
the Employment Period into a consultancy arrangement as provided for
in Section 9 below.
b. If the Employment Period is terminated (other than in accordance
with item (iv) in subsection a above) (i) by the Employer without
Cause, or (ii) by the Employee for Good Reason, Employee shall be
entitled to receive his Base Salary (as defined below) for the
remainder of the Employment Period in a lump sum within FIVE BUSINESS
days of the date of termination. The amounts payable pursuant to this
paragraph 2(b) shall not be reduced by the amount of any
compensation Employee receives with respect to any other employment
during the remainder of the Employment Period. Termination of the
Employment Period pursuant to this subparagraph 2(b) shall entitle
Employee to outplacement services paid by Employer which are consistent
with his position and customary in the New Canaan, Connecticut market.
c. If the Employment Period is terminated by the Employer for Cause or
is terminated pursuant to clause (a)(i) above, Employee shall be
entitled to receive his Base Salary through the date of termination,
subject to the provisions of Section 7 below.
d. All of Employee's rights to fringe benefits and bonuses hereunder
accruing after the date of termination of the Employment Period shall
(i) continue for the remainder of the Employment Period if the
termination is pursuant to subsection (b) above and (ii) cease upon the
date of termination if termination is pursuant to subsection (c) above.
If (A) Employee is entitled to any fringe benefit following the
termination of the Employment PERIOD and (B) the Employee is ineligible
to participate in the plan providing such fringe benefits BECAUSE HE is
no longer an employee, Employer shall provide Employee a substitute
fringe benefit or cash payment to Employee that is economically
equivalent (including any "gross up" required so that the substitute
fringe benefit or the cash payment has the same after income tax
equivalence to Employee).
c. For purposes of this Agreement, "Cause" shall mean (i) a "material
breach" of this Agreement by Employee, (ii) a breach of Employee's duty
of loyalty to the Employer or any act of dishonesty or fraud with
respect to the Employer, (iii) the conviction of Employee of a felony,
a crime involving moral turpitude or other act causing material harm to
the Employer's assets, standing or reputation. For the purposes of this
Agreement, a "material breach" shall be determined by a majority of the
Board (excluding Employee if he is a member of the Board) as provided
herein. The Board shall give Employee written notice of the Board's
concern over Employee's actions or failure to act, specifying in detail
the alleged breach and the material effect of such breach on Employer
and setting the time and place for a meeting with the full board of
directors at a location within the United States- Employee shall have
15 days to prepare for such meeting with the Board, at which meeting
Employee may present any information on market competitive conditions
and any other factors bearing upon his performance or disputing the
facts related to the alleged breach. Notwithstanding the above, general
dissatisfaction with Employee's job performance or a good faith
conclusion by the Board of Directors that Employee's performance is
substandard shall not constitute "Cause". Employer's sole option if the
Board of Director's conclusion is that Employee's job performance is
substandard or if there is general dissatisfaction with Employee's job
performance shall be to discharge Employee without Cause.
f. For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following events at airy time prior to the end
of the Employment Period: (i) any non-payment, reduction or attempted
reduction in Employee's Base Salary (ii) the elimination of, or a
material reduction in, any fringe benefits required to be furnished to
Employee pursuant to Section 5 below or that are made available to
other employees but from which Employee is excluded (Provided, HOWEVER,
that Good Reason shall not occur if Employer provides to Employee a
substitute fringe benefit or cash payment to Employee
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that is economically equivalent (including any "gross up" required so
that the substitute fringe benefit or the cash payment has the same
after income tax equivalence to Employee) to the eliminated, reduced or
non provided hinge benefit; (iii) failure of Employer's stockholders to
elect and retain Employee as a member of the Board of Directors: (iv) a
material change in Employee's duties (including status, office. title,
reporting relationships or working conditions), responsibilities,
authority or duties (v) relocation of Employee's office location after
the Effective Date, WHICH the parties agree is Greenwich, Connecticut
on the Effective Date; (vi) failure of the Board of Directors to adopt
the recommendation of Xxxxxx X. Xxxxxxxxxxx as to the recommendation of
the auditors for Employer or outside legal counsel for Employer; (vii)
failure of the Board of Directors to implement changes to financial
statements or procedures recommended by either the auditors or the
outside legal counsel recommended by Xx. Xxxxxxxxxxx for the purpose of
bringing Employer into compliance with any federal or state securities
law or regulation and to maintain such compliance; (viii) failure of
any "Successor" (as defined below) to assume, either by an enforceable
agreement or by operation of law, all of Employer's liabilities and
obligations to Employee under this Agreement or (ax) a "Change of
Control" (as defined below)
g. For purposes of this Agreement. "Successor" shall mean any successor
in interest to Employer by virtue of a Change in Control, merger,
consolidation or other business combination involving Employer.
h, For purposes of this Agreement, "Change of Control" shall mean
either of the following events:
i. the sale, transfer or exchange of all Or substantially all
of the assets of the Employer to any person or entity other
than a direct or indirect majority-owned subsidiary of
Employer:
ii. a 50% or greater change in the voting control of Employer.
Voting control shall be based upon an assumption that all
securities, warrants and options to acquire voting shares of
Employer are converted or exercised. A transfer of securities,
warrants or options among existing stockholders and issuance
of additional securities, warrants or options to existing
stockholders shall not be considered a change in the ownership
for purposes of the calculation. Provided, however, a "Change
OF Control" shall occur upon the acquisition following the
Effective Date of 50% or more of the voting control of
Employer by any person, including an existing stockholder, (as
defined in section 3 of the Securities Exchange Act of 1934)
or group, including a group containing one or more existing
stockholders, (as defined in Rule 13d-S(b) of the Securities
and Exchange Commission) or the appointment of nominees of
such person or group to a majority of the seats on the Board
of Directors of Employer.
3. o e - . During and throughout the Employment Period, Employee shall
receive compensation for services performed hereunder by payment of a base
annual salary of not less than 5200,000 (the "Base Salary").
The Base Salary to be paid the Employee hereunder shall be paid in equal
monthly or biweekly installments, as the Board of Directors of the Employer
shall determine. All salary and other cash
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compensation shall be paid in U.S. Dollars and shall be subject to U.S-, state
and local withholding taxes and payroll taxes.
Employee shall be entitled to participate in any cash or stock bonus
plan that may be adopted by the Board after the Effective Date.
Provided, however, Employer agrees to pay to Employee for each year of
the Employment Period a cash bonus in an amount as determined by the
Board of Directors. Said bonus SHALL BE paid in quarterly installments,
each installment being due no later than the thirty (30) days of the
end OF EACH calendar quarter. Immediately upon the execution of this
Agreement, Employer shall pay to EMPLOYCC a signing bonus in the gross
amount of 550,000 less ALL applicable withholding and payroll taxes.
4. STOCK (?RATIONS. Employer shall, as directed by Employee, issue as
of the Effective Date fully vested warrants or nonqualified stock
options to Employee to purchase 500,000 shares of Employer's common
stock with an exercise price equal to 125% of the fair market value of
the common stock at the date of issue of the warrants or non-qualified
options.
5. BOARD SEAT-ADDITIONAL BENEFITS. During the Employment Period,
Employer shall use its best efforts to nominate Employee to its Board
of Directors- The Employee shall be entitled to participate, after any
applicable waiting periods and subject to any underwriting standards,
in any cash or stock bonus plans, any stock option plans, any employee
welfare benefits plans or any other fringe benefit plan, whether SUCH
PLAN IS available to all employees or available only to key management
personnel, which may from time to time be established by the Board of
Directors. Nothing herein shall restrict or prohibit Employer's right
to amend, terminate or install any such plan. Notwithstanding the
above, Employer shall pay the full amount of Employee's (i) medical,
dental, vision, and prescription drug insurance premiums for family
coverage, (ii) any eo-payments and deductibles under such medical,
dental, prescription drug and vision policies and (iii) basic group or
individual term life insurance. If Employer has no group medical,
dental, prescription drug or vision insurance plans, Employer shall
reimburse Employee for his premium costs for his purchase of individual
policies with family coverage, in addition to the reimbursement of
co-payments and deductibles. The amount of life insurance to be paid
for by Employer, the proceeds of which shall be paid to beneficiaries
designated by Employee, shall be up to $250,000, the exact amount to be
elected in writing by Employee. Employer shall provide to Employee an
apartment in Vancouver, British Columbia for his exclusive use-
Employer shall also provide Employee with a rental car for his use in
Vancouver area, Employer shall reimburse Employee for round trip
airfare from Connecticut to Vancouver for trips per month.
Employer shall use its reasonable best efforts to obtain Director and
Officer Liability Insurance in an expeditious manner.
Employer shall reimburse Employee no less frequently than once per
month for all necessary and reasonable travel and other expenses
incurred by Employee in furtherance of Employer's business. 1n order to
receive such reimbursement, Employee shall be required to furnish to
Employer such documentation as is required by the Internal Revenue
Service to permit Employer to deduct such rcimbursement. Reimbursement
shall also be subject to such reasonable policies and procedures as are
established by the Board of Directors from time to time.
For all air travel required of Employee in the performance of his
duties hereunder, (i) Employee shall have the right to select a
recognized airline carrier of his choice, (ii) inter-continental air
travel tickets shall be no less THAN BUSINESS class and (iii) domestic
AIR TRAVEL TICKETS SHALL be no LESS THAN COACH with upgrade coupons.
6. VACATION, During each twelve months of employment, the Employee
shall be entitled to take up to four weeks vacation. Employee shall
schedule his vacation so as to create a minimum of disruption to the
business of the Employer. Employer shall pay to Employee cash in the
amount of one
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week's annual base salary for each week of allowed vacation not taken
by Employee during each twelve month period
7. Disability. In the event Employee shall become unable by
reason of mental or physical disability to continue the proper
performance of his duties hereunder on a full-time basis, payment of
the Base Salary to Employee under the terms of this Agreement shall
continue until the earlier of (i) Employee's receipt of disability
benefits pursuant to any disability insurance, or (ii) three (3) months
from the date Employee shall become unable by reason of such disability
to continue the proper performance of his duties hereunder on a
full-time basis (in either event, the "Date of Disability"). For
purposes of termination of the Employment Period, the Date of
Disability shall be the date of termination. After such period,
Employee's rights to disability benefits, if any, shall be dependent
solely upon any existing employee disability insurance plan, or
amendments to any such disability insurance plan which may be adopted
by Employer from time to time. If Employee is not satisfied WITH the
level of disability benefits, if any, provided by Employer, he is
encouraged to procure his own personal disability insurance.
8. Non DisclosureNon Solicitation. In consideration of and in
exchange for being employed, the payment of any severance pay and other
good and valuable considerations, Employee shall not, during the
Employment Period and thereafter:
a. use any of Employer's trade secrets or
confidential information or disclose any of
Employer's trade secrets or confidential information
to anyone who is not under a non-disclosure
obligation to Employer, This non-disclosure and
non-use obligation shall continue with respect to
each trade secret and each item of confidential
information until such knowledge or information
ceases to be a Trade Secret or confidential
information by virtue of its becoming known to third
parties under no non-disclosure obligation to
Employer. The terra "trade secrets" and "confidential
information" shall mean information which is not
generally known to the public and which, if revealed
to unauthorized persons, would be detrimental to the
reputation or business interests of Employer and
includes information relating to Employer's business
operations and structure, sales, methods, practices
and techniques, technical know-how, advertising or
marketing methods and practices, customer
relationships and customer lists (including customer
names and addresses), and Employer's relationships
with suppliers, employees, customers, potential
customers, or other persons or entities doing
business with Ernployer In the event Employee so uses
or discloses trade secrets or confidential
information in violation of this subsection (a),
then, in addition to any other remedy, Employer SHALL
be entitled to a temporary restraining order,
temporary or permanent injunction, specific
performance, and other equitable relief in addition
to any other rights and remedies which then may be
available to Employer or its affiliates, without any
showing of irreparable harm or damage or the posting
of any bond.
b. for a period of one year following termination of
the Employment Period, solicit customers, suppliers
or other entities having business relations with
Employer or its affiliates for the purpose of
encouraging them to terminate their relationships
with Employer or its affiliates.
c. Encourage other employees of Employer or its
affiliates to terminate their employment with
Employer or its affiliates.
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Employee acknowledges and agrees that the foregoing
restrictions are reasonable restrictions for the protection of the
goodwill and business of the Employer, and that the foregoing
restrictions do not place any undue hardship on him.
Employee further acknowledges and agrees that the Employer's
remedy at law for any breach of the obligations set forth in this
Section 8 would be inadequate and that temporary and permanent
injunctive relief may be granted in any proceeding which may be brought
to enforce the provisions of this section without the necessity of
proof of actual damage. With respect to any such provision of this
section finally determined by a court of competent jurisdiction to be
unenforceable, it is agreed that such court shall have jurisdiction to
reform this section of this Agreement and such provision(s) so that it
is enforceable to the maximum extent permitted by law, and the parties
involved in such action agree to abide by such court's determination.
If such unenforceable provision cannot be reformed, such provision
shall be deemed to be severed from this agreement but every other
provision of this section shall remain in full force and effect.
9. Consulting Agreement. At Employee's sole option, to be
exercised by Employee sending written notice to Employer prior to the
second anniversary of the Effective Date, Employee may elect to
terminate the Employment Period at the end of the SECOND year of the
Employment Period and to be a consultant to the Company during the
third year of the Employment Period. The effects of such election by
Employee shall be as follows
(i) Employee shall be deemed to have (a) terminated
the employment relationship and (b) resigned-as an officer,
both effective as of the sccond anniversary of the Effective
Date.
(ii) Employee's non-solicitation obligation under
subsection 8(b) shall run for a two year period commencing on
the second anniversary of the Effective Date
(iii) Employer and Employee shall enter into a
written consulting agreement, which shall include (A) the
economic benefits to Employee set forth in this Agreement
except to the extent fringe benefits cannot be provided to
Employee under group plans adopted by Employer due to
Employee's ceasing to be an employee, (B) granting to Employer
the right to terminate the payment of consulting fees for
Cause and (C) preserving Employer's right to seek injunctive
relief as set forth in this Agreement.
10. Employee Representations. EMPLOYEE hereby
represents and warrants to the Employer that (1) the
execution, delivery and performance of this Agreement by
EMPLOYEE. does not and will not conflict with, breach, violate
or cause a default under any contract; agreement, instrument,
order, judgment or decree to which Employee is a xxxxx or by
which he is bound, (ii) Fmployee is not a party to or bound by
any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity
which prohibits or restricts his ability to enter into this
Agreement or perform his dutiesas contemplated hereunder, and
(iii) upon the execution and delivery of this Agreement by the
Employer, this Agreement shall be the valid and binding
obligation of Employee, enforceable in accordance with its
terms.
11. Waiver. Failure by either party to insist upon
strict compliance with any of the terms and conditions of this
Agreement shall not be deemed a waiver of any such term or
condition, nor shall any such failure at any one or more times
be DEEMED a waiver or relinquishment at any other time of any
right under the terms or conditions hereof.
12. Bene. This Agreement shall inure to the benefit
of and be binding upon the heirs, legal representatives,
successors or assigns of the parties hereto.
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13. ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the
entire agreement between the parties hereto in respect of the subject
matter hereof and supersedes all prior and contemporaneous agreements
between the parties in connection with the .subject matter of this
Agreement.
No modification of this Agreement shall be effective unless the same
shall be in a writing duly executed by both parties hereto.
14. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, as such laws
apply to an employment agreement between an Illinois resident and a
corporation qualified to do business in Illinois. Any legal, equitable
or injunctive action brought by Employer to enforce us rights under
this Agreement shall be brought only in a court of appropriate
jurisdiction located within the state of Employee's primary residence
at the time such action is brought.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the Effective Date.
Global Tel hone Communicate
Xxxxxx Xxxxxxxx Xxxxxx X. xxxxxxxxxx
Employee Its' Chief Executive Officer
Employer
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