1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between,
TeleHub Network Services Corporation, an Illinois corporation, with offices at
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000 and 0000
Xxx-Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 (the "EMPLOYER"), and
XXXXXXX X. XXXXXXXXX, XX., an individual residing at 0000 Xxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxx, Xxxxxx ("EXECUTIVE"). The effective date of this Agreement is
January 1, 1998 ("EFFECTIVE DATE").
R E C I T A L S
WHEREAS, Employer desires to hire and employ Executive as its President of
TeleHub Network Services Corporation.
WHEREAS, Executive desires to become an employee of Employer;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. EMPLOYMENT. Employer, its subsidiaries and Affiliates (collectively, the
"COMPANY") agree to employ Executive, and Executive hereby agrees to be employed
by the Company on a full-time basis. For the purpose of this Agreement, the term
"AFFILIATE " means a person, firm or corporation that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control of Employer. Executive represents and warrants that the execution
of this Agreement and his performance under this Agreement does not breach any
other agreement and does not require the consent of any other person.
2. DUTIES. Executive shall perform the duties as assigned by the Company from
time to time and shall serve the Company faithfully and to the best of
Executive's ability. The Executive will hold, without additional compensation,
such other positions for the Company to which Executive may be appointed or
elected from time to time. In its sole discretion the Company may, from time to
time, change Executive's title or responsibility. Executive's conduct must
promote the best interests of the Company and must not discredit the Company,
its products or services.
3. EXCLUSIVITY. Executive shall devote substantially his full business time,
efforts, attention, skill and energy to the Company's business. Executive shall
disclose all other business activities to the Company and Executive shall not
engage in any other business activity that requires significant personal
services by Executive. After notifying the Company, Executive may take
reasonable personal time for:
3.1. personal investments that do not require significant services by
Executive;
3.2. participation in volunteer or charitable activities;
3.3. participation in industry-related organizations;
3.4. with prior Board approval, serving as a Director for other companies;
and
3.5. activities approved in advance by the Board;
1 of 7
2
except that Executive shall cease any such outside activity if the Company
determines that such activity will interfere or conflict with the Company's
interests.
4. CONFLICTS OF INTEREST. Executive shall not engage in any activity that, in
the Company's judgment, may interfere or conflict with the proper performance of
Executive's duties or the Company's interest. If Executive has any interest in a
proposed transaction involving the Company, that interest must be fully
disclosed to the Company and the Company must approve of the transaction.
5. INVENTIONS AND CONFIDENTIALITY. Executive acknowledges that TeleHub is in
a unique, world-wide business and has expended significant amounts to develop
its proprietary products and services and, by reason of Executive's position
with the Company, Executive will have access to Confidential Information,
proprietary information and other intellectual property of the Company. As a
condition to the Executive's employment with the Company, the Executive agrees
to and has executed and delivered to the Company, the Invention Assignment and
Confidentiality Covenant ("Covenant"), the terms of which are hereby
incorporated into and made part of this Agreement. Executive agrees that the
restrictions contained in the Covenant are fair, reasonable and necessary.
6. COMPENSATION AND BENEFITS. In consideration of the services to be rendered
pursuant to this Agreement, Executive shall receive the following compensation
and benefits during the term of his employment:
6.1. Salary. The Company shall pay Executive an annual base salary,
payable semimonthly in arrears. The annual base salary during the term hereof
shall be $160,000.00 ( Salary").
6.2. Bonus. The Company will pay Executive an incentive bonus up to fifty
percent (50%) of Executive's base Salary per year ("BONUS") based upon
Executive's accomplishments of objectives that are mutually defined and agreed
upon between, and documented by, Executive and the Company. The Company shall
pay Executive's Bonus ninety (90) calendar days after the close of the Company's
fiscal year. The Company's Board of Directors, with the advice of Executive's
supervisor, shall annually review the amounts of Executive's base Salary and
Bonus.
6.3. Benefits. The Company may provide Executive with such insurance
plans, hospitalization plans, retirement plans and other executive benefits that
are generally provided to executive employees of the Company and for which
Executive is eligible under the terms and conditions thereof.
6.4. Stock Options. The Company has created a stock option plan for
directors, officers and employees. Executive shall be granted 100,000 shares at
a $10.00 per share exercise price in accordance with the terms of the Plan.
6.5. Performance Options. An additional 100,000 shares shall be granted
as performance options. These options shall vest at the end of the 1st quarter
of 1999, 2000 and 2001 based upon the Executive exceeding the business plan
goals which were agreed upon by the end of the preceding year's 1st Quarter.
Performance option goals shall be structured in such a way that missed
commitments in one year may be made up in a subsequent year's performance.
2 of 7
3
6.6. Annual Leave. Executive shall be entitled to vacations, sick leaves,
personal days and other time off in accordance with the Company's policies in
effect for officers and executive employees of the Company which shall include
no less than three weeks vacation per year.
6.7. Car Allowance. The Company shall pay Executive a car allowance of
$450.00 per month, in addition to Executive's other compensation.
6.8. Relocation Expense. The Executive shall relocate to the vicinity of
the Company's business offices in Illinois. The Company shall reimburse the
Executive for reasonable expenses incurred for his relocation. Executive shall
be provided temporary housing in a corporate apartment for three months which
may be extended if the Company and the Executive mutually agree that such
extension is necessary.
6.8.1. Upon the execution of a mutually agreeable loan and security
agreement, Executive shall receive $189,000.00 Canadian as a
loan secured by Executive's Toronto home. The loan is to be
repaid to the Company upon the sale of the home.
6.9. Reimbursement of Expenses. Upon receipt of an itemized accounting of
such expenses with acceptable supporting documentation, the Company shall
promptly reimburse Executive for all reasonable and necessary out-of-pocket
expenses incurred by Executive in connection with the business of the Company
and in performance of Executive's duties under this Agreement in accordance with
Company policy.
7. DURATION. Executive's employment shall commence on the Effective Date and
continue until terminated in accordance with Section 8. The initial term of
Executive's employment shall be four (4) years ("INITIAL TERM"), and shall be
automatically renewed for additional terms of one (1) year unless earlier
terminated pursuant to the terms of this Agreement. After termination of
Executive's employment, the applicable provisions of Sections 5 and 8 shall
remain in full force and effect until the time specified in each such section.
8. TERMINATION. Executive's employment may be terminated as follows:
8.1. Expiration of Term. Upon written notice by either party delivered at
least thirty (30) calendar days before the expiration of the Initial Term or
renewal term (collectively, "TERM"), Executive's employment will terminate at
the expiration of the then current Term.
8.2. Death. If Executive dies during the Term of his employment, the
Company shall pay his estate the compensation that would otherwise be payable to
him for the month in which his death occurs, and his employment shall be deemed
terminated on the last day of such month.
8.3. Cause. The Company may immediately terminate Executive's employment
at any time for:
8.3.1. non-performance or gross negligent performance by Executive of
any material duties which continues after fifteen (15)
calendar days' written notice specifying such non-performance
or gross negligent performance; or
8.3.2. the commission of any theft, fraud, embezzlement or similar
crime involving the commission of any felony; for acts of
dishonesty or moral turpitude; for violation of Company policy
or applicable local, state or federal laws or regulations,
including anti-discrimination laws or
3 of 7
4
securities laws; or for violation of other laws which causes
material economic damage to the Company or material damage to
the business reputation of the Company; or for a material
breach of any provision of this Agreement.
8.4. Demotion. The Executive may terminate Executive's employment with
the Company upon thirty (30) calendar days' written notice if the Company
assigns the Executive to a position of lower responsibility and Executive
rejects such assignment.
8.5. Discretion. Either party, in its sole discretion, may terminate
Executive's employment at any time upon thirty (30) calendar days' prior written
notice.
8.6. Change of Control. Either party may terminate Executive's employment
upon at least thirty (30) calendar days' written notice upon the occurrence of
any of the following events:
8.6.1. sale by the Company of substantially all of its assets to a
single purchaser or associated group of purchasers who are not
Affiliates of the Company;
8.6.2. sale, exchange or other disposition in one transaction of 35%
or more of the outstanding voting stock of the Company to
persons, firms or corporations who are not Affiliates of the
Company;
8.6.3. merger or consolidation of the Company in a transaction not
involving an Affiliate of the Company in which the
shareholders of the Company receive less than 50% of the
outstanding voting stock of the new continuing corporation or
successor entity;
8.6.4. a bona fide decision by the Company to terminate its business
and liquidate its assets (but only if such liquidation is not
part of a plan to carry on the Company's business through its
shareholders).
8.7. Severance. If Executive's employment is terminated pursuant to
Subsection 8.4 or 8.6 hereof, or the Company terminates Executive's employment
pursuant to Subsection 8.5 hereof, the Company shall pay Executive a Termination
Fee equal to one hundred percent (100%) of Executive's annual Salary, plus
Benefits, plus the Bonus specified in Section 6.2 hereof; if Executive's
employment is terminated during the first year of employment, the Bonus will be
fifty percent (50%) of Executive's annual Salary pro-rated for the portion of
the year served; otherwise the Bonus will be the amount of the previous year's
Bonus pro rated for the portion of the year served. Such Bonus shall be paid
within ninety (90) calendar days of Executive's termination. Payments to be made
pursuant to this paragraph shall only be made upon Executive's execution of a
standard release waiving all claims against the Company.
9. SECURITIES MATTERS. Since the Executive will have access to Confidential
Information, Executive's ability to engage in securities transactions (including
securities issued by the Company and by others) will be limited. Executive
agrees to:
9.1. not engage in any transactions that intentionally or knowingly
violate federal and state securities laws;
9.2. file all reports required by securities regulatory authorities;
9.3. provide information about securities transactions when requested by
the Company;
9.4. follow written Company policies concerning securities transactions;
4 of 7
5
9.5. execute any "lock-up" agreements or other restrictions on
transactions when requested by the Company; and
9.6. comply with securities law requirements for all transactions.
While Executive may request the Company's permission to engage in proposed
securities transactions, Executive is still responsible for compliance with
applicable legal requirements.
10. INJUNCTIVE RELIEF. Upon a material breach or threatened material breach by
Executive of any of the provisions of Sections 3, 4, 5 and 9 of this Agreement,
or any term of the Covenant, the Company shall be entitled to institute and
prosecute proceedings in any court of competent jurisdiction either in law or in
equity to obtain the specific performance thereof by Executive or to enjoin
Executive from violating the provisions hereof. Pending the outcome of any such
litigation, Company shall be entitled to obtain injunctive or other relief,
without bond. If the Company takes such legal action, the prevailing party, as
part of its damages, shall be entitled to recover its legal fees and expenses
incurred in such action from the other party.
11. SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any provision of this Agreement shall be
adjudicated to be invalid or unenforceable, then the remaining provisions will
continue in full force and effect.
12. NOTICES. All communications, requests, consents and other notices under
this Agreement shall be given in writing and delivered by courier, registered or
certified mail (postage prepaid), return receipt requested, and shall be
effective upon delivery. Notices to the Company shall be delivered to the
attention of the General Counsel at TeleHub's Walnut Creek address written
above, and Notices to Executive shall be delivered to the Executive's address
written above.
13. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by Illinois
law, irrespective of choices of law principles. The parties agree that any
action brought pursuant to the terms of this Agreement shall be brought in, and
the parties hereby submit exclusively to, the personal jurisdiction and venue of
the state and federal courts in or presiding over Chicago, Illinois.
14. ASSIGNMENT. The Company may assign its rights and obligations under this
Agreement to any successor corporation or to any acquirer of substantially all
of the business of the Company, and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by or against any such assignee.
Neither this Agreement nor any rights or duties hereunder may be assigned or
delegated by Executive.
15. NO WAIVER. A waiver by either party of any breach of this Agreement shall
not be a waiver for any preceding or succeeding breach. A waiver by either party
of any right under this Agreement shall not be construed as a waiver of any
other right.
16. AMENDMENTS. No provision of this Agreement shall be altered, amended,
revoked or
5 of 7
6
waived, except by an instrument in writing, signed by the Company and Executive.
17. BINDING EFFECT. Except as otherwise provided herein, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and assigns.
18. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement together with the Invention Assignment
and Confidentiality Covenant set forth the entire agreement and understanding of
the parties related to the subject matter of this Agreement and supersede all
prior and contemporaneous understandings, agreements or representations by or
between the parties, whether written or oral.
20. DISPUTES. Other than an action brought under Section 10, which may be
brought directly in any court of competent jurisdiction, any dispute or
controversy arising under, out of, in connection with or in relation to this
Agreement or the employment of Xxxxxxx X. Xxxxxxxxx, Xx., and the Company or the
termination of employment of Xxxxxxx X. Xxxxxxxxx, Xx., with the Company,
including any claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Family and Medical Leave Act, and any other federal, state or local statute,
regulation or ordinance pertaining to employment, shall be finally determined
and settled by arbitration. Arbitration shall be initiated by one party making
written demand upon the other party and simultaneously filing the demand
together with required fees in the office of the American Arbitration
Association in Chicago, Illinois. The arbitration proceeding shall be conducted
in Chicago, Illinois by a single arbitrator in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association, except as otherwise provided herein. Discovery shall be permitted
to the extent ordered by the arbitrator in compliance with and pursuant to the
Employment Dispute Resolution Rules of the American Arbitration Association. The
arbitration award shall be a final and binding determination of the dispute and
shall be fully enforceable as an arbitration award in any court having
jurisdiction and venue over such parties. The prevailing party (as determined by
the arbitrator) shall be awarded by the arbitrator such party's attorneys' fees,
costs and expenses in connection with such proceeding, in addition to any other
relief that may be granted.
6 of 7
7
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the "EFFECTIVE DATE" as stated above.
COMPANY: TeleHub Network Services Corporation,
an Illinois corporation
Date: 12/5/97 Date: 12/5/97
----------- -----------
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------- -----------------------------
Xxxxxx X. Xxxxxx, President & CEO Xxxxxxx X. Xxxxxxxxx, Xx.
7 of 7
