DIGITEC 2000, INC.
EMPLOYMENT AGREEMENT
(XXXXX XxXXXXX)
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of July 1, 1997 (the
"Effective Date") by and between DigiTEC 2000, Inc., a Nevada corporation, with
an office at 0 Xxxx 00xx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Company"), and Xxxxx XxXxxxx, with an address of 0 Xxxxxxxx Xxxxxx, Xxxxxxxx,
XX 00000 ("Executive"). The Company requires execution of this Agreement by
Executive as a condition to employing Executive.
RECITALS
Executive is currently employed by the Company as its Vice President, Finance.
Company and Executive desire to enter into this Agreement to provide additional
financial security and benefits to Executive, to encourage Executive to continue
employment with Company, and to enhance the motivation of Executive to increase
profitability of Company.
In consideration of the mutual covenants herein, and in consideration of the
employment of Executive with Company, the parties agree as follows:
AGREEMENT
1. Duties and Scope of Employment. Company shall employ the Executive in the
position of Vice President, Finance, responsible for the day to day
financial and accounting operations of the Company; provided, however,
that the Board of Directors of the Company (the "Board") shall have the
right to revise such responsibilities from time to time as the Board may
deem necessary or appropriate. Such duties and responsibilities shall be
commensurate with Executive's past practices and consistent with his
position as Vice President, Finance.
2. Restriction on Outside Business Activities. During employment, Executive
shall devote Executive's full energies, interest, abilities, and
productive time to the performance of duties for Company and shall not,
without Company's prior written consent:
(a) render to others services of any kind, or engage in any other
business activity that would materially interfere with the
performance of Executive's duties under this Agreement;
(b) perform any services, directly or indirectly, whether as an
employee, consultant, independent contractor, for any person or
entity competing, directly or indirectly with Company;
(c) own, directly or indirectly, whether as partner, creditor,
shareholder, or otherwise, any interest in any entity competing,
directly or indirectly, with Company;
(d) promote, participate, or engage in any activity or other business
competitive with Company;
(e) compete, directly or indirectly, with any products or services
marketed or offered by Company; or
(f) engage in any activity which could be deemed to be a conflict of
interest.
Nothing herein contained shall prevent or be construed as preventing the
Executive from holding or purchasing five (5%) percent or less of any
class of stock or securities of a corporation which is listed on a
national securities exchange or regularly traded in the over-the-counter
market, or making other investments or participating in business ventures
not in competition with the business of the Company, as long as such
investments and business ventures shall not require any significant
- 1 -
time during normal business hours and do not conflict with Executive's
duties and obligations to the Company as provided in this Agreement.
3. Term of Employment. This Agreement shall commence on the Effective Date
and shall continue until the earliest of (a) June 30, 2000, or (b) until
such time as a notice of non-renewal or termination of this Agreement is
given in writing by either Company or Executive to the other as specified
in paragraph 10(b). The parties may renew this Agreement in their sole
discretion.
4. Executive's Compensation and Benefits.
(a) Base Salary. Company shall pay a base salary to Executive as noted
below, payable semi-monthly in arrears or at such other intervals as
other employees are paid. Such salary shall be reviewed at least
annually and may be increased from to time, in the sole discretion
of the Board. Base salary to the executive will be as follows:
For the year ended June 30,
1998 $140,000
1999 $190,000
2000 $215,000
(a) Bonus Bonus. For each fiscal year while this Agreement is in effect,
the Executive shall be paid a bonus (the "Performance Bonus") equal
to one and one quarter (1.25) percent of the Company's adjusted
annual net income before depreciation and amortization interest and
income tax, as determined by the Company's independent auditors in
connection with each fiscal year's audit. Such payment shall be made
within thirty (30) days after such determination. Executive shall be
eligible for the Performance Bonus only if the Executive is in an
employee of the Company in good standing during the entire
applicable fiscal year and on the date the payment is due. The
Company reserves the right to implement a bonus plan document to
further describe the Performance Bonus which Executive acknowledges
and agrees may place additional restrictions on the payment of the
Performance Bonus consistent with reasonable industry practice. The
Board may from time to time award Executive additional bonuses in
its sole and absolute discretion.
(a) Benefits. During employment, Executive shall receive all benefits
generally available to Company's other employees of like position
when and as Executive becomes eligible for them. The Executive shall
be entitled to participate in any and all fringe benefits and/or
plans, generally afforded to other employees of the Company (to the
extent the Executive otherwise qualifies therefore under the
specific terms and conditions of each such benefit), including,
without limitation, savings or profit sharing plans, deferred
compensation plans, pension and other retirement plans (e.g. 401k),
supplemental retirement or excess benefit plans, stock option,
incentive or other bonus plans, group disability, life insurance,
and medical insurance plans, which are, or which may become
available generally to senior personnel of the Company, subject in
each case to the generally applicable terms and conditions of the
plan or program in question and to the determination of the Board or
any committee administering such plan or program. Participation
shall be consistent with Executive's position with Company.
(b) Vacation. The Executive shall be entitled to four (4) weeks paid
vacation time during each year of this Agreement or such additional
vacation as may be permitted from time to time by Company policy.
Executive shall not be permitted to carry over unused vacation time
from one year to another.
(c) Expenses. The Company shall reimburse the Executive for all
reasonable business and travel expenses actually incurred by or paid
by the Executive in the performance of services on behalf
- 2 -
of the Company, in accordance with the Company's expense
reimbursement policy as in effect from time to time.
(d) Other Payments. In the event that any payment or benefit received or
to be received by the Executive pursuant to this Agreement or
otherwise from the Company (collectively, the "Payments") would be
subject to the excise tax (or interest or penalties related thereto)
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any similar or successor provision (the
"Excise Tax"), the Company shall pay to the Executive within ninety
(90) days of the date of Executive's termination of employment (or,
if earlier, within ninety (90) days of the date the Executive
becomes subject to the Excise Tax), an additional amount (the
"Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax and any federal (and
state and local) income tax on the Payments, shall be equal to the
Payments minus all applicable taxes on the Payments. For purposes of
determining whether any of the Payments will be subject to the
Excise Tax and the amount of Excise Tax, (i) any other payments or
benefits received or to be received in connection with a change of
control of the Company or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company), shall be treated as
"parachute payments" within the meaning of Section 280(G)(b)(2) of
the Code or any similar or successor provision, and all "excess
parachute payments" within the meaning of Section 280G(b)(l) or any
similar or successor provision shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the
Company such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in
whole or in part) represent reasonable compensation for services
within the meaning of Section 280G(b) or any similar or successor
provision of the Code in excess of the base amount within the
meaning of Section 280g(b)(3) or any similar or successor provision
of the Code, or are otherwise not subject to the Excise Tax; (ii)
the amount of the Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of
the Payments or (B) the amount of the excess parachute payments
within the meaning of Section 280G(b)(l) (after applying clause (i)
above), and (iii) the value of any non-cash benefits or a deferred
payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal
income taxes at the highest nominal marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest nominal
marginal rate of taxation in the state and locality of the
Executive's residence on the date of termination of Executive's
employment, net of the maximum reduction in federal income taxes
which could be obtained from deducting of such state and local
taxes. In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time
of termination of Executive's employment, the Executive shall repay
to the Company at the time that the amount of such reduction in
Excise Tax is finally determined the portion of the Gross-Up Payment
attributable to the Excise Tax and federal (and state and local)
income tax imposed on the Gross-Up Payment being repaid by the
Executive if such repayment results in a reduction in Excise Tax
and/or a federal (and state and local) income tax deduction plus
interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at
the time of termination of the Executive's employment (including by
reason of a payment the existence or amount of which cannot be
determined at the date of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest payable with respect to such excess) at the time that
the amount of such excess is finally determined. The Company may
contest any claim by the Internal Revenue Service which would
require the payment of the Gross-Up Payment hereunder, provided that
the Company shall bear directly all costs and expenses (including
interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of any such
claim and payment of costs and expenses.
- 3 -
5. Termination of Employment; Severance.
(a) By Death or Disability.
(i) Executive's employment shall terminate automatically upon the
death of Executive. Company shall pay or provide to
Executive's beneficiaries or estate, as appropriate, the
compensation as of the date of death and benefits to which
Executive is entitled through the end of the pay period in
which death occurs and thereafter Company's obligations shall
terminate except as noted below.
(ii) If, in the sole opinion of Company, Executive shall be
prevented from properly performing Executive's duties by
reason of any physical or mental incapacity for a period of
more than six (6) months in the aggregate or four (4)
consecutive months in any twelve-month period, then, to the
extent permitted by law, Executive's employment shall
terminate on, and the compensation and benefits to which
Executive is entitled shall be paid or provided up through,
the last day of the month in which the day evidencing
incapacity (as determined above) occurs and thereafter
Company's obligations shall terminate except as noted below.
(iii) In the event of termination for death or disability, Executive
shall not be entitled to receive severance or other benefits
except (A) those (if any) as may then be established and
applicable under the Company's then-existing severance and
other benefits plans and policies at the time of such death or
disability, (B) benefits required by applicable laws, and (C)
a prorated portion of the Performance Bonus based on the last
day of the month in which the death or the incapacity (as
determined above) occurs, (D) in the case of death, the
Executive's base compensation for a period of twenty-six (26)
weeks shall be paid to the Executive's surviving spouse, or,
if none, to the Executive's estate.
(iv) In the event of termination for disability, the Executive
shall be entitled to the benefits provided under the Company's
then-existing disability or extended sick pay plan, for so
long as Executive continues to be disabled under this
Agreement or benefits otherwise terminate under such plan,
whether or not Executive is deemed to be disabled under such
plan.
(b) By Company for Cause; Voluntary Resignation.
(i) Company may terminate, without liability, Executive's
employment for cause (as defined below) at any time and
without notice. Company shall pay Executive the compensation
to which Executive is entitled through the end of the day of
such termination and thereafter Company's obligations shall
terminate. Termination shall be for cause if Executive's
employment is terminated by Company because of:
(A) any act or failure to act by Executive which involves
bad faith conduct by Executive and which is to the
material detriment of Company;
(B) Executive's willful refusal or willful failure to act in
accordance with any lawful and reasonable direction or
order of Company;
(C) Executive's exhibiting material unfitness or material
unavailability for service to Company (other than by
reason of Executive's death or disability);
(D) Executive's materially unsatisfactory performance,
material misconduct, dishonesty or theft, habitual
material neglect, material carelessness or material
incompetence in the performance of his duties for
Company;
(E) Executive's willful or intentional disclosure of
confidential information of Company, or any other
violation of paragraphs 6 or 7 below;
- 4 -
(F) Executive's providing false information to Company in
connection with Executive's application for employment;
(G) Executive's violation of Company's policies regarding
xxxxxxx xxxxxxx;
(H) Executive's violation of Company's policies regarding
controlled substances;
(I) Executive's conviction of a crime, except a minor
traffic violation; or
(J) Executive's willfully or intentionally acting in any way
that has a direct, substantial and adverse effect on
Company's reputation.
(ii) If Executive's employment terminates by reason of
the Executive's voluntary resignation or if the
Executive is terminated for cause, then the
Executive shall not be entitled to receive
severance or any other benefits.
(d) Non-Renewal or Termination Without Cause. In the event that Company
without cause fails to offer to renew Executive's employment
hereunder for at least the same period of time as specified herein,
and on substantially similar terms, or in the event that Company at
any time terminates Executive's employment hereunder without cause,
Company as its sole obligation to Employee shall pay to Executive,
and Executive as his sole remedy shall accept, severance in the
amount of one-twelfth of Executive's base compensation at the time
of such non-renewal per month, for a period of six (6) months
beginning on the effective date of termination. In the event that
Executive becomes employed by another company, the Company shall not
have any right of offset or similar right against any earnings
arising out of such subsequent employment.
(e) Accrued Salary, etc. In the event of termination of Executive's
employment for any reason,
(i) the Company shall pay to Executive any unpaid base
compensation for periods prior to termination;
(ii) the Company shall pay the Executive all of the Executive's
accrued and unused vacation time through the date of
termination; and
(iii) following submission of proper expense reports by the
Executive, the Company shall reimburse the Executive for all
expenses reasonably and necessarily incurred by Executive in
connection with the business of the Company prior to
termination.
All of the above payments shall be made promptly upon termination,
and within the period of time mandated by law.
(f) Certain obligations of Employee on termination. Executive hereby
acknowledges and agrees that all personal property, including,
without limitation, all books, manuals, memorandums, policy
statements, correspondence (letters, telegrams, mailgrams), minutes
of meetings, agendas, interoffice communications, forecasts,
analyses, working papers, charts, expense account reports, ledgers,
journals, financial statements, statements of accounts, data
compilations, records, reports, notes, memoranda, computer disks,
flow charts, computer documents and computer software, data sheets,
contracts, lists, and other documents, proprietary information, and
equipment furnished to or prepared by Executive in the course of or
incident to Executive's employment, belong exclusively to the
Company and shall be promptly returned to the Company upon
termination of Executive's employment for any reason.
6. Confidentiality and Non-Disclosure; Non-Solicitation
(a) For purposes of this paragraph, the following definitions shall
apply:
- 5 -
(i) Inventions shall mean all inventions, processes, methods,
formulas, techniques, improvements, modifications and
enhancements, whether or not patentable, made by Executive,
whether or not during the hours of Executive's employment or
with the use of Company's facilities, materials or personnel,
either solely or jointly, during Executive's employment by
Company and all inventions, processes, methods, formulas,
techniques, improvements, modifications and enhancements made
by Executive, during a period of one year after any
termination of Executive's employment, which relate directly
to the past, present or future business of Company and which
are within the scope of Executive's duties during the last 12
months of Executive's employment by Company.
(ii) Work Product shall mean all documentation, software, creative
works, know-how and information created, in whole or in part,
by Executive during Executive's employment by Company, whether
or not copyrightable or otherwise protectable, excluding
Inventions.
(iii) Trade Secrets shall mean compensation data, marketing
strategies, new material research, pending projects and
proposals, research and development, technological data, all
proprietary information, actual and potential, customer lists,
vendor lists, pricing and credit techniques, research and
development activities, documentation, software, know-how and
information relating to the past, present or future business
of Company or any plans relating to the foregoing, or relating
to the past, present or future business of a third party that
are disclosed to Company, which Company does not disclose to
third parties without restrictions on use or further
disclosure.
(b) Executive hereby:
(i) agrees to promptly disclose to Company all Inventions and keep
accurate records relating to the conception and reduction to
practice of all Inventions. Such records shall be the sole and
exclusive property of Company, and the Executive shall
surrender possession of the records to Company upon any
suspension or termination of Executive's employment with
Company.
(ii) Executive hereby assigns to Company, without additional
consideration to Executive, the entire right, title and
interest in and to the Inventions and Work Product and in and
to all copyrights, patents, trademarks and any and all other
proprietary rights therein or based thereon. Executive agrees
that the Work Product shall be deemed to be a "work made for
hire." Executive shall execute all such assignments, oaths,
declarations and other documents as may be prepared by Company
to effect the foregoing.
(iii) agrees that Company, without additional consideration to
Executive, shall have the exclusive worldwide and perpetual
right to use and to make, use and sell products and/or
services derived from any Inventions or Work Product.
(c) Executive shall provide Company with all information, documentation,
and assistance Company may request to perfect, enforce or defend the
proprietary rights in or based on the Inventions, Work Product or
Trade Secrets. Company, in its sole discretion, shall determine the
extent of the proprietary rights, if any, to be protected in or
based on the Inventions, Work Product and Trade Secrets. All such
information, documentation and assistance shall be provided by
Executive at no additional expense to Company, except for
out-of-pocket expenses which Executive incurred at Company's
request.
(d) During employment and thereafter, Executive shall treat Trade
Secrets on a confidential basis and not disclose them to others
without the prior written consent of Company or use Trade Secrets
for any purpose other than for the performance of services for
Company.
- 6 -
Executive acknowledges that the Trade Secrets are the sole and
exclusive property of Company. Executive shall surrender possession
of all Trade Secrets to Company upon any suspension or termination
of Executive's employment with Company. If, after such time,
Executive becomes aware of any Trade Secrets in Executive's
possession, Executive shall immediately surrender those Trade
Secrets to Company.
(e) Executive acknowledges that the work force of the Company
constitutes a unique, valuable and special asset of the Company.
Therefore, Executive agrees that during his employment with the
Company, and for a period of one year following termination of such
employment for any reason, Executive shall not, directly or
indirectly, hire any current or future employee of the Company, or
solicit or induce or attempt to solicit or induce, any current or
future employee of the Company to terminate his or her employment
with the Company for any reason.
(f) In the event of a breach or threatened breach by the Executive of
the provisions of this paragraph 6, the Company shall be entitled to
an injunction restraining the Executive from any such breach.
Nothing herein contained shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company
for such breach or threatened breach, including the recovery of
damages from the Executive.
7. Restrictive Covenants.
(a) The Executive hereby acknowledges and recognizes the highly
competitive nature of the Company's business and accordingly agrees
that Executive will not from and after the date hereof, until the
Designated Date (as hereinafter defined) (i) engage, directly or
indirectly in any Competitive Activity, whether such engagement
shall be as an officer, director, employee, consultant, agent,
lender, stockholder, or other participant; or (ii) assist others in
engaging in any Competitive Activity. As used herein, the term
"Competitive Activity" shall mean and include the development,
distribution, sale, marketing and management of telecommunications
products, including, without limitation, consumer and corporate
prepaid telephone and cellular calling cards and other products and
services offered or planned to be offered by the Company during
Executive's employment with the Company.
(b) As used in paragraph 7, the "Designated Date" shall mean the
following:
(i) if the Executive voluntarily terminates employment with the
Company in violation of this Agreement, then the "Designated
Date" shall be the second (2nd) anniversary of the effective
date of such termination;
(ii) if the Company terminates this Agreement for cause, then the
"Designated Date" shall be the second (2nd) anniversary of the
effective date of such termination;
(iii) if the Company offers to renew this Agreement for at least the
same period of time as specified herein, and on substantially
similar terms, and the Executive declines, then the term
"Designated Date" shall be the second (2nd) anniversary of the
effective date of termination; or
(iv) if the Company fails to offer to renew this Agreement for at
least the same period of time as specified herein, and on
substantially similar terms, without cause, or terminates
Executive's employment hereunder without cause, then the term
"Designated Date" shall mean the effective date of
termination.
(c) It is the desire and intent of the parties that the provisions of
this paragraph 7 shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction
which enforcement is sought. Accordingly, if any particular
provision of this paragraph 7 shall be adjudicated to be invalid or
unenforceable, such provision of this paragraph 7 shall be deemed
amended to delete therefrom the portion thus adjudicated to be
- 7 -
invalid or unenforceable, such deletion to apply only with respect
to the operation of such provisions of this paragraph 7 in the
particular jurisdiction in which such adjudication is made. In
addition, if the scope of any restriction contained in this
paragraph 7 is too broad to permit enforcement thereof to its
fullest extent, then such restriction shall be enforced to the
maximum extent permitted by law, and the Executive hereby consents
and agrees that such restriction shall be enforced to the maximum
extent permitted by law, and the Executive hereby consents and
agrees that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction.
(d) If there is a breach or threatened breach by the Executive of the
provisions of this paragraph 7, the Company shall be entitled to an
injunction restraining the Executive from any such breach. Nothing
herein contained shall be construed as prohibiting the Company from
pursuing any other remedies available for such breach or threatened
breach or any other breach of this Agreement.
8. Executive Representations and Warranties. Executive represents and
warrants as of the Effective Date:
(a) Executive has complied with any and all written and/or oral
conditions of Executive's former employment concerning resignation
and notice of resignation or termination of employment;
(b) Executive has returned to Executive's former employer all of the
former employer's property and confidential proprietary material and
that he or she will not disclose to Company, or use during
Executive's employment by Company, any of Executive's previous
employer's trade secrets and confidential proprietary information;
(c) Neither the execution of this Agreement, nor employment with
Company, nor performance of the duties required hereby will violate
any obligations of Executive to any former employer or breach any
agreement to keep in confidence information acquired by Executive
before Executive's employment by Company;
(d) Executive has not entered into, and will not enter into any
agreement, either written or oral, that conflicts with this
Agreement; and
Executive understands and agrees that the representations and warranties
set forth in this paragraph are material inducements upon which Company
has relied in entering into this Agreement.
9. Survival. Certain provisions of this Agreement, including, without
limitation, paragraphs 5(f), 6, 7, 8 and 11 are intended to continue and
survive termination or suspension of Executive's employment with Company.
10. Notices.
(a) All notices required or permitted to be given under the provisions
of this Agreement shall be in writing and delivered personally or by
certified or registered mail, return receipt requested, postage
prepaid to the following persons at the following addresses, or to
such other persons at such other addresses as any party may request
by notice in writing to the other party to this Agreement:
If to Executive:
Xxxxx XxXxxxx
0 Xxxxxxxx Xxxxxx
Xxxxxxxx, X.X. 00000
- 8 -
If to Company:
DigiTEC 2000
8 West 38th Street, Fifth Floor
New York, New York 10018
Att: Xxxxx Xxxxxxxx
(b) Any termination by either party hereunder shall be communicated by a
notice of termination to the other party given in accordance with
this Agreement. Such notice shall indicate the specific termination
provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall
specify the termination date (which shall be not more than 30 days
after the giving of such notice).
11. Confidentiality. Except as required by applicable securities' or other
laws, neither party shall disclose the contents of this Agreement without
first obtaining the prior written consent of the other party. Executive
may disclose this Agreement to Executive's spouse, attorney and financial
advisors subject to the above confidentiality restriction.
12. Successors and Assigns.
(a) Any successor of the Company (whether direct or indirect and whether
by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the
same manner and to the same extent as the Company would be required
to perform such obligations in the absence of such a succession. For
all purposes of this Agreement, the term "Company" shall include any
successor to the Company's business and/or assets which executes and
delivers the assumption agreement described above or which becomes
bound by the terms of this Agreement by operation of law.
(b) This Agreement is personal in nature and may not be assigned or
transferred by the Executive without the prior written consent of
the Company.
13. Severability. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain
in full force and effect.
14. Entire Agreement; Integration; Amendments. The terms of this Agreement are
intended by the parties to be the final expression of their Agreement with
respect to the employment of Executive by Company and may not be
contradicted by evidence of any prior or contemporaneous agreement. This
Agreement constitutes the complete and exclusive statement of its terms
and no extrinsic evidence whatsoever may be introduced in any legal
proceeding involving this Agreement. This Agreement contains the entire
agreement between the parties and supersedes all prior oral, written and
implied agreements, understandings, commitments, and practices between the
parties, including all prior employment agreements, if any. No amendments
to this Agreement may be made except by a writing signed by both parties.
15. Choice of Law. The formation, construction, and performance of this
Agreement shall be construed in accordance with the laws of the State of
New York, without regard to principles of conflicts of law, and any action
relating to this Agreement or Executive's employment with Employer shall
be brought exclusively in the state or federal courts of the State of New
York.
16. Voluntary Execution. Executive acknowledges that Executive has read and
understands the Agreement, is fully aware of its legal effect, has not
acted in reliance upon any representations or promises made by Company
other than those contained in writing herein. The Executive has
- 9 -
been advised to obtain independent legal counsel regarding this Agreement
and the Executive is signing this Agreement knowingly and voluntarily.
17. No Assignment of Benefits. The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation
of law, including without limitation bankruptcy, garnishments, attachment
or other creditor's process, and any action in violation of this paragraph
shall be void.
18. Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.
19. Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, provided that the Company shall remain jointly
and severally liable under this Agreement, and provided further that no
assignment shall be made if the net worth of the assignee is less than the
net worth of the Company at the time of assignment. In the case of any
such assignment, the term "Company" when used in this Agreement shall mean
the corporation that actually employs the Executive.
20. Interest. In the event that the Company fails to make any payment
hereunder or afford any benefit when due, the Company shall pay interest
at the rate of the publicly announced prime rate of Citibank or its
successors plus 3% or, if lower, the maximum permitted by law.
- 10 -
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
day and year first above written.
Executive Company
/s/ Xxxxx XxXxxxx
--------------------------
Xxxxx XxXxxxx By: /s/ Xxxxx Xxxxxxxx
------------------------------
Its: /s/ Xxxxx Xxxxxxxx, President
-----------------------------
- 11 -
EXHIBIT A July 1, 1997 STOCK OPTION CERTIFICATE
- 12 -
CERTIFICATE 1997 NQ1
OPTION TO PURCHASE COMMON SHARES OF DIGITEC 2000, INC., A NEVADA CORPORATION
VOID AFTER 5:00 P.M., July 1,2007, AS PROVIDED FOR HEREIN.
OPTIONEE: Xxxxx XxXxxxx
EFFECTIVE DATE July 1, 1997
NUMBER OF SHARES: 200,000
DIGITEC 2000, INC., A NEVADA CORPORATION, (the "Company") intending to be
legally bound, hereby grants to the Optionee named above an option (the
"Option") to purchase all or any part of an aggregate of 200,000 Common Shares,
.01 par value ("Option Shares") of the Company.
1. Exercise Price. The Option shares may be purchased pursuant to this Option at
a price of $13.00 per share (closing price as of July 1, 1997), subject to
adjustment as set forth below.
2. Vesting. You may exercise:
(a) 22,222 Option Shares effective July 1, 1997;
(b) an additional 22,222 Option Shares effective September 30, 1997;
(c) an additional 22,222 Option Shares effective December 31, 1997;
(d) an additional 22,222 Option Shares effective March 31, 1998;
(e) an additional 22,222 Option Shares effective June 30, 1998;
(f) an additional 22,222 Option Shares effective September 30,1 1998;
(g) an additional 22,222 Option Shares effective December 31, 1998;
(h) an additional 22,222 Option Shares effective March 31, 1989; and
(i) the remaining 22,224 Option Shares effective June 30, 1999.
3. Exercise Procedure. To exercise this Option, or any part, the Optionee shall:
(a) surrender this Option Certificate to the Company at its principal office;
(b) deliver a notice (the "Exercise Notice") specifying the number of Option
Shares to be purchased;
(c) pay the full exercise price for the Option Shares to be purchased by
certified or bank cashier's check made payable to the Company or other form of
payment acceptable to the Company; and
(d) furnish to the Company such other instruments or documents as it or its
legal counsel may reasonably require.
If less than all the Option Shares are purchased, the Company will issue, in
addition to the Option Shares, a certificate evidencing the number of Option
Shares still covered by
this Option, or shall xxxx a notation on this Option Certificate setting forth
the number of Option Shares remaining unexercised.
4. Changes in Capitalization. If, prior to the exercise of this Option, the
outstanding shares of the capital stock of the Company shall be changed in
number or class or exchanged for a different number or kind of shares of stock
or other different number or kind of shares of stock or other securities of the
Company, whether by reason of recapitalization, reclassification,
reorganization, combination or split-up of shares or payment of a stock dividend
or other similar change in capitalization, affected without receipt of any
consideration by the Company, the remaining number of Option Shares and the
purchase price shall be adjusted in a manner determined by the Board of
Directors of the Company so that the adjusted number of Option Shares and the
adjusted purchase price shall be the substantial equivalent of the remaining
number of Option Shares and the purchase price prior to the change.
5. Change of Control. In the event of a Change of Control (defined below), all
outstanding Option Shares shall become immediately exercisable. A Change in
Control shall be deemed to have occurred after the Effective Date if:
(a) any person as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Company, any subsidiary of the Company, or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities in any transaction or series of transactions not
approved in advance by a vote of at least two-thirds (2/3) of the Board; (b)
during any period of three consecutive years (not including any period prior to
the effective date of this Option Certificate), individuals who at the beginning
of such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c), (d) or (e) of this
definition) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof; (c)
the stockholders of the Company approve a merger or consolidation of the Company
with any other company other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 65% of the
combined voting power of the voting securities of the Company (or such surviving
entity) outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no "person" (as above defined) acquires more
than 20% of the combined voting power of the Company's then outstanding
securities;
2
(d) the stockholders of the Company adopt a plan of complete liquidation of the
Company or approve an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets. For purposes of this clause
(d), the term "the sale or disposition by the Company of all or substantially
all of the Company's assets" shall mean a sale or other disposition transaction
or series of related transactions involving assets of the Company or of any
direct or indirect subsidiary of the Company (including the stock of any direct
or indirect subsidiary of the Company) in which the value of the assets or stock
being sold or otherwise disposed of (as measured by the purchase price being
paid therefor or by such other method as the Board determines is appropriate in
a case where there is no readily ascertainable purchase price) constitutes more
than two-thirds of the fair market value of the Company (as hereinafter
defined). For purposes of the preceding sentence, the "fair market value of the
Company" shall be the aggregate market value of the outstanding shares of Common
Stock of the Company (on a fully diluted basis) plus the aggregate market value
of the Company's other outstanding equity securities. The aggregate market value
of the shares of Common Stock (on a fully diluted basis) outstanding on the date
of the execution and delivery of a definitive agreement with respect to the
transaction or series of related transactions (the "Transaction Date") shall be
determined by the average closing price of the shares of Common Stock for the
ten trading days immediately preceding the Transaction Date or such other method
as the Board shall determine is appropriate. The aggregate market value of any
other equity securities of the Company shall be determined in a manner similar
to that prescribed in the immediately preceding sentence; or (e) any other event
determined by a vote of at least two-thirds (2/3) of the Board to constitute a
"Change of Control."
6. Restrictions on Transfer. The Option is not transferable other than by will
or the laws of descent and distribution and shall be exercisable during the
Optionee's lifetime only by him or her. Optionee shall have no rights as a
stockholder until payment of the option price and issuance of Option Shares.
7. Expiration. The Option expires at 5:00 P.M. Eastern Time on July 1, 2007
("Expiration Date"). In the event that Optionee dies during the term of the
Option, Optionee's personal representatives may exercise any unexercised Options
(without regard to vesting), within one (1) year of Optionee's death. In the
event that Optionee's employment with the Company is terminated by the Company
as a result of a disability, Optionee may exercise any unexercised Options
vested at the time of any such termination for a period of one (1) year after
any such termination. In the event that Optionee's employment is terminated for
any other reason (except for cause as defined in that certain Employment
Agreement between Option and the Company dated effective July 1, 1997), all
outstanding unexercised options vested at the time of termination shall expire
ninety (90) days after such termination. In the event of termination for cause,
all outstanding unexercised options shall immediately expire on such
termination.
8. Securities' Laws. Optionee acknowledges that the Option Shares to be issued
pursuant to this Option are not presently registered under the Securities Act of
1933, as amended, and that the Company has no obligation to register the Option
Shares. The
3
Optionee will comply with all applicable resale restrictions and agrees not to
transfer any Option Shares unless such transfer in the opinion of counsel
acceptable to the Company complies in all respects with applicable federal and
state securities' laws. Certificates issued for the Option Shares shall bear
legends which the Company deems appropriate.
9. No Right to Employment. Executive acknowledges and agrees that the granting
of this Option by itself does not create or imply any obligation of the Company
to employ Executive for any period of time.
10. Authority. The Company represents and warrants to Optionee that it has
taken, or will take, any and all necessary acts so that the Option is a valid
and binding obligation of the Company.
11. Administration. The Board will have the authority and discretion to
interpret the Option to make any determinations that it deems necessary or
advisable for the administration of the Option and to correct any defect or
omission or reconcile any inconsistency in the Option in the manner and to the
extent the Board deems necessary or advisable.
12. Governing Law. The formation, construction, and performance of this Option
Certificate shall be construed in accordance with the laws of the State of New
York, without regard to principles of conflicts of law, and any action relating
to this Option Certificate shall be brought exclusively in the state or federal
courts of the State of New York.
DIGITEC 2000, INC.
BY: /s/ Xxxxx Xxxxxxxx
--------------------------
TITLE: President
DATE: July 1, 1997
ACCEPTED AND AGREED TO BY:
/s/ Xxxxx XxXXXXX
------------------------------
XXXXX XxXXXXX
DATE: July 1, 1997
4
