EXHIBIT 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 5th day of September, 1996 between
Xxxxxx Xxxxxxx, an individual residing at 000 Xxxx Xx., Xxxxxx, Xxxxxxxxxxx
00000 (hereinafter referred to as "Employee") and International
Telecommunication Data Systems, Inc., a Delaware corporation , with offices at
000 Xxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxxx 00000 (hereinafter
referred to as "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the Employee
desires to serve as an employee of Corporation on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of the
parties hereto, the Corporation and the Employee agree as follows:
1. Employment: The Corporation hereby agrees to employ the Employee as
Executive Vice President and the Employee hereby agrees to function as such
Executive Vice President for the Corporation on the terms and conditions
hereinafter stated, subject to the directives of the Chief Executive Officer and
Board of Directors of the Corporation (the "Board").
2. Term of Employment: The term of this Agreement shall begin on or before
November 1, 1996 and shall continue in full force and effect until October 31,
2000 unless sooner terminated as provided herein.
3. Compensation:
(a) During the term of this Agreement, for all services rendered by
Employee under this Agreement, the Corporation shall pay the Employee an annual
base salary of $175,000 per annum, payable in weekly or monthly installments as
determined by the Corporation. All compensation payable under this Agreement
shall be subject to applicable federal and state withholding tax requirements
and other deductions approved by Employee.
(b) In addition to the annual base salary described in Section 3(a) hereof,
, the Employee shall become eligible to participate in the ITDS Stock Incentive
Plan ("Plan"), a copy of which is attached hereto and made a part hereof as
Schedule "A", upon the commencement of Employee's employment with Corporation.
(c) In addition to the annual base salary described in Section 3(a) hereof,
and the Incentive Stock Plan described in Section 3(b) hereof, the Employee may
receive an annual year end cash performance bonus of up to 10% of annual base
salary, in the sole and absolute discretion of the Board of Directors of the
Corporation, which performance bonus, if any, will be pro rated for 1996.
(d) In addition to the annual base salary described in Section 3(a) hereof,
the Incentive Stock Plan described in Section 3(b) hereof, and the cash
performance bonus described in Section 3(c) hereof, pursuant to the Plan, the
Employee shall be granted on the commencement of employment { 24,000 } shares of
Restriced Common Stock( "Restricted Stock"), which Restricted Stock shall vest
as follows: 25% on or after April 1, 1997, 50% on or after October 31, 1998, 75%
on or after October 31, 1999, and 100% on or after October 31, 2000, provided
however, that vesting will accelerate upon the sale of the Corporation. The
Restricted Stock grant shall be subject to the terms of a Restricted Stock
Agreement to be executed by the Employee and the Corporation.
(e) In addition to the foregoing, the Employee shall be entitled to
reimbursement of his legal fees related to this Agreement, not to exceed $3000.
4. Fringe Benefits:
(a) During the term hereof, subject to applicable waiting periods,
Corporation shall provide the Employee and his immediate family, at no cost to
Employee, with medical and hospitalization insurance coverage( and group dental,
if available) similar to that offered to other officers of the Corporation, in
addition to Employee's right to extend existing COBRA insurance coverage from
his previous employer through the termination of the same. The Corporation shall
pay Employees COBRA out of pocket costs.
(b) During the term hereof, Corporation shall provide the Employee, at no
cost to the Employee, subject to applicable waiting periods, with long term
disability insurance coverage no less favorable than that offered to other
officers of the Corporation. During the term hereof, Corporation shall provide
Employee, at no cost to Employee, with supplemental life insurance coverage on
Employee's life in the amount of $300,000. The proceeds of such life insurance
policies shall be payable to Employee's named beneficiary.
(c) Employee is authorized to incur on behalf of the Corporation only
reasonable expenses (including travel and entertainment) in connection with the
business of the Corporation. Any such expenses in excess of two thousand five
hundred dollars ($2500.00) per month, in the aggregate, must be approved in
advance by Corporation. Corporation shall reimburse Employee for all such
reasonable expenses incurred in connection with the business of Corporation upon
the presentation by Employee, from time to time, of an itemized account of such
expenditures, which account shall conform, in form and substance, to applicable
rules and regulations of the Internal Revenue Service.
5. Duties and Extent of Services: Upon the execution of this Agreement and
throughout its term, the duties of the Employee shall include, but are not
limited to the following:
(a) Provide managerial and executive support to the Corporation;
(b) Provide marketing and sales support for the products of the
Corporation;
(c) Develop information to provide support for the development and
distribution of the products of the Corporation;
(d) Support and development of sales leads as directed by the Corporation;
(e) Such other duties and responsibilities as may be assigned by the Board
or the Chief Executive Officer, from time to time consistent with Employee's
status as Executive Vice President.
(f) Employee will work exclusively for the Corporation during the term of
this Agreement. Employee shall exert his best efforts and shall devote no less
than the greater of: (i) forty (40) hours per week, or (ii) the amount of time
necessary for Employee to perform his duties with regard to the business and
affairs of the Corporation in accordance with this Agreement. During the term of
this Agreement Employee shall not, directly or indirectly, alone or as a member
of the partnership, or as an officer, director, shareholder, owner, agent or
employee of any other corporation, be engaged in or concerned with any other
compensable duties or pursuits whatsoever requiring his personal services
without the prior written consent of the Corporation, which consent may be
withheld for any reason or for no reason. Notwithstanding the foregoing, the
provisions of this Section 5 (f) shall not preclude the Employee from providing
tax return and other accounting services for clients for whom he has provided
such services during the prior 12 months, provided the Employee's provision of
such accounting services does not adversely effect the performance of his duties
hereunder in the sole opinion of the Corporation.
6. Vacation: During each year of the term of this Agreement, the Employee
shall be entitled to four (4) weeks vacation, the time of which shall be
determined after consultation with the Chief Executive Officer of the
Corporation. For purposes of this Section 6, Employee shall be entitled to carry
forward any unused vacation time from one period to another.
7. Termination: The Employee's employment hereunder shall terminate on the
date set forth in Section 2 hereof, or sooner upon the occurrence of any of the
following events:
(a) The Employee's death.
(b) The termination of the Employee's employment hereunder by Corporation,
at its option, to be exercised by written notice from Corporation to the
Employee, upon the Employee's incapacity or inability to perform his services as
contemplated herein for a period of at least one hundred twenty (120)
consecutive days or an aggregate of one hundred sixty (160) consecutive or
non-consecutive days during any twelve (12) month period during the term hereof
due to the fact that his physical or mental health shall have become impaired so
as to make it impossible or impractical for him to perform the duties and
responsibilities contemplated for him hereunder.
(c) The termination for "cause" of the Employee's employment hereunder by
Corporation, at its option, to be exercised by written notice from Corporation
to the Employee. The term "cause", as used herein, shall mean: (i) the
Employee's willful misconduct or gross
negligence in the performance of his duties on behalf of the Corporation, or the
Employee's dishonesty in the performance of his duties on behalf of the
Corporation, (ii) the neglect, failure or refusal of the Employee to
satisfactorily carry out any reasonable request of the Chief Executive Officer
or Board for the provision of services hereunder, after notice of such neglect,
failure or refusal has been given to Employee and Employee has failed to cure
such neglect, failure or refusal within 15 days of notice (iii) the material
breach of any provision of this Agreement by the Employee, after notice of such
breach has been given to Employee and Employee has failed to cure such breach
within 15 days of notice or (iv) the Employee's plea of guilty or nolo
contendere to, or conviction of any crime involving moral turpitude, common law
fraud, dishonesty, theft, or unethical conduct. For purposes of (ii) and (iii)
above, the Employee shall not be afforded an opportunity to cure in the event
that the Employee has already been afforded an opportunity to cure on two
previous occasions during the employment term and the termination for cause
shall be effective notwithstanding the lack of an opportunity to cure.
(d) The Cessation of the Corporation's Business: In the event of any such
termination, Corporation shall pay to Employee such portion of his annual base
salary payable to Employee to the date such termination becomes effective, and
thereafter Employee shall have no claim for any further compensation hereunder;
provided however, that in the event of Employee's death, his death shall be
deemed to have occurred on the last day of the month in which he dies.
8. Restrictions On Employee: During the period commencing on the date
hereof and ending two (2) years after the termination of the Employee's
employment by Corporation for any reason, the Employee shall not directly or
indirectly induce or attempt to induce any of the employees of Corporation to
leave the employ of Corporation.
9. Covenant Not To Compete: (a) During the period commencing on the date
hereof, and ending one (1) year after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, directly or indirectly engage in, associate with, or
own or control any interest in, or act as principal, director, officer, agent,
or employee of, or consultant to: (i) Cincinnati Xxxx Information Systems,
Systematics, Xxxxxxx Systems, Cable Services Group, Computer Sciences
Corporation, Electronic Data Systems, Alltel, or their successors or assigns, or
(ii) any person, firm or corporation, located in the eastern third of the United
States, whose activity is (i) a venture or business, substantially similar to
that of Corporation and/or (ii) which is in competition with the Corporation.
Notwithstanding anything to the contrary contained herein, to the extent
Corporation (i) makes an absolute assignment of the bulk of its assets for the
benefit of creditors, (ii) consents to the appointment of a bankruptcy trustee,
(iii) institutes bankruptcy proceedings or (iv) experiences a cessation, the
provisions of this Section 9 shall lapse.
(b) In the event the Employee's employment is terminated by the Corporation
pursuant to the provisions of Sections 7(c)(ii) or 7(c)(iii) hereof, the
Corporation shall pay the Employee, for a period of one (1) year after
termination, in monthly installments, a total amount equal to 50% of his base
salary, provided the Employee fully complies with the provisions of Sections 8,9
and 10 hereof. The Employee shall not be entitled to post termination payments
of any kind or nature with respect to his obligations pursuant to this Ageement,
except as expressly provided in this Section 9(b).
10. Proprietary Information:
(a) For purposes of this Agreement, "proprietary information" shall mean
any information relating to the business of Corporation or any entity in which
Corporation has an ownership interest that has not previously been publicly
released by duly authorized representatives of Corporation and shall include
(but shall not be limited to) information encompassed in all proposals,
marketing and sales plans, financial information, costs, pricing information,
computer programs, customer information, customer lists, and all methods,
concepts or ideas in or reasonably related to the business of Corporation or any
entity in which Corporation has an interest. The Employee agrees to regard and
preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other physical form. The Employee
will not, without written authority from Corporation to do so, directly or
indirectly, use for his benefit or purposes, nor disclose to others, either
during the term of his employment hereunder or thereafter, except as required by
the conditions of his employment hereunder, any proprietary information. The
Employee agrees not to remove from the premises of Corporation or any subsidiary
or affiliate of Corporation, except as an employee of Corporation in pursuit of
the business of Corporation or any of its subsidiaries, affiliates or any entity
in which Corporation has an ownership interest, or except as specifically
permitted in writing by Corporation, any document or object containing or
reflecting any proprietary information. The Employee recognizes that all such
documents and objects, whether developed by him or by someone else during the
term of his employment with Corporation, are the exclusive property of
Corporation.
(b) All proprietary information and all of the Employee's interest in trade
secrets, trademarks, computer programs, customer information, customer lists,
employee lists, products, procedure, copyrights and developments hereafter to
the end of the period of employment hereunder developed by Employee as a result
of, or in connection with, his employment hereunder, shall belong to
Corporation; and without further compensation, but at Corporation's expense,
forthwith upon request of Corporation, Employee shall execute any and all such
assignments and other documents and take any and all such other action as
Corporation may reasonably request in order to vest in Corporation all
Employee's right, title and interest in and all of the aforesaid items, free and
clear of liens, charges and encumbrances.
(c) The Employee expressly agrees that the covenants set forth in Sections
8, 9, and 10 of this Agreement are being given to Corporation in connection with
the employment of the Employee by Corporation and that such covenants are
intended to protect Corporation against the competition by the Employee, within
the terms stated, to the fullest extent deemed reasonable and permitted in law
and equity. In the event that the foregoing limitations upon the conduct of the
Employee are beyond those permitted by law, such limitations, both as to time
and geographical area, shall be, and be deemed to be, reduced in scope and
effect to the maximum extent permitted by law.
11. Injunctive Relief: The Employee acknowledges that the injury to
Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money damages, and, accordingly, Corporation may, in
addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction of the matter restraining any such violation; and no bond or
other security shall be required in connection with such injunction.
12. Representation of Employee: The Employee represents and warrants that
neither the execution and delivery of this Agreement nor the performance of his
duties hereunder violates the provisions of any other agreement to which he is a
party or by which he is bound.
13. Parties; Non-Assignability: As used herein, the term "Corporation"
shall mean and include Corporation and any subsidiary or affiliate thereof and
any successor thereto unless the context indicates otherwise. This Agreement and
all rights hereunder are personal to the Employee and shall not be assignable by
him and any purported assignment shall be null and void and shall not be binding
on Corporation.
14. Entire Agreement: This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated herein and
supersedes all previous representations, negotiations, commitments, and writing
with respect thereto.
15. Amendment or Alteration: No amendment or alteration of the terms of
this Agreement shall be valid unless made in writing and signed by all of the
parties hereto.
16. Choice of Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, except a provision of that
law which would refer resolution of any issue to another jurisdiction. The forum
for resolution of any dispute shall be the State of Connecticut.
17. Arbitration: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof may, in the sole discretion of
either party, be settled by arbitration in Stamford, Connecticut in accordance
with the rules of the American Arbitration Association and the judgment upon the
award rendered shall be entered by consent in any court having jurisdiction
thereof.
18. Waiver of Breach: The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any of the parties hereto.
19. Binding Effect: The terms of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
CORPORATION:
INTERNATIONAL TELECOMMUNICATION
DATA SYSTEMS, INC.
By /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
EMPLOYEE:
By /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
