EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective the first day of January, 1997,
by and between U.S. LONG DISTANCE CORP., a Delaware corporation, with principal
offices located at 0000 Xxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000
(hereinafter referred to as the "Company"), and XXXXXXX X. XXXXXX, a resident of
Xxxxxx, Xxxxxx County, Texas (hereinafter referred to as the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is now employed by the Company, and the Employee and
Company desire to enter into an agreement relating to such employment, outlining
the duties and obligations of each:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, it is agreed as follows:
1. EMPLOYMENT. The Company agrees to continue to employ the Employee,
and the Employee agrees to continue to be employed by the Company, subject to
the terms and conditions set forth herein.
2. TERM. Subject to the provisions hereof, the term of the Employee's
employment by the Company under this Agreement shall be for a period of one (1)
year commencing on the date hereof; provided that such term of employment shall
continue thereafter unless and until terminated by either the Company or the
Employee upon no less than one hundred twenty (120) days' prior written notice
to the other of the desire to terminate such employment. The term of the
Employee's employment hereunder, including any continuation of the original
term, is hereinafter referred to as the "Employment Period."
3. POSITION AND DUTIES. During the Employment Period, the Employee shall
serve as Senior Vice President, Chief Financial Officer and Corporate Treasurer
of the Company, with such assignments, powers and duties as are assigned or
delegated to him by the Chief Executive Officer and President of the Company
(which is presently Xx. Xxxxx X. Xxxxx) or his authorized representative. Such
assignments, powers and duties may, from time to time, be modified by the
Company, as the Company's needs may require. The Employee shall also, at the
request of the Company, perform similar services for any Affiliate (as
hereinafter defined) of the Company without additional compensation. The
Employee agrees to devote all of his business time, skill, attention and best
efforts to the business of the Company and its Affiliates in the advancement of
the best interests of the Company and its Affiliates. As used in this
Agreement, the term "Affiliate" of the Company means any person or corporation
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under the control of the Company.
4. COMPENSATION.
4.1 For all services rendered by the Employee to the Company during
the Employment Period, the Company shall pay the Employee a salary at the rate
of One Hundred Forty Thousand and No/100 Dollars ($140,000.00) annually. The
compensation is to be payable, subject to such withholdings as are required by
law, in installments in accordance with the Company's customary payroll
practices.
4.2. The Employee will be eligible for bonuses from a bonus pool, the
make-up, terms, conditions and awards therefrom to be determined by the
Compensation Committee of the Company.
5. OFFICE FACILITIES. During the Employment Period, the Company will
furnish the Employee, without charge, suitable office facilities for the purpose
of performing his duties hereunder, which facilities shall include secretarial,
telephone, clerical and support personnel and services and shall be similar to
those furnished to employees of the Company having comparable positions.
6. FRINGE BENEFITS; VACATIONS. During the Employment Period, the
Employee shall be entitled to participate in or receive benefits under such
pension, medical and life insurance and other employee benefit plans of the
Company which may be in effect from time to time, to the extent he is eligible
under the terms of those plans, on the same basis as other employees of the
Company having comparable positions. The Employee shall be entitled to
vacations with pay in accordance with the policies of the Company in effect from
time to time.
7. EXPENSES. Subject to such policies regarding expenses and expense
reimbursement as may be adopted from time to time by the Company and compliance
therewith by the Employee, the Employee is authorized to incur reasonable
expenses in the performance of his duties hereunder, and the Company will
reimburse Employee for such reasonable out-of-pocket expenses upon the
presentation by the Employee of an itemized account and receipts satisfactory to
the Company.
8. TERMINATION.
8.1 TERMINATION BY THE COMPANY WITHOUT CAUSE. Subject to the
provisions of this Section 8.1, this Agreement may be terminated by the Company
without cause upon 30 days' prior written notice thereof given to Employee. In
the event of termination pursuant to this Section 8.1 the Company shall pay
Employee, within 15 days of the effective date of such termination, a lump-sum
payment equal to (without discounting to present value) one times his then
effective annual base salary under Section 4.1 hereof and (b) all outstanding
stock options to acquire shares of the Company's common stock held by Employee
shall become fully vested and exercisable pursuant to the Agreement Regarding
Vesting of Stock Options attached hereto as EXHIBIT A. Payment of such sum by
the Company shall constitute Employee's full severance pay, and the Company
shall have no further obligation to Employee arising out of such termination.
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8.2 VOLUNTARY TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee
may at any time voluntarily terminate his employment for "good reason" (as
defined below). In the event of such voluntary termination for "good reason,"
(a) the Company shall pay Employee, within 15 days of the effective date of such
termination, a lump-sum payment equal to (without discounting to present value)
one times his then effective annual base salary under Section 4.1 hereof and (c)
all outstanding stock options to acquire shares of the Company's common stock
held by Employee shall become fully vested and exercisable pursuant to the
Agreement Regarding Vesting of Stock Options attached hereto as EXHIBIT A.
For purposes of this Agreement, "good reason" shall mean the
occurrence of any of the following events:
(a) Removal from the offices Employee holds on the date of this
Agreement or a material reduction in Employee's authority or
responsibility, including, without limitation, involuntary
removal from the Board of Directors, but not including
termination of Employee for "cause," as defined below;
(b) Relocation of the Company's headquarters from Bexar County,
Texas;
(c) A reduction in the Employee's then effective base salary under
Section 4.1; or
(d) The Company otherwise commits a material breach of this
Agreement.
8.3. TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate this Agreement at any time if such termination is for "cause" (as
defined below), by delivering to Employee written notice describing the cause of
termination 30 days before the effective date of such termination and by
granting Employee at least 30 days to cure the cause. In the event the
employment of Employee is terminated for "cause," Employee shall be entitled
only to the base salary earned PRO RATA to the date of such termination with no
entitlement to any base salary continuation payments or benefits continuation
(except as specifically provided by the terms of an employee benefit plan of the
Company). Except as otherwise provided in this Agreement, the determination of
whether Employee shall be terminated for "cause" shall be made by the Board of
Directors of the Company, in the reasonable exercise of its business judgment,
and shall be limited to the occurrence of the following events:
(a) Conviction of or a plea of NOLO CONTENDERE to the charge of a
felony (which, through lapse of time or otherwise, is not
subject to appeal);
(b) Willful refusal without proper legal cause to perform, or gross
negligence in performing, Employee's duties and
responsibilities;
(c) Material breach of fiduciary duty to the Company through the
misappropriation of Company funds or property; or
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(d) The unauthorized absence of Employee from work (other than for
sick leave or disability) for a period of 30 working days or
more during any period of 45 working days during the term of
this Agreement.
8.4 TERMINATION UPON DEATH OR PERMANENT DISABILITY. In the event
that Employee dies, this Agreement shall terminate upon the Employee's death.
Likewise, if the Employee becomes unable to perform the essential functions of
the position, with or without reasonable accommodation, on account of illness,
disability, or other reason whatsoever for a period of more than six consecutive
or nonconsecutive months in any twelve-month period, this Agreement shall
terminate effective upon such incapacity, and Employee (or his legal
representatives) shall be entitled only to the base salary earned PRO RATA to
the date of such termination with no entitlement to any base salary continuation
payments or benefits continuation (except as specifically provided by the terms
of an employee benefit plan of the Company).
8.5 VOLUNTARY TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement at any time upon delivering 30 days' written notice of resignation to
the Company. In the event of such voluntary termination other than for "good
reason" (as defined above), Employee shall be entitled to his base salary earned
PRO RATA to the date of his resignation, but no base salary continuation
payments or benefits continuation (except as specifically provided by the terms
of an employee benefit plan of the Company). On or after the date the Company
receives notice of Employee's resignation, the Company may, at its option, pay
Employee his base salary through the effective date of his resignation and
terminate his employment immediately.
8.6 TERMINATION FOLLOWING CHANGE OF CONTROL.
(a) Notwithstanding anything to the contrary contained herein,
should Employee at any time within 12 months of the occurrence of a "change of
control" (as defined below) cease to be an employee of the Company (or its
successor), by reason of (i) termination by the Company (or its successor) other
than for "cause" (following a change of control, "cause" shall be limited to the
conviction of or a plea of NOLO CONTENDERE to the charge of a felony which,
through lapse of time or otherwise, is not subject to appeal), or a material
breach of fiduciary duty to the Company through the misappropriation of Company
funds or property) or (ii) voluntary termination by Employee for "good reason
upon change of control" (as defined below), then in any such event, (1) the
Company shall pay Employee, within 45 days of the severance of employment
described in this Section 8.6, a lump-sum payment equal to (without discounting
to present value) two times his then effective base salary under Section 4.1
hereof, and (2) all outstanding stock options held by Employee shall become
fully vested and exercisable pursuant to the Agreement Regarding Vesting of
Stock Options attached hereto as EXHIBIT A.
(b) As used in this Section, voluntary termination by Employee for
"good reason upon change of control" shall mean (i) removal of Employee from the
offices Employee holds on the date of this Agreement, (ii) a material reduction
in Employee's authority or responsibility, including, without limitation,
involuntary removal from the Board of Directors, (iii) relocation of the
Company's headquarters from Bexar County, Texas, (iv) a reduction in
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Employee's then effective base salary under Section 4.1, or (v) the Company
otherwise commits a breach of this Agreement.
(c) As used in this Agreement, a "change of control" shall be
deemed to have occurred if (i) 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"), is or becomes a "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing more than 30% of the combined voting power of the Company's then
outstanding securities, or (ii) at any time during the 24-month period after a
tender offer, merger, consolidation, sale of assets or contested election, or
any combination of such transactions, at least a majority of the Company's Board
of Directors shall cease to consist of "continuing directors" (meaning directors
of the Company who either were directors prior to such transaction or who
subsequently became directors and whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least two thirds of the
directors then still in office who were directors prior to such transaction), or
(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation that
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) at least 60% of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement of sale or disposition by
the Company of all or substantially all of the Company's assets.
8.7 EXCLUSIVITY OF TERMINATION PROVISIONS. The termination
provisions of this Agreement regarding the parties' respective obligations in
the event Employee's employment is terminated, are intended to be exclusive and
in lieu of any other rights or remedies to which Employee or the Company may
otherwise be entitled at law, in equity or otherwise. It is also agreed that,
although the personnel policies and fringe benefit programs of the Company may
be unilaterally modified from time to time, the termination provisions of this
Agreement are not subject to modification, whether orally, impliedly or in
writing, unless any such modification is mutually agreed upon and signed by the
parties.
9. COVENANTS NOT TO DISCLOSE. The Employee covenants and agrees that he
will not, at any time during or after the termination of his employment by the
Company, communicate or disclose to any person, or use for his own account, or
advise, discuss with, or in any way assist any other person or firm in obtaining
or learning about, without the prior written consent of the Company, information
concerning any inventions, processes, programs, systems, flow charts or
equipment used in, or any secret or confidential information (including, without
limitation, any customer lists, trade secrets or information concerning any work
done by the Company for its customers or done in any effort to solicit or obtain
customers) concerning, the business and affairs of the Company or any of its
Affiliates acquired by the Employee during the term of his employment by the
Company. The Employee further covenants and agrees that he shall retain all
such knowledge and information concerning the foregoing in trust for the sole
benefit of the Company and its Affiliates and their respective successors and
assigns.
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10. COVENANT NOT TO COMPETE. The Employee covenants and agrees that,
during the Employment Period and for a period of one (1) year after the
voluntary resignation of the Employee as outlined in Section 8.5 herein, other
than for "good reason" (as defined in Section 8.2), or termination for cause as
outlined in Section 8.3 herein, he will not, directly or indirectly, own, render
services or advice to, or be engaged in a business which is similar to or in
competition with the business of marketing or selling of operator assisted or
long distance telecommunication services, such as one-plus, WATS, 800 and travel
services or any other products or services which have been, are then, or will in
the future be, marketed through the Company in the State of Texas except in the
course of his employment hereunder or except upon the written consent of the
Company.
11. ESSENTIAL NATURE OF COVENANTS. The covenants of the Employee
contained in Sections 9 and 10 shall be construed as independent of any other
provision of this Agreement; and the existence of any claim or cause of action
of the Employee against the Company or any of its Affiliates, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of said covenants. The Employee understands that the
covenants contained in Sections 9 and 10 are essential elements of the
transactions contemplated by this Agreement and, but for the agreement of the
Employee to Sections 9 and 10, the Company would not have agreed to enter into
such transactions. The Employee has been advised to consult with his counsel in
order to be informed in all respects concerning the reasonableness and propriety
of Sections 9 and 10, with specific regard to the nature of the business
conducted by the Company, and the Employee acknowledges that Sections 9 and 10
are reasonable in all respects.
12. REMEDIES. In the event of a breach or threatened breach by the
Employee of Section 9 or 10, the Company shall be entitled to a temporary
restraining order and an injunction restraining the Employee from the commission
of such breach. Nothing herein contained shall be construed as prohibiting the
Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of money damages.
13. WAIVER OF BREACH. The waiver by the Company of a breach of any
provision of this Agreement by the Employee shall not operate or be construed as
a waiver of any subsequent breach by the Employee.
14. BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors,
assigns, heirs and legal representatives. Insofar as the Employee is concerned,
this Agreement, being personal, cannot be assigned.
15. SEVERABILITY. The invalidity of all or any part of any section of
this Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
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16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be an original,
but all of which together shall constitute one and the same instrument.
17. GOVERNING LAW. This Agreement shall be construed (both as to validity
and performance) and enforced in accordance with and governed by the laws of the
State of Texas.
18. NOTICE. All Notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered in person or three (3) days after being mailed by registered or
certified first-class mail, postage prepaid, return receipt requested, if to the
Employee at 0000 Xxxx Xxxxx, Xxxxxx, Xxxxx 00000, or if to the Company, at the
address listed above, or to such other address as such party shall have
specified by notice to the other party hereto as provided in this section.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and date first above written.
U.S. LONG DISTANCE CORP.
By: /s/ XXXXX X. XXXXX /s/ XXXXXXX X. XXXXXX
------------------------- -------------------------
XXXXX X. XXXXX XXXXXXX X. XXXXXX
Chief Executive Officer and President
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AGREEMENT REGARDING VESTING OF STOCK OPTIONS
This Agreement is entered into effective January 1, 1997, between Xxxxxxx
X. Xxxxxx ("Employee") and U.S. Long Distance Corp., a Delaware corporation (the
"Company").
WHEREAS, Employee has been granted and may hereafter be granted options
under the Company's 1990 Employee Stock Option Plan (as amended from time to
time, the "Option Plan") to acquire shares of common stock, $.01 par value, of
the Company; and
WHEREAS, Employee and the Company have entered into an Employment Agreement
on January 1, 1997 (the "Employment Agreement"); and
WHEREAS, as contemplated in the Employment Agreement, the parties desire
that options granted to Employee under the Option Plan become fully exercisable
by Employee upon termination of the Employment Agreement under certain
circumstances;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, notwithstanding any provisions to the contrary
contained in resolutions granting or agreements governing Options heretofore or
hereafter granted to Employee under the Option Plan ("Options"), in the event of
termination of the Employment Agreement (a) at the election of the Company under
Article II thereof, (b) by the Company under Section 8.1 thereof without cause
(c) by Employee under Section 8.2 thereof with "good reason" (as defined
therein) or (d) under Section 8.6 thereof following a "change in control" (as
defined therein), then, in any such event, immediately prior to the effective
date of such termination, all Options which have not lapsed shall become fully
vested and exercisable (if not already vested and exercisable) by Employee for a
period of three months thereafter (as contemplated in Section 14 of the Option
Plan). Further, for the purposes of applying the provisions of Section 14 of
the Plan respecting the termination of Options, the Company hereby consents to
any termination by Employee under Section 8.2 of the Employment Agreement with
"good reason" (as defined therein).
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date indicated above.
COMPANY: U.S. LONG DISTANCE CORP.
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: President and CEO
EMPLOYEE: /s/ XXXXXXX X. XXXXXX
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XXXXXXX X. XXXXXX
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