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