Exhibit 10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated May 19, 1999 by and between International
Telecommunication Data Systems, Inc., a Delaware corporation (the "Company"),
and Xxxxxxx X. Xxxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to serve as an employee of Company on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as the Chief
Financial Officer, and the Executive hereby agrees to function as such for the
Company, upon the terms and conditions hereinafter set forth, subject to the
directives of the Chief Executive Officer and Board of Directors of the Company
(the "Board").
2. TERM OF EMPLOYMENT.
(a) Unless (i) earlier terminated as provided in Section 7
hereof, or (ii) renewed as provided in Section 2(b) hereof, the term of the
Executive's employment under this Agreement shall be for a period beginning on
June 1, 1999 and ending on May 31, 2002 (the "Initial Term").
(b) The term of the Executive's employment under this
Agreement shall be automatically renewed for additional one-year terms (each, a
"Renewal Term") upon the expiration of the Initial Term or any Renewal Term
unless the Company or the Executive delivers to the other, at least 120 days
prior to the expiration of the Initial Term or the then current Renewal Term, as
the case may be, a written notice specifying that the term of the Executive's
employment will not be renewed at the end of the Initial Term or such Renewal
Term, as the case may be.
(c) The period from June 1, 1999 until May 31, 2002 or, in the
event that the Executive's employment hereunder is earlier terminated as
provided in Section 7 hereof or renewed as provided in Section 2(b) hereof, such
shorter or longer period, as the case may be, is hereinafter called the
"Employment Term".
(d) In the event that the Executive continues in the full-time
employ of the Company after the end of the Employment Term (it being expressly
understood and agreed that the Company does not now, nor hereafter shall have,
any obligation to continue the Executive in its employ whether or not on a
full-time basis, after the Employment Term ends), then the Executive's continued
employment by the Company
shall, notwithstanding anything to the contrary expressed or implied herein, be
terminable by the Company at will.
3. DUTIES. Upon the execution of this Agreement and throughout
the Employment Term, the duties of the Executive shall include, but are not
limited to, the following:
(a) Provide managerial and executive supervision and
support to the Company's accounting personnel;
(b) Provide investor relations support and management;
(c) Provide financial supervision of all aspects of the
Company's business;
(d) Develop budgeting, accounting and management programs to
support the development and distribution of the products and services of the
Company;
(e) Responsibility for the Company's financial reporting
obligations;
(f) Such other duties and responsibilities as may be
assigned by the Board from time to time.
(g) Except as approved in advance, in writing, by the Board of
Directors, Executive will work exclusively for the Company during the Employment
Term and shall exert his best efforts and shall devote no less than the greater
of: (i) fifty (50) hours per week, or (ii) the amount of time necessary for
Executive to perform his duties with regard to the business and affairs of the
Company in accordance with this Agreement. During the Employment Term, Executive
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 Company, which consent may be withheld for any reason or for no
reason. The Executive shall perform his duties at the offices of the Company in
Stamford, Connecticut and/or Champaign, Illinois, with travel to such other
locations from time to time as the Chief Executive Officer of the Company may
reasonably prescribe.
4. COMPENSATION.
(a) SALARY. As compensation for the complete and satisfactory
performance by the Executive of the services to be performed by the Executive
hereunder during the Employment Term, the Company shall pay the Executive a base
salary at the annual rate of $200,000 increased (but not reduced) from time to
time in such amounts as the Company may, in its reasonable discretion, deem to
be appropriate (said amount, together with any such increases, being hereinafter
referred to as the
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"Salary"). Any Salary payable hereunder shall be paid in regular intervals in
accordance with the Company's payroll practices from time to time in effect. All
compensation payable under this Agreement shall be subject to applicable federal
and state withholding tax requirements and other deductions approved by the
Executive.
(b) BONUS PAYMENTS. For each calendar year during the
Employment Term, the Executive is eligible to receive an annual bonus in the
reasonable discretion of the Board of Directors subject to the satisfaction of
such reasonable performance criteria as shall be established for him with
respect to such year.
5. BENEFITS. During the Employment Term, the Executive shall:
(a) be eligible to participate in executive fringe benefits
that may be provided by the Company for its executive employees in accordance
with the provisions of any such plans, as the same may be in effect from time to
time;
(b) be eligible to participate in any medical and health plans
or other executive welfare benefit plans that may be provided by the Company for
its executive employees in accordance with the provisions of any such plans, as
the same may be in effect from time to time;
(c) be entitled to annual paid vacation in accordance with the
Company policy that may be applicable to executive employees from time to time,
such vacation to be in no event less than three weeks in each calendar year.
(d) be entitled to sick leave and sick pay in accordance with
any Company policy that may be applicable to executive employees from time to
time;
(e) be entitled to life insurance coverage (payable to his
designated beneficiary) equal to twice the Executive's base salary to a maximum
of $300,000 and long term disability insurance coverage provided by the Company
to executive employees; and
(f) be entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by the Executive in the
performance of his duties hereunder in accordance with the Company's policies
for executive employees.
6. STOCK PLANS AND OPTIONS. During the Employment Term, the
Executive shall be eligible to participate in any stock option, incentive and
similar plans established by the Company from time to time and at any time
and the Company shall grant to the Executive or cause to be granted to him
stock options and other benefits similar to the options and benefits granted
to other executive officers subject in all cases to the satisfaction by the
Executive of the terms and conditions of such plans and to the reasonable
exercise by the Board of Directors of any discretion granted to it or them
thereunder. On the effective date of this Agreement, the Executive shall be
granted options to purchase sixty thousand (60,000) shares of Common Stock of
the Company,
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at market value on the date of grant, vesting over a 4 year period pursuant to
the terms of the Company's 1999 Stock Incentive Plan.
7. TERMINATION: EFFECT OF TERMINATION. The Executive's
employment hereunder shall be terminated upon the occurrence of any of the
following:
(a) death of the Executive;
(b) termination of the Executive's employment hereunder by the
Company because of the Executive's inability to perform his duties on
account of disability or incapacity for a period of one hundred eighty
(180) or more days, whether or not consecutive, occurring within any
period of twelve (12) consecutive months;
(c) written notice by the Company to the Executive of the
termination of his employment hereunder by the Company at any time "for
cause,"
(d) written notice by the Executive to the Company of the
termination of the Executive's employment hereunder by the Executive
because of a material diminution of the Executive's duties, authority
or responsibility or a materially impairment by action of the Company
of his ability to perform his duties or responsibilities, regardless of
whether such diminution of duties or impairment is accompanied by a
change in the Executive's title of Chief Financial Officer;
(e) written notice by the Executive to the Company of a
material breach by the Company of any provision of this Agreement if
such breach continues for thirty (30) days after written notice thereof
to the Company; or
(f) written notice by the Executive to the Company of the
termination of the Executive's employment hereunder by the Executive at
any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than a breach of any provision of this
Agreement by the Company (as described in paragraph (v) above) or other
than the occurrence of any event described in clause (iv) above.
The following, and only the following, actions, failures or events by or
affecting the Executive shall constitute "cause" for termination within the
meaning of clause (c) above:
(1) conviction of having committed a felony, (2) acts of dishonesty or moral
turpitude that are materially detrimental to the Company, (3) willful acts or
omissions which the Executive knew were likely to materially damage the business
of the Company, (4) failure by the Executive to obey the reasonable and lawful
orders of the Board of Directors, (5) willful breach by the Executive of his
obligations under this Agreement, or (6) failure by the Executive to perform
duties in accordance with the reasonable directions of the Board of Directors.
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(b) In the event that the Executive's employment with the Company is
terminated by the Executive pursuant to clauses (d) and (e) above, then the
Company shall pay to the Executive, as severance pay in a single lump sum
payment, an amount equal to 12 months of Base Salary within thirty (30) days
after the Executive's termination of employment, based on the Executive's Base
Salary immediately preceding the event specified in clauses (d) and (e), without
reduction or offset for any other monies which the Executive may thereafter earn
or be paid.
(c) In the event that the Executive's employment with the Company
terminates pursuant to clauses (a), (b) or (c) above, then notwithstanding
anything to the contrary expressed or implied herein, except as required by
applicable law and Section 8 hereof, the Company shall not be obligated to make
any payments to the Executive or on his behalf of whatever kind or nature by
reason of the Executive's cessation of employment (including, without
limitation, by reason of termination of the Executive's employment by the
Company for "cause"), other than (i) such amounts, if any, of his Salary as
shall have accrued and remained unpaid as of the date of said cessation and (ii)
such other amounts which may be then otherwise payable to the Executive from the
Company's benefit plans or reimbursement policies, if any.
8. CHANGE IN CONTROL.
(a) In the event of a Change in Control (as hereinafter
defined), (i) all unvested stock options and other benefits then held by the
Executive shall become fully vested and immediately exercisable and shall remain
so for a period of six months thereafter or, if longer, for the period during
which such option or other benefit would otherwise be exercisable in accordance
with its terms or the terms of the applicable plan and (ii) Executive shall be
entitled to the compensation provided in Section 7(b) hereof within thirty (30)
days after the Change in Control; provided, however, that prior to the
occurrence of the Change in Control the Executive may elect to defer payment of
any amounts payable pursuant to this Section until the calendar year beginning
at least 30 days after the Change in Control.
(b) Change in Control shall mean (i) any transfer or other
transaction whereby the right to vote more than fifty percent (50%) of the then
issued and outstanding capital stock of (A) the Company or (B) any subsidiary of
the Company to which the Company shall have transferred all or substantially all
of its business, is transferred to any party or affiliated group of parties,
(ii) any merger or consolidation of the Company (or a subsidiary of the Company
of the type described in clause (i)(B) above) with any other business entity, at
the conclusion of which transaction the persons who were holders of all the
voting stock of the Company immediately prior to the transaction hold less than
fifty percent (50%) of the total voting stock of the successor entity
immediately following the transaction, or (iii) any sale, lease, transfer or
other disposition of all or substantially all the assets of the Company (or a
subsidiary of the type described in clause (i)(B) above).
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(c) Notwithstanding any other provision of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive (i) is deemed to be in connection with a Change in Control (whether
payable pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, its successors, any person whose actions result
in a Change in Control or any corporation ("Affiliates") affiliated (or which,
as a result of the completion of the transactions causing a Change in Control
will become affiliated) with the Company within the meaning of Section 1504 of
the Internal Revenue Code of 1986, as amended (the "Code") (collectively with
the payments and benefits pursuant to this Agreement if deemed to be paid
pursuant to a Change in Control, "Total Payments") and (ii) is determined by the
Company's independent certified accounting firm (the "Tax Advisor") that an
excise tax is payable by Executive under Section 4999 of the Code, then the
Company will pay to the Executive additional compensation which will be
sufficient to enable Executive to pay such excise tax as well as the income tax,
medicare tax and excise tax on such additional compensation, such that, after
the payment of income, medicare and excise taxes, Executive is in the same
economic position in which he would have been if the provisions of Section 4999
of the Code had not been applicable. The additional compensation required by
this Section 8(c) will be paid to Executive promptly after the date or dates on
which the amount of such additional compensation is determinable, in whole or in
part by the Tax Advisor.
9. RESTRICTIONS ON EXECUTIVE. During the period commencing on
the date hereof and ending two (2) years after the termination of the
Executive's employment by the Company for any reason, the Executive shall not
directly or indirectly induce or attempt to induce any of the employees of
the Company to leave the employ of the Company.
10. COVENANT NOT TO COMPETE. During the period commencing on
the date hereof, and ending one (1) year after the termination of the
Executive's employment due to Sections 7(b), 7(c) or 7(f)) hereof, except if
termination is a result of a Change in Control, the Executive 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
any person, firm or company, or any division or subsidiary, whose primary
activity is in competition with the Company. Notwithstanding anything to the
contrary contained herein, to the extent the Company (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 10 shall lapse.
11. PROPRIETARY INFORMATION.
(a) For purposes of this Agreement, "proprietary information"
shall mean any information relating to the business of Company or any entity in
which Company has an ownership interest that has not previously been publicly
released by duly authorized representatives of the Company and shall include
(but shall not be
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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 Company or any entity in which Company has an
interest. The Executive 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 Executive will not, without written
authority from Company 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 or as otherwise required by law, any proprietary information. The
Executive agrees not to remove from the premises of the Company or any
subsidiary or affiliate of Company, except as an executive of the Company in
pursuit of the business of the Company or any of its subsidiaries, affiliates or
any entity in which the Company has an ownership interest, or except as
specifically permitted in writing by the Company, any document or object
containing or reflecting any proprietary information. The Executive recognizes
that all such documents and objects, whether developed by him or by someone else
during the term of his employment with the Company are the exclusive property of
the Company.
(b) All proprietary information and all of the Executive'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
Executive as a result of, or in connection with, his employment hereunder, shall
belong to the Company; and without further compensation, but at the Company's
expense, forthwith upon request of the Company, Executive shall execute any and
all such assignments and other documents and take any and all such other action
as the Company may reasonably request in order to vest in the Company all
Executive's right, title and interest in and all of the aforesaid items, free
and clear of liens, charges and encumbrances.
(c) The Executive expressly agrees that the covenants set
forth in Sections 9, 10, and 11 of this Agreement are being given to the Company
in connection with the employment of the Executive by the Company and that such
covenants are intended to protect the Company against the competition by the
Executive, 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 Executive 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.
12. INJUNCTIVE RELIEF: The Executive acknowledges that the
injury to the Company 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, the
Company may, in addition to pursuing its other remedies, obtain an injunction
from any court having jurisdiction of the matter
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restraining any such violation; and no bond or other security shall be required
in connection with such injunction.
13. REPRESENTATION OF EXECUTIVE: The Executive 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.
14. NON-ASSIGNABILITY. (a) Neither this Agreement nor any right or
interest hereunder shall be assignable by the Executive, his beneficiaries, or
legal representatives without the Company's prior written consent; PROVIDED,
HOWEVER, that nothing in this Section shall preclude the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity. Notwithstanding the foregoing, in the case of a Change in
Control, this Agreement and any right or interest of the Company hereunder shall
be assignable by the Company without the consent of the Executive; PROVIDED,
HOWEVER, that in the event of such an assignment without the consent of the
Executive, the Company shall remain liable for the payment of all amounts
payable to the Executive hereunder and the transferee shall agree to be bound by
all of the provisions hereof in a writing delivered to the Executive.
(b) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
15. BINDING EFFECT. Without limiting or diminishing the effect of
Section 10 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
16. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Executive,
at his home address or addresses as either party shall have designated in
writing to the other party hereto.
17. NO SET-OFF. The Company will pay promptly when due all sums to be
paid the Executive under this Agreement without abatement, deduction or
reduction of any kind or without any kind of setoff against any such sums; it
being the intention of the parties that all such sums shall continue to be
payable in all events unless the Company's obligation to pay such sums shall be
terminated pursuant to the express provisions of this Agreement.
18. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut other than conflicts of
law.
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19. SEVERABILITY. If any part of this Agreement is held by a court of
competent jurisdiction to be invalid, illegible or incapable of being enforced
in whole or in part by reason of any rule of law or public policy, such part
shall be deemed to be severed from the remainder of this Agreement for the
purpose only of the particular legal proceedings in question and all other
covenants and provisions of this Agreement shall in every other respect continue
in full force and effect and no covenant or provision shall be deemed dependent
upon any other covenant or provision.
20. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
21. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
including the prior Agreement between the parties hereto with respect to the
subject matter hereof. This Agreement may be modified or amended only by an
instrument in writing signed by both parties hereto.
22. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23. GENERAL RELEASES . The parties agree to exchange mutual general
releases in the event of a lump sum payment to the Executive pursuant to the
Change of Control provisions or Section 7(b).
24. ARBITRATION: Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof may, in the sole discretion of
the Company, 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
INTERNATIONAL TELECOMMUNICATION EXECUTIVE
DATA SYSTEMS, INC.
By /s/ Xxxxx X. Xxxxxxxxxx /s/ X.X. Xxxxxxxxxx
-------------------------------------- ---------------------------
Xxxxx X. Xxxxxxxxxx Xxxxxxx X. Xxxxxxxxxx
President
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