EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 31,
1998, is entered into between XXXXXXXX XXXXXXX, residing at 000 Xx. Xxxxx
Xxxxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 ("Executive"), and GLOBAL
TELECOMMUNICATION SOLUTIONS, INC., a Delaware corporation having its principal
office at 0000 Xxxxxx Xxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment of
Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Chief Operating
Officer to supervise and control the day-to-day functions of the
Company's sales, marketing, customer support and customer service
departments. All of Executive's powers and authority in any capacity
shall at all times be subject to the reasonable direction and control
of the Company's President.
1.2 The President may assign to Executive such other executive
duties for the Company or any Affiliate (as defined in Section 4.7) as
are consistent with Executive's status as Chief Operating Officer.
1.3 Executive accepts such employment and agrees to devote
substantially all of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties
primarily in and from the Company's offices located in the
Philadelphia metropolitan area. During the term of this Agreement,
Executive shall not be required to re-locate from the Philadelphia
metropolitan area.
1
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary ("Salary")
at the aggregate rate of $180,000 per annum during the Employment Term
(as such term is defined in Section 3.1, below). Executive's Salary
shall be paid in equal, periodic installments, in accordance with the
Company's normal payroll procedures and shall be subject to
withholding taxes and other normal payroll deductions.
2.2 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may
consider, the Company may determine to increase Executive's salary
and/or to award Executive a bonus (which bonus may be payable in cash
or securities of the Company). Notwithstanding the foregoing,
Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary or bonus.
2.3 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally
afforded to other senior executives of the Company, subject to
applicable waiting periods and other conditions. Executive shall be
entitled to four weeks of vacation in each employment year and to a
reasonable number of other days off for religious and personal
reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life,
health, disability, accident or other insurance, including key man
insurance, upon Executive that the Company may deem necessary and
advisable to protect its interests hereunder; and Executive agrees to
submit to any medical or other reasonable examination necessary for
such purpose and to assist and cooperate with the Company in procuring
such insurance; and Executive acknowledges that he shall have no
right, title or interest in or to such insurance. 2.4 The Company will
pay or reimburse Executive for all transportation, hotel and other
expenses reasonably incurred by Executive on business trips and for
all other ordinary and reasonable out-of-pocket expenses actually
incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved
in accordance with customary procedures. 2.5 The Company shall grant
Executive the option to purchase 50,000 shares of the Company's common
stock, par value $.01 per share, at an exercise price per share equal
to the closing price of such stock, as reported in the Wall Street
Journal, on February 6, 1998. Fifty percent of the option shall vest
on the one-year anniversary date of this Agreement and fifty percent
of the options shall vest on the second anniversary date of this
Agreement. All other terms and conditions of the Option shall be
governed by the Option Agreement entered into between Executive and
the Company of even date herewith.
3. Term and Termination.
3.1 The term of this Agreement commences as of January 1, 1998
and shall continue until December 31, 2000 (the "Employment Term"),
unless sooner terminated or extended as herein provided.
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate. Notwithstanding such termination,
the Company shall pay to the legal representative of Executive's
estate the Salary due Executive pursuant to paragraph 2.1 hereof
through the one-year anniversary date of Executive's death.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to
render, for six consecutive months, services of the character
contemplated by this Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event
of such termination the Company shall pay to Executive the salary due
Executive pursuant to Paragraph 2.1 through the Employment Term as
provided in Section 3.1. Notwithstanding such termination, the
provisions of paragraph 4 shall survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall mean: (a) the
intentional refusal or failure by Executive to carry out specific
directions of the President which are of a material nature and
consistent with his status as Chief Operating Officer; (b) the
commission by Executive of a material breach of any of the provisions
of this Agreement; (c) common law fraud or dishonest action by
Executive in his relations with the Company or any of its subsidiaries
or affiliates, or with any customer or business contact of the Company
or any of its subsidiaries or affiliates ("dishonest" for these
purposes shall mean Executive's knowingly or recklessly making of a
material misstatement or omission for his personal benefit); or (d)
the conviction of Executive of any crime involving an act of moral
turpitude. Notwithstanding the foregoing, no "cause" for termination
shall be deemed to exist with respect to Executive's acts described in
clauses (a) or (b) above, unless the Company shall have given written
notice to Executive specifying the "cause" with reasonable
particularity and, within ten business days after such notice,
Executive shall not have cured or eliminated the problem or thing
giving rise to such "cause"; provided, however, that a breach of any
provision of clauses (a) or (b) above, involving the same or
substantially similar actions or conduct for which the Company
previously gave notice of termination and with respect to which,
Executive satisfactorily cured, shall be grounds for termination for
cause without any additional notice from the Company. Notwithstanding
such termination, the provisions of paragraph 4 shall survive. 3.6 The
Executive, by notice to the Company, may terminate this Agreement if
the Company materially breaches any of the provisions of this
Agreement. Notwithstanding the foregoing, the Executive shall not have
grounds for termination unless Executive shall have given written
notice to the Company specifying the breach with reasonable
particularity and, within ten days after such notice, the Company
shall not have cured or eliminated the problem or thing giving rise to
such breach; provided, however, that a breach of any provision of this
Agreement involving the same or substantially similar actions or
conduct for which the Executive previously gave notice of termination
and with respect to which, the Company satisfactorily cured, shall be
grounds for termination for cause without any additional notice from
the Company. In the event of termination by Executive under this
Section 3.6, the Company shall pay to Executive the Salary due
Executive pursuant to paragraph 2.1 hereof through the Employment
Term. Notwithstanding such termination, the provisions of paragraph 4
shall survive termination if the Company continues to pay Executive
the Salary as provided in the immediately preceding sentence.
4. Protection of Confidential Information.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company, Executive
will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates
(referred to collectively in this paragraph 4 as the "Company"),
including, without limitation, financial information, designs and
other proprietary rights, trade secrets and "know-how," customers and
sources ("Confidential Information").
(b) The Company will suffer substantial damage which will be
difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should enter a Competitive Business
with the Company or divulge Confidential Information.
(c) The provisions of this Agreement are reasonable and necessary
for the protection of the business of the Company. 4.2 Executive
agrees that he will not at any time, either during the term of this
Agreement or thereafter, divulge to any person or entity any
Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the
course of performing his duties hereunder; (ii) with the Company's
express written consent; (iii) to the extent that any such information
is in the public domain other than as a result of Executive's breach
of any of his obligations hereunder; or (iv) where required to be
disclosed by court order, subpoena or other government process. If
Executive shall be required to make disclosure pursuant to the
provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such
subpoena, court order, or other government process, shall notify, by
personal delivery or by electronic means, confirmed by mail, the
Company and, at the Company's expense, Executive shall: (a) take all
reasonably necessary and lawful steps required by the Company to
defend against the enforcement of such subpoena, court order or other
government process, and (b) permit the Company to intervene and
participate with counsel of its choice in any proceeding relating to
the enforcement thereof. 4.3 Upon termination of his employment with
the Company, Executive will promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and
other documents (and all copies thereof) relating to the business of
the Company and all property associated therewith, which he may then
possess or have under his control; provided, however, subject to
Executive's obligations under this Section 4, that Executive shall be
entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the
Company. 4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Section 4.2, the Company shall
have the right and remedy: (a) to have the provisions of this
Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed by Executive that the
services being rendered hereunder to the Company are of a special,
unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company;
and (b) to require Executive to account for and pay over to the
Company all monetary damages suffered by the Company as the result of
any transactions constituting a breach of any of the provisions of
Section 4.2, and Executive hereby agrees to account for and pay over
such damages to the Company. Each of the rights and remedies
enumerated in this Section 4.5 shall be independent of the other, and
shall be severally enforceable, and such rights and remedies shall be
in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or equity. In connection with any
legal action or proceeding arising out of Section 4.2, the prevailing
party in such action or proceeding shall be entitled to be reimbursed
by the other party for the reasonable attorneys' fees and costs
incurred by the prevailing party. 4.5 If any provision of Section 4.2
is held to be unenforceable because of the scope, duration or area of
its applicability, the tribunal making such determination shall have
the power to modify such scope, duration, or area, or all of them, and
such provision or provisions shall then be applicable in such modified
form. 4.6 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason. 4.7 As used in this
Agreement, "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control
with the Company, and "Competitive Business" shall mean the design,
development and/or marketing of prepaid phone cards, enhanced and/or
interactive telecommunications services and/or products and/or any
other reselling of telecommunications access and/or the operation of
telephone calling centers or outlets or any other business engaged in
by the Company and/or any of its subsidiaries during the fiscal year
prior to the termination of Executive's employment.
5. Miscellaneous Provisions.
5.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same, when transmitted by
electronic means, or when delivered by reputable overnight courier,
postage prepaid, addressed to the party to receive the same at his or
its address set forth below, or such other address as the party to
receive the same shall have specified by written notice given in the
manner provided for in this Section 6.1. All notices shall be deemed
to have been given upon actual receipt. If to Executive:
Xxxxxxxx Xxxxxxx
000 Xx. Xxxxx Xxxxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
Marked: "Personal and Confidential"
If to the Company:
Global Telecommunication Solutions, Inc.
0000 Xxxxxx Xxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: General Counsel
5.2 This Agreement sets forth the entire agreement of the parties
relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions
of this Agreement may be waived or changed except by a writing by the
party against whom such waiver or change is sought to be enforced. The
failure of any party to require performance of any provision hereof or
thereof shall in no manner affect the right at a later time to enforce
such provision.
5.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder,
shall be determined in accordance with the law of the State of New
York applicable to agreements made and to be performed entirely in New
York. 5.4 This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company. This Agreement shall
not be assignable by Executive, but shall inure to the benefit of and
be binding upon Executive's heirs and legal representatives. 5.5
Should any provision of this Agreement become legally unenforceable,
no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent
the unenforceable provision. 5.6 Executive expressly agrees that the
compensation to which he may be entitled pursuant to Section 2 hereof
may be reduced as provided in Article 8 of the Merger and
Reorganization Agreement and pursuant to any other indemnification
obligation of Executive incurred in connection with the transactions
contemplated by the Merger and Reorganization Agreement. Executive
expressly agrees that any such reduction shall not constitute a
deduction from "wages" as defined in Section 190, Article 6, of the
New York Labor Law, and that such reduction is not prohibited under
Section 193, Article 6, of the New York Labor Law. Executive shall not
bring or participate in any action claiming that such reduction is in
violation of Section 193, Article 6, of the New York Labor Law, or any
other provision of applicable law. Executive shall not bring or
participate in any action claiming that such reduction is in violation
of Section 193, Article 6, of the New York Labor Law, or any other
provision of applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
-----------------------------------
Xxxxxxxx Xxxxxxx
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
By: _______________________________
Name:
Title:
