EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") made and entered into as of March
1, 1999 by and between Teltran International Group, Ltd., a Delaware
corporation (the "Company"), and Xxxxx Xxxxx (the "Executive").
The Executive is being employed by the Company as an executive
officer. The parties desire to enter into an employment agreement and to set
forth herein the terms and conditions of the Executive's continued employment
by the Company and its subsidiaries.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and the mutual benefits to be derived here from,
the Company and the Executive agree as follows:
1. Employment.
(a). Duties. The Company shall employ the Executive, on the
terms set forth in this Agreement, as its Executive Vice President, and Chief
Operating Officer. The Executive accepts such employment with the Company and
shall perform and fulfill such duties as are assigned to him hereunder
consistent with his status as a senior executive of the Company, devoting his
best efforts and a substantial portion of his time and attention to the
performance and fulfillment of his duties and to the advancement of the
interests of the Company, subject only to the direction, approval, control and
directives of the Company's Board of Directors (the "Board"). Nothing
contained herein shall be construed, however, to prevent the Executive from
trading in or managing, for his own account and benefit, in stocks, bonds,
securities, real estate, commodities or other forms of investments (subject to
law and Company policy with respect to trading in Company securities). Without
any additional consideration, Executive shall also serve as an officer of any
or all subsidiaries of the Company. Unless otherwise indicated by the context,
the term "Company" shall include the Company and all its subsidiaries.
Notwithstanding any provisions to the contrary Executive is retaining
his ownership in and receive passive revenues from any telecommunications
company he may have an interest in prior to the date hereof and the time
devoted thereto does not interfere with his duties hereunder.
(b). Place of Performance. In connection with his employment
by the Company, the Executive shall be based at the Company's principal place
of business in the New York, New York, except when required for travel on
Company business.
(c). Nomination as Director. The Company agrees that it will
nominate the Executive as a member of the Board of Directors each year during
the term of this Agreement and will use its best efforts to ensure that the
Executive is elected to the Board of Directors.
2. Term. The Executive's employment under this Agreement shall
commence as of March 1, 1999 (the "Commencement Date") and shall, unless
sooner terminated in accordance with the provisions hereof, continue
uninterrupted until April 30, 2002 ("Term"). As used herein "Year" shall refer
to a twelve month period ending March 31 except the first year shall be a
thirteen month period beginning March 1, 1999 and ending April 30, 2000.
Unless notice of non-renewal is given by either party at least sixty (60) days
prior to the end of the Term or prior to the end of any Year thereafter, the
Term of this Agreement shall be automatically extended for an additional
period of one year.
3. Compensation.
(a). Base Salary. Executive shall receive a "Base Salary"
during the Term. For the period March 1, 1999 through July 31, 1999 the Base
Salary shall be at the rate of $150,000 per annum which shall increase to the
rate of $180,000 per annum commencing August 1, 1999. On April 1, 2000 the
Base Salary shall increase to $189,000 per annum for the Year commencing on
such date provided that if Net Income, as hereinafter defined, for the year
ended March 31, 2000 is equal to or greater than $200,000 then the Base Salary
shall be increased to $200,000. Every Year after March 31, 2001 the Base
Salary shall increase by an amount equal to ten (10%) percent of the prior
year's base Salary.
(b). Net Income. As used herein the term "Net Income" shall
mean pre-tax income of the Company determined in accordance with generally
accepted accounting principles consistently applied but excluding therefrom
(i) any reduction reflecting amortization of good-will and (ii) any deduction
for any bonus awarded under Paragraph 1(c).
(c). Bonus Pool Participation. Commencing with the year
beginning April 1, 1999 and ending March 31, 2000 Executive shall be entitled
to participate in bonus pool to be awarded for each year of the Term. The
bonus pool shall equal fifteen (15%) percent of Net Income for such year and
shall be paid on the earlier of the filing of the Company's quarterly report
on Form 10-Q for the quarter ending March 31, 1999 or fifty days after the end
of such year. At the time of payment Execution shall receive a written
statement of the Company's public accountant's calculating the amount of the
bonus pool. The allocation of such bonus pool shall be determined by Xxxxx
Xxxxxx and Xxxxx Xxxxx while they are employed provided each of Messrs. Xxxxxx
and Xxxxx shall receive six (6%) percent of such bonus pool. In addition, each
of Messrs. Xxxxxx and Xxxxx shall participate in such bonus pool to such
extent for any year in which they were employed hereunder except if their
employment is terminated by their voluntary termination or termination for
cause. The obligation to pay a bonus hereunder shall survive termination or
expiration of the Agreement.
4. Insurance
(a). Health Insurance and Other Benefits. During the Term, the
Executive shall
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be entitled to all employee benefits generally offered by
the Company to its executive officers and key management employees, including,
without limitation, all pension, profit sharing, retirement, stock option,
salary continuation, deferred compensation, disability insurance,
hospitalization insurance, major medical insurance, medical reimbursement,
survivor income, life insurance or any other benefit plan or arrangement
established and maintained by the Company, subject to the rules and
regulations then in effect regarding participation therein.
(b). Keyman Insurance. The Company may obtain keyman life
insurance upon the life of the Executive. In amounts to be determined from
time to time by Executive and the Company.
5. Expenses.
(a). Reimbursement of Expenses. The Executive shall be
reimbursed for all items of travel, entertainment and miscellaneous expenses
that the Executive reasonably incurs in connection with the performance of his
duties hereunder, provided the Executive submits to the Company such
statements and other evidence supporting said expenses as the Company may
reasonably require.
(b). Automobile Allowance. The Executive shall be reimbursed
for the expenses of owning or leasing an automobile suitable for his position
and consistent with Company practices, including the expenses of operating,
insuring and parking such automobile, provided the Executive submits to the
Company such statements and other evidence supporting such expenses as the
Company may require.
6. Vacation. The Executive shall be entitled to not less than four
(4) weeks of vacation in any calendar year. Any unused vacation time in a year
shall be accumulated and increase the amount of vacation time in subsequent
years.
7. Termination of Employment.
(a). Death or Total Disability. In the event of the death of
the Executive during the Term, this Agreement shall terminate as of the date
of the Executive's death. In the event of the Total Disability (as that term
is defined below) of the Executive for sixty (60) days in the aggregate during
any consecutive nine (9) month period during the Term, the Company shall have
the right to terminate this Agreement by giving the Executive thirty (30)
days' prior written notice thereof, and upon the expiration of such thirty
(30) day period, the Executive's employment under this Agreement shall
terminate. If the Executive shall resume his duties within thirty (30) days
after receipt of such a notice of termination and continue to perform such
duties for four (4) consecutive weeks thereafter, this Agreement shall
continue in full force and effect, without any reduction in Base Salary and
other benefits, and the notice of termination shall be considered null and
void and of no effect. Upon termination of this Agreement under this Paragraph
7(a), the Company shall have no further
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obligations or liabilities under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be, (i) the portion, if
any, that remains unpaid of the Base Salary for the Year in which termination
occurred, but in no event less than six (6) months' Base Salary; and (ii) the
amount of any expenses reimbursable in accordance with Paragraph 4 above, and
any automobile allowance due under Paragraph 5 above; and (iii) any amounts
due under any Company benefit, welfare or pension plan. Except as otherwise
provided by their terms, any stock options not vested at the time of the
termination of this Agreement under this Paragraph 7(a) shall immediately
become fully vested.
The term "Total Disability," as used herein, shall mean a
mental or physical condition which in the reasonable opinion of an independent
medical doctor selected by the Company renders the Executive unable or
incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement at the time the disabling condition was
incurred. In the event the Executive disagrees with such opinion, the
Executive may, at his sole expense, select an independent medical doctor and,
in the event that doctor disagrees with the opinion of the doctor selected by
the Company, they shall select a third independent medical doctor, and the
three doctors shall, by majority vote, determine whether the employee has
suffered Total Disability. The expense of the third doctor shall be shared
equally by the Company and the Executive. Notwithstanding the foregoing, if
the Executive is covered under any policy of disability insurance under
Paragraph 3(c) above, under no circumstances shall the definition of Total
Disability be different from the definition of that term in such policy.
(b). Discharge for Cause. The Company may discharge the
Executive for "Cause" upon notice and thereby immediately terminate his
employment under this Agreement. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment if the Executive,
in the reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured such
breach or commenced in good faith to correct such breach within thirty (30)
days after notice; (ii) embezzles or converts to his own use any funds of the
Company or any client or customer of the Company; (iii) converts to his own
use or unreasonably destroys, intentionally, any property of the Company,
without the Company's consent; (iv) is convicted of a crime; (v) is
adjudicated an incompetent; or (vi) is habitually intoxicated or is diagnosed
by an independent medical doctor to be addicted to a controlled substance (any
disagreement of Executive shall be resolved using the procedure provided in
Paragraph 7(a) above).
(c). Termination by Executive. Executive may terminate this
Agreement for the failure by the Company to comply with the material
provisions of this Agreement which failure is not cured within thirty (30)
days after notice ("Good Reason").
(d). No Mitigation. The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in this Agreement
by seeking other employment or otherwise, not shall the amount of any payment
provided for in this Agreement be reduced by any
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compensation earned by the Executive as the result of his employment by
another employer.
8. Restrictive Covenant.
(a). Competition. As used herein "Company Business" shall
mean any business which the Company is actively pursuing or actively
considering while the executive was employed by the Company provided that upon
termination or execution of this agreement the term "Company Business" shall
refer to any arrangement or contract or relation of the Company or any
subsidiary existing or actually pursued at the time of termination or
expiration of the Agreement. The Executive undertakes and agrees that during
the term of this Agreement and for a period of two years after the date of
termination or expiration of this Agreement he will not compete, directly or
indirectly, with respect to a Company Business or participate as a director,
officer, employee, agent, consultant, representative or otherwise, or as a
stockholder, partner or joint venturer, or have any direct or indirect
financial interest, including, without limitation, the interest of a creditor,
in any business competing with respect to a Company Business. Executive
acknowledges that such prospects represent a corporate opportunity or are the
property of the Company and Executive should have no rights with respect to
such properties on projects. Executive further undertakes and agrees that
during the term of the Agreement and for a period of one year after the date
of termination or expiration of this Agreement he will not, directly or
indirectly employ, cause to be employed, or solicit for employment any of
Company's or its subsidiaries' employees. Notwithstanding the foregoing, the
provisions of the paragraph 7 (a) shall not apply to termination by the
Executive pursuant to Section 7(c) or by the Company without cause.
(b). Scope of Covenant. Should the duration, geographical
area or range or proscribed activities contained in Paragraph 8(a) above be
held unreasonable by any court of competent jurisdiction, then such duration,
geographical area or range of proscribed activities shall be modified to such
degree as to make it or them reasonable and enforceable.
(c). Non-Disclosure of Information.
(i). The Executive shall (i) never, directly or
indirectly, disclose to any person or entity for any reason, or use for his
own personal benefit, any "Confidential Information" (as hereinafter defined)
either during his employment with the Company or following termination of that
employment for any reason (ii) at all times take all precautions necessary to
protect from loss or disclosure by him of any and all documents or other
information containing, referring or relating to such Confidential
Information, and (iii) upon termination of his employment with the Company for
any reason, the Executive shall promptly return to the Company any and all
documents or other tangible property containing, referring or relating to such
Confidential Information, whether prepared by him or others.
(ii). Notwithstanding any provision to the
contrary in this Paragraph 8(c), this paragraph shall not apply to information
which the Executive is called upon by legal process regular on its face
(including, without limitation, by subpoena or discovery requirement) to
disclose
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or to information which has become part of the public domain or is otherwise
publicly disclosed through no fault or action of the Executive.
(iii). For purposes of this Agreement,
"Confidential Information" means any information relating in any way to the
business of the Company disclosed to or known to the Executive as a
consequence of, result of, or through the Executive's employment by the
Company which consists of technical and nontechnical information about the
Company's products, processes, computer programs, concepts, forms, business
methods, data, any and all financial and accounting data, marketing,
customers, customer lists, and services and information corresponding thereto
acquired by the Executive during the term of the Executive's employment by the
Company. Confidential Information shall not include any of such items which
are published or are otherwise part of the public domain, or freely available
from trade sources or otherwise.
(iv). Upon termination of this Agreement for any
reason, the Executive shall turn over to the Company all tangible property
then in the Executive's possession or custody which belongs or relates to the
Company. The Executive shall not retain any copies or reproductions of
computer programs, correspondence, memoranda, reports, notebooks, drawings,
photographs, or other documents which constitute Confidential Information.
9. Arbitration.
(a). Any and all other disputes, controversies and claims
arising out of or relating to this Agreement, or with respect to the
interpretation of this Agreement, or the rights or obligations of the parties
and their successors and permitted assigns, whether by operation of law or
otherwise, shall be settled and determined by arbitration in New York City,
New York pursuant to the then existing rules of the American Arbitration
Association ("AAA") for commercial arbitration.
(b). In the event that the Executive disputes a
determination that Cause exists for terminating his employment hereunder
pursuant to paragraph 7(b), or the Company disputes the determination that
Good Reason exists for the Executive's termination of this Agreement pursuant
to paragraph 7(c), either party disputing this determination shall serve the
other with written notice of such dispute ("Dispute Notice") within thirty
(30) days after the date the Executive is terminated for Cause or the date the
Executive terminates this Agreement for Good Reason. Within fifteen (15) days
thereafter, the Executive or the Company, as the case may be, shall, in
accordance with the Rules of the AAA, file a petition with the AAA for
arbitration of the dispute, the costs thereof to be shared equally by the
Executive and the Company unless an order of the AAA provides otherwise. If
the Executive serves a Dispute Notice upon the Company, an amount equal to the
portion of the Base Salary Executive would be entitled to receive hereunder
shall be placed by the Company in an interest-bearing escrow account mutually
agreeable to the parties or the Company shall deliver an irrevocable letter of
credit for such amount plus interest containing terms mutually agreeable to
the parties. If the AAA determines that Cause existed for the termination, the
escrowed funds and accrued interest shall be paid to the Company. However, in
the event the AAA determines that the Executive was terminated without Cause
or that Executive resigned for Good Reason, the escrowed funds and accrued
interest shall be paid to the Executive.
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(c). Any proceeding referred to in paragraph 9(a) or (b)
shall also determine Executive's entitlement to legal fees as well as all
other disputes between the parties relating to Executive's employment.
(d). The parties covenant and agree that the decision of the
AAA shall be final and binding and hereby waive their right to appeal
therefrom.
10. Indemnity. The Company shall indemnify and hold executive
harmless from all liability to the full extent permitted by the laws of its
state of incorporation.
11. Miscellaneous.
(a). Notices. Any notice, demand or communication required
or permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below
by registered or certified mail, return receipt requested or sent by overnight
express mail or courier or facsimile to such address, if a party has a
facsimile machine. Notice shall be deemed to have been given and received when
so hand-delivered or after three (3) business days when so deposited in the
U.S. Mail, or when transmitted and received by facsimile or sent by express
mail properly addressed to the other party. The addresses are:
To the Company: Teltran International Group, Ltd.
Xxx Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
cc: Xxxxxx Xxxxxx Xxxxxx & Xxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
To the Executive: Xxxxx X. Xxxxxx
00 Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
The foregoing addresses may be changed at any time by notice given in the
manner herein provided.
(b). Integration; Modification. This Agreement constitutes
the entire understanding and agreement between the Company and the Executive
regarding its subject matter and supersedes all prior negotiations and
agreements, whether oral or written, between them with respect to its subject
matter. This Agreement may not be modified except by a written agreement
signed by the Executive and a duly authorized officer of the Company.
(c). Enforceability. If any provision of this Agreement
shall be invalid or unenforceable, in whole or in part, such provision shall
be deemed to be modified or restricted to the
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extent and in the manner necessary to render the same valid and enforceable,
or shall be deemed excised from this Agreement, as the case may require, and
this Agreement shall be construed and enforced to the maximum extent permitted
by law as if such provision had been originally incorporated herein as so
modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.
(d). Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties, including and their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
(e). Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one (1) or more
instances shall be deemed or construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition, or the breach
of any other term or covenant set forth in this Agreement. Moreover, the
failure of either party to exercise any right hereunder shall not bar the
later exercise thereof with respect to other future breaches.
(f). Governing Law. This Agreement shall be governed by the
internal laws of the State of New York.
(g). Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
(h). Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(i). Due Authorization. The Company represents that all
corporate action required to authorize the execution, delivery and performance
of this Agreement has been duly taken.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and, on behalf of the Company, by its duly authorized officer on the day and
year first above written.
/s/ Xxxxx Xxxxx
------------------------------------------
XXXXX XXXXX
TELTRAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Xxxxx X. Xxxxxx, President
