EXHIBIT 10.3
EMPLOYMENT CONTRACT
EMPLOYMENT CONTRACT, dated as of November 2, 1999, between DIAL-THRU
INTERNATIONAL CORPORATION, a Delaware corporation with offices at 0000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Company"), XXXXX TELECOM
& TECHNOLOGIES, INC., a Delaware corporation ("XXXXX"), and XXXX XXXXXXX,
residing at the address set forth his name below his signature at the end of
this Agreement (the "Executive").
RECITALS:
A. As of the date hereof, the Company has acquired substantially all
of the assets and business (the "Business") of Dial-Thru International
Corporation, a California corporation ("DTI"), of which Executive was the
sole shareholder, pursuant to the terms of an Asset Purchase Agreement dated
November 2, 1999 (the "Purchase Agreement").
B. The Company desires to employ Executive as an executive officer of
the Company.
C. Executive has agreed to be employed by the Company pursuant to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Company, XXXXX and Executive hereby agree as follows:
1. TERM AND RENEWAL.
The Company agrees to employ Executive, and the Executive agrees to
serve, on the terms and conditions of this Agreement for a period commencing
on November 1, 1999 and ending October 31, 2001, or such shorter period as
may be provided for herein. On October 31, 2001 and each anniversary of
this Agreement thereafter, the term shall be extended for an additional
period of one (1) year unless the Board of Directors of XXXXX elects, at the
directors' meeting immediately following the annual stockholders' meeting,
not to extend this Agreement. In the event that this Agreement is not
extended by the Board of Directors of XXXXX, this Agreement shall remain in
effect for only the remainder of the term then in effect. Notwithstanding
the foregoing, this Agreement shall not be extended beyond the time that
Executive has attained the normal retirement age (which shall be no earlier
than age 65) established by the Board of Directors of XXXXX for the
Company's executives. The period during which Executive is employed
hereunder is hereafter referred to as the "Employment Period."
2. DUTIES AND SERVICES.
During the Employment Period, Executive shall be employed as President
of the Company and Executive Vice President of XXXXX and shall also perform
services in a responsible executive or managerial capacity for any of the
Company's or XXXXX'x subsidiary corporations when and as requested by the
Company. In performance of his duties, Executive shall be subject to the
direction of the Chief Executive Officer of the Company and Board of
Directors of XXXXX. Executive agrees to his employment as described in this
Section 2 and agrees to devote substantially all of his time and efforts to
the performance of his duties under this Agreement. Executive shall be
available to travel as the needs of the business require.
3. COMPENSATION.
(a) As compensation for his services hereunder, the Company shall pay
Executive, during the Employment Period, a base salary payable in equal
monthly installments at the annual rate of $175,000. Executive shall also
participate in any bonus programs for the Company's executive officers, as
provided by the Board of Directors of XXXXX, including, without limitation,
the Company's current Management Incentive Plan. During the term of this
Agreement, the Company may increase the base salary payable to the
Executive, but cannot reduce the base amount of Executive's salary.
Executive will also be eligible to participate in the regular employee
benefit programs and stock option plans now or hereafter established by the
Company and in any special executive benefits and perquisites established by
the Board of Directors of XXXXX.
(b) If during the first two (2) years of this Agreement, the Business
achieves the First Target Levels (as defined in the Purchase Agreement) or
the First Contingent Payment (as defined in the Purchase Agreement) is
otherwise made under the Purchase Agreement, then Executive shall be
entitled to receive a bonus pursuant to Section 3(a) above for such year of
at least $10,000.
(c) If during the first two (2) years of this Agreement, the Business
achieves the Second Target Level (as defined in the Purchase Agreement) or
the Second Contingent Payment (as defined in the Purchase Agreement) is
otherwise made under the Purchase Agreement, then Executive shall be
entitled to receive an additional bonus pursuant to Section 3(a) above for
such year of at least $20,000.
4. EXPENSES.
Executive shall be entitled to reimbursement for travel and other out-
of-pocket expenses incurred by Executive in the performance of his duties
hereunder, upon submission and approval of written statements and bills in
accordance with the then regular procedures of the Company. Executive shall
be entitled to reasonable vacations in accordance with the then regular
procedures of the Company governing executives.
5. NONCOMPETITION; NON-SOLICITATION.
Executive agrees that he will not during the Employment Period engage
in, or otherwise directly or indirectly be employed by, or act as a
consultant or lender to, or be a director, officer, employee, owner or
partner of, any other business or organization that directly or indirectly
competes with the business of the Company or any of its subsidiaries;
provided, however, that notwithstanding the foregoing, the provisions of
this Section 5 will not be deemed breached merely because Executive owns not
more than 5 percent of the outstanding equity securities of an entity, if,
at the time of its acquisition by Executive, such securities are listed on a
national securities exchange, is reported on the Nasdaq Stock Market, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange. Executive agrees that he shall not, during the two-
year period after he voluntarily terminates this Agreement or is terminated
pursuant to this Agreement for "cause" (as defined in Section 7(d) below),
solicit or encourage any employee, consultant, vendor, supplier or customer
of the Company or XXXXX to leave the employment of, or cease or diminish its
relations with, the Company or XXXXX.
6. CONFIDENTIAL INFORMATION.
All confidential information which Executive may now possess, may
obtain from the Company or its subsidiaries during or after the Employment
Period, or may create prior to the end of the Employment Period or otherwise
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company or of
any customer or supplier of any of them shall not be published, disclosed,
or made accessible by him to any other person or entity either during or
after the termination of his employment or used by him except during the
Employment Period in the business and for the benefit of the Company and its
subsidiaries, in each case without prior written permission of the Company.
Executive shall deliver to the Company all tangible evidence of such
confidential information prior to or at the termination of his employment.
The provisions of this Section 6 shall survive the termination of this
Agreement by either party.
7. TERMINATION.
(a) Executive's Death. If Executive shall die during the Employment
Period, this Agreement shall terminate, except that Executive's estate
("Estate") shall be entitled to receive (i) the base salary payable to
Executive, accrued to the last day of the month in which his death occurs,
(ii) for a period of three (3) months following death, payments equal to
fifty percent (50%) of the payments of Executive's base salary effective at
the time of death, each in accordance with the Company's regular payroll
cycle, and (iii) any death benefits provided under employee benefit plans
maintained by the Company. In addition, if Executive shall die during the
Employment Period and notwithstanding any contrary provisions of any Company
stock option, warrant or stock option plan, the Estate shall have the right
to retain and exercise (y) any vested options or warrants outstanding on the
date of death and (z) any unvested options or warrants outstanding on the
date of death that vest within one year of the date of death, in each case
in accordance with their respective terms.
(b) Executive's Disability. If, during the Employment Period,
Executive shall become Disabled (as defined below), this Agreement shall
terminate effective on such incapacity, and Executive (or his legal
representatives) shall be entitled only to the base compensation earned
through the date of termination with no entitlement to any base salary after
the date of termination; provided, however, that (i) Executive shall be
entitled to receive all benefits to which he may be entitled pursuant to the
Company's employee benefit plans; and (ii) the Company shall not be
obligated to make any payments to Executive under this Section 7(b) to the
extent that such payments, when aggregated with all other salary or
disability payments received by Executive (whether from disability programs
maintained by the Company or otherwise) exceed the then current base salary
of Executive. As used herein, the term "Disabled" or "Disability" shall mean
a mental or physical condition that prevents Executive from performing his
usual duties and services hereunder for a period of six (6) consecutive
months or six (6) non-consecutive months in any twelve (12) month period, as
determined in the reasonable discretion of the Board of Directors of XXXXX;
provided that if Executive disputes such determination by the Board of
Directors, Executive (or his legal representatives) shall notify the Board
of Directors in writing and (x) the Board of Directors and Executive (or his
legal representatives) shall each designate a licensed physician practicing
in the field to which the alleged Disability relates within fifteen (15)
days of the delivery of such notice, (y) the designated physicians shall
within fifteen (15) days select a third physician practicing in the field to
which the alleged Disability relates, and (z) the third physician shall
determine whether Executive is or has been Disabled within the meaning of
this Agreement.
(c) Termination Without Cause. This Agreement may be terminated by
the Company or XXXXX without cause upon thirty (30) days' prior written
notice thereof given to Executive. In the event of termination without
cause, the Company shall (i) for a period of one (1) year continue to pay
Executive the base salary effective at the time of termination in accordance
with the Company's regular payroll cycle and (ii) for a period of six (6)
months pay to Executive a monthly amount equal to one twelfth of any bonuses
paid during the twelve-month period preceding the date of termination.
Additionally, Executive shall be entitled to continue to participate in all
regular employee benefit plans of the Company for a period of one (1) year
following termination without cause; provided, however, that if Executive
accepts another job during such period that provides employee benefits
comparable to those offered by the Company at such time at a cost to
Executive no greater than the cost of the benefits provided by the Company,
the Company's obligation to extend such benefits to Executive shall cease.
(d) Termination for Cause. This Agreement may be terminated by the
Company or XXXXX "for cause", as defined below, by delivering to Executive
written notice describing the cause and granting Executive thirty (30) days
to respond to the Chief Executive Officer of the Company or the Board of
Directors of XXXXX. If this Agreement is terminated by the Company for
cause, Executive shall only be entitled to the base salary earned by him to
the date of termination with no entitlement to any base salary continuation
payments or benefits continuation (except as otherwise provided by the terms
of any employee benefit plan of the Company). The determination as to
whether termination is for cause shall be made by the Chief Executive
Officer of the Company or the Board of Directors of XXXXX in the exercise of
its business judgment. Termination of this Agreement by the Company for
cause shall be deemed to have occurred only if:
(i) termination shall have been the result of an act or acts of
dishonesty on the Executive's part constituting a felony or intended to
result directly or indirectly in substantial gain or personal
enrichment to his at the expense of the Company; or
(ii) termination shall have been the result of the Executive's
willful and continued failure substantially to perform his duties and
responsibilities as an officer of the Company (other than such failure
resulting from his incapacity due to physical or mental illness) after
a demand for substantial performance is delivered to the Executive by
the Chief Executive Officer of the Company or the Board of Directors of
XXXXX which specifically identifies the manner in which such Board
believes that the Executive has not substantially performed his duties
and the Executive is given a reasonable time after such demand
substantially to perform his duties.
Executive's employment shall not be considered to have been terminated
by the Company for cause if the act or failure to act upon which the
termination is based (A) was done or omitted to be done without intent of
gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled and as a result of his good faith belief that such act
or failure to act was in or was not opposed to the interests of the Company,
or (B) is an act or failure to act in respect of which the Executive meets
the applicable standard of conduct prescribed for indemnification or
reimbursement of expenses under the Bylaws of the Company or the laws of its
state of incorporation.
(e) Voluntary Termination by Executive. Executive may terminate this
Agreement at any time upon delivering thirty (30) days' written notice to
the Company. In the event of such voluntary termination other than for
"good reason", as hereinafter defined, Executive shall be entitled to his
base salary earned to the date of his resignation, but no base salary
continuation payment or benefits continuation (except as provided by the
terms of the Company's employee benefit plans). On or after the date the
Company receives notice of Executive's resignation (other than resignation
for good reason), the Company may, at its option, pay Executive his base
salary through the effective date of his resignation and terminate his
employment immediately.
(f) Termination by Executive For Good Reason. Executive may at any
time voluntarily terminate his employment for "good reason", as defined
below, upon thirty (30) days written notice thereof to the Company; provided
that the Company may, at its option, pay Executive his base salary through
the effective date of his resignation, terminate his employment immediately
(except for the provision of non monetary benefits) and, following the
effective date of such resignation, provide the payments and benefits
provided in Section 7(c). In the event of such voluntary termination for
"good reason", Executive shall be deemed to have been terminated without
cause with the same payments and benefits set forth in Section 7(c) being
applicable to Executive's termination under this Section 7(f).
For purposes of this Agreement, "good reason" shall mean the occurrence
of any of the following events:
(i) removal from the offices Executive holds on the date of this
Agreement or a material reduction in Executive's authority or
responsibility, but not including termination of Executive "for cause";
(ii) reduction in the base salary payable to Executive; or
(iii) the Company otherwise commits a material breach of this
Agreement;
provided that "good reason" shall not include the temporary appointment of
another person to fulfill Executive's responsibilities during any period of
disability of Executive.
8. CHANGE OF CONTROL
(a) Concerns Regarding Change of Control. Executive and the Company
agree that the circumstances surrounding a "Change of Control," as
hereinafter defined, impose unique risks to the Company and the Executive
and that in response to the unique circumstances surrounding a Change of
Control, the provisions of this Agreement shall separately consider the
parties rights' and obligations in the event that a Change of Control
occurs. This Section 8 shall be applicable whether or not a Change of
Control is contemplated at this time. Notwithstanding any other provision
of this Agreement, the severance payments and benefits, if any, payable to
Executive shall be determined solely by reference to this Section 8 in the
event that a Change of Control has occurred, or if Executive is
"involuntarily terminated," as hereinafter defined, in contemplation of a
Change of Control.
(b) Voluntary Termination Following a Change of Control. If a Change
of Control has occurred, Executive shall have ninety (90) days in which to
terminate his employment. If Executive voluntarily terminates his employment
within ninety (90) days following a Change of Control he shall be entitled
to receive one Executive's annualized base salary in effect at the time of
termination as a lump sum payment. Upon payment of the severance
compensation described in the preceding sentence, the Company will have no
future obligation to Executive under this Agreement. Except as otherwise
provided in Section 8(c), if Executive does not voluntarily terminate his
employment within ninety (90) days of a Change of Control, Executive shall
not be entitled to any severance compensation if he voluntarily terminates
his employment after that time.
(c) Involuntary Termination in Contemplation of, or Within Two Years
Following, a Change of Control. If Executive is involuntarily terminated,
other than "for cause" (as defined in Section 7(d)) in contemplation of, or
within two (2) years following, a Change of Control, the Company shall pay
Executive (i) a lump sum severance payment equal to (A) the Executive's
annualized base salary in effect at the time of involuntary termination plus
(B) fifty percent (50%) of any bonus paid during the preceding twelve-month
period, payable as a lump sum, and (ii) continuation of all employee
benefits, executive benefits and perquisites, or benefits reasonably
equivalent thereto, for a period of one (1) year; provided, however, that if
Executive accepts another job during such period that provides employee
benefits comparable to those offered by the Company at such time at a cost
to Executive no greater than the cost of the benefits provided by the
Company, the Company's obligation to extend such benefits to Executive shall
cease.
For purposes of this Agreement, the following shall be deemed to
constitute involuntary termination:
(i) dismissal of Executive (except termination for cause as
defined in Section 7(d) hereof);
(ii) reduction in Executive's base salary;
(iii) reduction in the level of employee benefits received by
Executive, unless substituted with reasonably comparable benefits;
(iv) requesting Executive to relocate more than 100 miles from his
current location;
(v) removal from the offices Executive holds on the date of this
Agreement or a material reduction in Executive's authority or
responsibility; or
(vi) the Company (or its successor) otherwise commits a material
breach of this Agreement.
In the event that within two (2) years following a Change of Control,
Executive is terminated for cause, Executive shall only be entitled to his
base salary up until the last date of employment pursuant to the date of
termination for cause.
(d) Termination of this Agreement More Than Two Years After a Change
of Control. The parties' rights and obligations arising from a termination
of this Agreement, whether by Executive or the Company, that occurs more
than two (2) years following a Change of Control shall be governed by
Section 7 of this Agreement.
(e) Definition of Change of Control. For purposes of this Agreement, a
Change of Control shall be deemed to exist upon the occurrence of any of the
following:
(i) any "Person" (as such term is used in Section 13(d) and
Section 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is or becomes a "beneficial owner" (as defined in
Section 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company or XXXXX representing more than thirty
percent (30%) of the combined voting power of the outstanding
securities of the Company or XXXXX Inc.;
(ii) at any time during the twenty-four (24) month period
following a merger, tender offer, consolidation, sale of assets or
contested election, or any combination of such transactions, at least a
majority of the Board of Directors of the Company or XXXXX shall cease
to be "continuing directors" (meaning directors of the Company or XXXXX
prior to such transaction or who subsequently became directors and
whose election or nomination for election by the stockholders of the
Company or XXXXX, was approved by a vote of at least two-thirds of the
directors then still in office prior to such transaction);
(iii) the stockholders approve an agreement of sale or disposition
by the Company or XXXXX of all or substantially all of the assets of
the Company or XXXXX.
(f) Vesting of Options and Warrants. Upon any Change of Control, any
unvested options or warrants held by Executive to acquire shares of XXXXX
common stock shall be immediately vested and exercisable by Executive, and
XXXXX undertakes to amend any existing stock option or warrant agreements
between XXXXX and/or the Company and Executive consistent with this Section
8(f).
(g) No Mitigation of Compensation. Executive shall not be required to
mitigate any severance payments received under this Section 8 due to his
employment with a successor organization.
9. SURVIVAL.
The covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive Executive's termination of
employment.
10. MODIFICATION.
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements
between them concerning such subject matter, and may be modified only by a
written instrument duly executed by each party.
11. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail, or similar overnight
delivery or courier service or delivered (in person or by telecopy, telex,
or similar telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 11).
Any notice given to the Company shall be addressed to the attention of the
Corporate Secretary. Notice to the estate of Executive shall be sufficient
if addressed to Executive as provided in this Section 11. Any notice or
other communication given by certified mail shall be deemed given at the
time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 11 shall be deemed
given at the time of receipt thereof.
12. WAIVER.
Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must
be in writing.
13. BINDING EFFECT.
Executive's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrance, or the claims of Executive's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Executive and
his heirs and personal representatives, and shall be binding upon and inure
to the benefit of the Company and its successors and assigns.
14. HEADINGS.
The headings of this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
15. ATTORNEYS' FEES.
In the event that any person commences any action or proceeding to
enforce the terms of this Agreement, the prevailing party shall be entitled
to recover from the other his or its reasonable attorney's fees.
16. COUNTERPARTS; GOVERNING LAW.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to the conflict of laws rules. Any action, suit, or proceeding
arising out of, based on, or in connection with this Agreement, any document
or instrument delivered pursuant to, in connection with, or simultaneously
with this Agreement, any breach of this Agreement or any such document or
instrument, or any transaction contemplated hereby or thereby may be brought
only in the District Courts of Dallas County, Texas or the United States
District Court for the Northern District of Texas, Dallas Division and each
party covenants and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, proceeding, any claim that such party
is not subject personally to the jurisdiction of such court, that such
party's property is exempt or immune from attachment or execution, that the
action, suit or proceeding is brought in an inconvenient forum, that the
venue of the action, suit, or proceeding is improper, or that this Agreement
or the subject matter hereof may not be enforced in or by such court.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
COMPANY:
DIAL-THRU INTERNATIONAL CORPORATION
By: ______________________________
Xxxxx X. Xxxxxx
Chairman
EXECUTIVE:
______________________________
XXXX XXXXXXX
XXXXX TELECOM & TECHNOLOGIES, INC.
By: ______________________________
Xxxxx X. Xxxxxx
President
