EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 1, 1999 (the
"Effective Date"), is entered into between XXX X. XXXXXXXXXX, residing at 00
Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 ("Executive"), and GLOBAL
TELECOMMUNICATION SOLUTIONS, INC., a Delaware corporation having its principal
office at 00 Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxxxx 00000 ("Company").
WHEREAS, 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 Financial
Officer and Vice President to supervise and control the day-to-day financial
affairs of the Company. In such capacity, Executive shall use his best efforts
to carry out all reasonable orders and resolutions of the Board of Directors
("Board") within the scope of the Executive's supervision and control (unless
any such order or resolution shall provide otherwise), and in general shall
perform all duties incident to the office of Chief Financial Officer and Vice
President. 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 5.1) as are
consistent with Executive's status and responsibilities as Chief Financial
Officer and Vice President.
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. Notwithstanding anything contained in this Agreement
to the contrary, Executive may devote an insignificant amount of time to the
affairs of Paging Management, Inc. its affiliates and their respective
successors, provided that such activity does not interfere or conflict with his
duties and responsibilities as the Chief Financial Officer and Vice President of
the Company.
1.4 The office from which Executive shall perform his duties under
this Agreement shall at all times be located within 60 miles of Freehold, New
Jersey.
2. Compensation and Benefits.
2.1 Salary. The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $125,000 per annum commencing on the
Effective Date and terminating on October 15, 1999. In the event this Agreement
is extended after September 30, 1999 as provided in Section 3.1, then
Executive's salary shall be increased to $150,000 per annum effective October
17, 1999. Executive's Salary shall be paid in equal, periodic installments, in
accordance with the Company's normal payroll procedures applicable to its most
senior executive officers and shall be subject to withholding taxes and other
normal payroll deductions.
2.2 Salary Increases/Bonuses.
2.2.1 The Board shall meet at least annually to review
Executive's performance. Based upon such review and such other factors as the
Board may consider, at the sole and absolute discretion of the Board, the Board
may determine to increase but not decrease Executive's Salary and/or to award
Executive a bonus (which bonus may be payable in cash or securities of the
Company, including, without limitation, options to purchase shares of the
Company's Common Stock) and up to $50,000, at the Board's option.
Notwithstanding the foregoing, Executive understands, acknowledges and agrees
that the Board would not be obligated, under any circumstances, to award any
such increase in salary or bonus.
2.3 Stock Options.
2.3.1 (a) As additional compensation for services to be
rendered by Executive hereunder, the Company shall grant to Executive options
(the "Options") to purchase 320,000 shares of Company Common Stock at the per
share exercise prices and vesting dates set forth in the schedule below. These
Options (i) are not granted under any plan, including the Company's 1994
Performance Equity Plan; (ii) are evidenced by a Stock Option Agreement of even
date herewith between the Company and Executive; and (iii) shall remain
exercisable for a period of five years after the date of vesting, except as
otherwise set forth in the Stock Option Agreement.
Number of Options Exercise Price Date Exercisable
----------------- -------------- ----------------
120,000 $0.75 December 1, 1999
120,000 $1.25 June 1, 2000
40,000 $1.75 June 1, 2001
40,000 $2.00 June 1, 2002
(b) The Company agrees to include the shares underlying the
Option for sale and resale under any Form S-8 registration statement (and, if
necessary, Form S-3) filed by the Company after the execution of this Agreement,
and to maintain such registration for a period of two years longer than the end
of the vesting periods set forth below; provided the Company shall not be
obligated to maintain such registration if the Executive no longer has the right
to exercise the Option or has exercised all of the Option and no longer owns any
of the shares received upon exercise.
2.4 Benefits. Executive shall be entitled to such medical, dental,
disability, life insurance and other benefits (the "Benefits") and perquisites
no less favorable than such as are afforded to other senior executives of the
Company generally. Executive shall be entitled to three weeks of vacation in
each calendar year and to a reasonable number of other days off for religious
and personal reasons.
2.5 Expenses. 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
reasonably detailed vouchers submitted with respect to any such expenses
approved in accordance with the Company's customary procedures applicable to its
most senior executive officers.
2.6 Signing Bonus. The Company shall pay Executive a bonus in the
amount of $5,000 for executing this Agreement (the "Signing Bonus"). The Signing
Bonus shall be included in Executive's next payroll check after the execution of
this Agreement.
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3. Term and Termination.
3.1 Employment Term. The term of this Agreement commences as of the
Effective Date and shall expire on September 30, 1999, unless sooner terminated
or extended as herein provided (the "Initial Term"). This Agreement shall
automatically renew for a three-year period unless either party provides the
other with at least thirty days' prior written notice of its intent to not renew
this Agreement (the "Renewal Term"). Thereafter, this Agreement shall
automatically renew for an additional one-year period unless either party
provides the other with at least six months' prior written notice of its intent
to not renew the Agreement.
3.2 Death. If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate; provided, however, the Company shall pay to
Executive's estate and/or beneficiaries, as the case may be, the Salary earned
but not paid prior to the date of Executive's death.
3.3 Disability. 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. Notwithstanding such termination, the Company shall pay to
Executive the Salary due Executive pursuant to Section 2.1 hereof through the
date of such notice, payable in the manner set forth in Section 2.1, less any
amount Executive receives for such period from any Company-sponsored or
Company-paid for source of insurance, disability compensation or government
program.
3.4 Termination for Cause. The Company, by notice to Executive, may
terminate this Agreement for Cause. In the event Executive's employment is
terminated for Cause, Executive shall be entitled to the Salary earned but not
paid prior to the date of termination. Additionally, all of the options granted
to Executive hereunder shall immediately terminate. For purposes of this Section
3.4, "Cause" shall be defined as:
(1) habitual absence from work by the Executive, including without
limitation, habitual absence from the Company's offices on
non-Company matters that
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interferes with the Executive's duties;
(2) habitual drunkenness by the Executive;
(3) habitual drug abuse or drug addiction by the Executive;
(4) the Executive maliciously denigrating in public the Company or
any officer, director or affiliate thereof;
(5) sexual harassment by the Executive which has been reasonably
substantial if it has been determined that such sexual
harassment, in fact, took place in accordance with the
Company's then existing policy regarding sexual harassment;
(6) physical destruction of substantial property or asset of the
Company by, or caused by, the Executive;
(7) appropriation of business opportunities of the Company by the
Executive for the direct or indirect personal gain of the
Executive or members of his family without the prior written
consent of the Board;
(8) the Executive causing the Company to enter into transactions
or arrangements with the Executive, in his capacity as an
individual and not as an employee of the Company, or a person
or entity affiliated therewith, which results in direct or
indirect personal gain to the Executive or members of his
family without the prior written consent of the Board,
provided, however, that this Section 3.4(8) shall not include
the employment of the Executive by the Company or its
affiliates;
(9) willful and malicious interference with the Company's
operations by the Executive;
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(10) engagement by the Executive in any act of fraud, material
misappropriation of funds or assets, or embezzlement,
including without limitation, theft, bribery or the receipt of
kickbacks;
(11) a conviction of the Executive for, or a plea of nolo
contendere by the Executive to, a felony or other criminal act
for which the possible penalties include a prison sentence of
at least 1 year;
(12) a material breach by the Executive of the restrictive
covenants contained in this Agreement, or for disloyal,
dishonest or illegal conduct by the Executive;
(13) a material breach of this agreement by the Executive;
(14) a failure, after written notice to the Executive from the
Company, of the Executive to follow the reasonable directions
or instructions of the Board or the Company's President which
are consistent with the Executive's position and
responsibilities; or
(15) gross negligence by the Executive which results in material
harm to the Company.
3.5 Termination Without Cause.
(a) Company, upon not less than 30 days written notice, may
terminate Executive's employment at any time for any reason. If Executive's
employment is terminated by the Company other than for Cause (as defined in
Section 3.4 hereof) or as a result of Executive's death or Permanent Disability
(as defined in Section 3.2 and 3.3, respectively, hereof) or if Executive
terminates his employment for Good Reason (as defined in Section 3.5(b) hereof)
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prior to the end of the Term, Executive shall receive or commence receiving as
soon as practicable in accordance with the terms of this Agreement:
(i) such payments under applicable plans or programs, including
but not limited to those referred to in Section 2 hereof, to
which he is entitled pursuant to the terms of such plans or
programs through the date of termination;
(ii) a severance payment (the "Severance Payment"), which amount
shall be paid in the form of Base Salary continuation through
the one-year period after termination, plus the amount of any
bonus paid by the Company for the calendar year immediately
preceding the calendar year in which termination occurs;
(iii) payment in respect of accrued by unused vacation days (the
"Vacation Payment") and compensation earned but not yet paid
(the "Compensation Payment") which amount shall be paid in a
cash lump sum within thirty (30) days of the date of
termination; and
(iv) continued coverage, at the Company's expense for a period of
12 months from the date of termination under all Employee
health, dental, disability and life insurance plans in which
the Executive participates as of the date of termination in
accordance with the respective terms thereof.
(b) For purposes of this Agreement, "Good Reason" shall mean
any of the following events (without Executive's express prior written consent)
which are not cured by the Company within thirty (30) days after the Company's
receipt of written notice indicating such breach with reasonable particularity:
(i) Any material breach by Company of any provision of this
Agreement, including any material reduction by Company of
Executive's duties or
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responsibilities (except in connection with the termination of
Executive's employment for Cause, as a result of Permanent
Disability, as a result of Executive's death or by Executive
other than for Good Reason);
(ii) Moving the principal executive offices of Company or the place
of Executive's employment to a location 60 or more miles
outside of the Freehold, New Jersey area; or
(iii) Upon a Change of Control of Company (as such term is
hereinafter defined), but only if Executive's employment
hereunder is terminated within ninety (90) days after such
Change of Control.
(c) For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if (i) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior to
the merger have substantially the same proportionate ownership of common stock
of the surviving corporation immediately after the merger, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, or (ii) at
any time during a period of two consecutive years, individuals who at the
beginning of such period, constituted the Board of Directors of the Company
shall cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company's stockholders of each
new director during such two-year period was approved by a vote of at least
two-thirds of the directors then still in office, who were directors at the
beginning of such two-year period.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
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(1) As a result of his current employment with the Company,
Executive has obtained and will obtain secret and confidential information
concerning the business of the Company and/or its subsidiaries and affiliates,
(referred to collectively in this Section 4 as the "Company"), including,
without limitation, financial information, designs and other proprietary rights,
trade secrets and "know-how," customers and sources of supply ("Confidential
Information").
(2) The Company will suffer substantial damage that will be
difficult to compute if, during the period of his employment with the Company or
thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information.
(3) 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 (a) in the course of
performing his duties hereunder, (b) with the Company's express written consent;
(c) 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 (d)
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 (d) 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: (i) 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 (ii) 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 (or confirm in writing that all such
information has been destroyed) all confidential memoranda, notes, records,
reports, manuals, drawings, blueprints and
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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 During the one-year period following termination of Executive's
employment with the Company for any reason, Executive, without the prior written
permission of the Company, shall not, anywhere in the United States, (a) enter
into the employ of or render any services to any person, firm or corporation
engaged in any Competitive Business, as defined below; (b) engage in any
Competitive Business for his own account; (c) become associated with or
interested in any Competitive Business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee, consultant,
advisor or in any other relationship or capacity; (d) employ or retain, or have
or cause any other person or entity to employ or retain, any person who was
employed or retained by the Company while Executive was employed by the Company;
or (e) solicit, interfere with, or endeavor to entice away from the Company, for
the benefit of a Competitive Business, any of its customers or other persons
with whom the Company has a contractual relationship or is otherwise doing
business or has done business during the term of this Agreement. Notwithstanding
the foregoing, nothing in this Agreement shall preclude Executive from investing
his personal assets in the securities of any corporation or other business
entity which is engaged in a Competitive Business if such securities are traded
on a national stock exchange or in the over-the-counter market and if such
investment does not result in his beneficially owning, at any time, more than
4.9% of the publicly-traded equity securities of such Competitive Business. In
the event Executive's employment is terminated by the Company without cause as
provided in Section 3.5(a) or by Executive for Good Reason as provided in
Section 3.5(b), then Executive's obligations under this Section 4.4 shall only
be in effect for so long as the Company complies with its obligation to pay
Executive in accordance with Section 3.5(a) or (b), whichever is applicable.
4.5 If Executive commits a breach, or threatens to commit a breach,
of any of the provisions of Sections 4.2 or 4.4, the Company shall have the
right and remedy:
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(1) 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
(2) 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 Sections 4.2 or
4.4, 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 4.4, 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.
4.6 If Executive shall violate any covenant contained in Section
4.4, the duration of such covenant so violated shall be automatically extended
for a period of time equal to the period of such violation.
4.7 If any provision of Sections 4.2 or 4.4 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.
4.8 The provisions of Section 4.2 shall survive the termination of
this Agreement for any reason.
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5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or indirectly,
is controlled by, controlling, or under common control with the Company.
5.2 "Competitive Business" shall mean (i) the design, development,
sale and/or marketing of prepaid phone cards; (ii) attempt to solicit, solicit,
interfere with or endeavor to entice away from the Company any of its customers,
business or strategic partners or others with whom the Company is doing
business; or (iii) attempt to solicit or solicit any person employed by or
contracted by the Company, or any of its Affiliates, to leave their employment
or not fulfill their contractual responsibility, whether or not the employment
or contracting is full-time or temporary pursuant to a written or oral
agreement, or for a determined period or at will. Notwithstanding the foregoing,
a "Competitive Business" shall not include the business of Paging Management.
Inc. ("PMI") its affiliates so long as the sale of prepaid phone cards dose not
constitute a material part of PMI's business.
6. Miscellaneous Provisions.
6.1 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 sent by
a nationally recognized next-day courier, 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
as of the date of personal delivery, transmittal or courier delivery thereof.
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If to Executive:
Xxx X. Xxxxxxxxxx
00 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Marked: "Personal and Confidential"
with a copy to:
Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to the Company:
Global Telecommunication Solutions, Inc.
00 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Attn: President
with a copy to:
Xxxxx Xxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
6.2 This Agreement and the Stock Option Agreement set 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 or the Stock Option 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.
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6.3 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 Jersey.
6.4 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.
6.5 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
/s/ Xxx X. Xxxxxxxxxx
-------------------------------------
XXX X. XXXXXXXXXX
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Xxxxx Xxxxxxx, President
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