EXHIBIT 10.56
EMPLOYMENT AGREEMENT
(Xxxxx X. Xxxxx)
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THIS EMPLOYMENT AGREEMENT is entered into on April 13, 2001, by and
between GROUP LONG DISTANCE, INC., a Florida corporation ("GLDI"), and XXXXX X.
XXXXX (the "Executive").
WITNESSETH:
WHEREAS, GLDI desires to continue to employ the Executive, and the
Executive desires to continue to be employed by GLDI, pursuant to the provisions
contained in this Employment Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the premise, and the respective
covenants and agreements of each of GLDI and the Executive contained in this
Agreement, each of GLDI and the Executive agrees as follows:
ARTICLE I
Employment
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1.1 Employment by GLDI. GLDI continues to employ the Executive and the
Executive accepts such continued employment. Subject to the direction of the
Board of Directors of GLDI and the Executive Committee thereof, the Executive
shall serve as the President and Chief Operating Officer of GLDI. The Executive
shall have such responsibilities, perform such duties and exercise such power
and authority as are inherent in, or incident to, the offices of President and
Chief Operating Officer. The Executive shall devote such time and attention to
the performance of his duties as an officer and employee of GLDI as shall be
reasonably necessary, and he shall utilize his best efforts to perform such
duties diligently.
1.2 Subsidiary Corporations. The Executive shall serve as the President
and Chief Operating Officer of HomeAccess Microweb, Inc., a California
corporation ("HA"), and HA Technology, Inc., a Delaware corporation ("HAT"),
each of which are subsidiary corporations of GLDI.
ARTICLE II
Term
----
Subject to the provisions of Article VII below, the term of this
Agreement shall be for a period commencing on the date of this Agreement and
expiring on April 30, 2004. Unless either party shall give to the other written
notice of termination on or before December 31, 2003, and subject to the
provisions of Article VII below, the term of this Agreement shall be extended
for a period of three years, commencing on May 1, 2004 and expiring on April 30,
2007.
ARTICLE III
Salary
------
3.1 Initial Salary. In full payment for the obligations to be performed
by the Executive during the term of this Agreement, GLDI shall pay to the
Executive an annual salary of Two Hundred Forty Thousand Dollars
($240,000.00)(subject to applicable payroll and/or other taxes required by law
to be withheld).
3.2 Adjustment of Salary. As promptly as practicable after the
conclusion of each of GLDI's fiscal years during the term of the Executive's
employment hereunder, the certified public accountants regularly retained by
GLDI shall determine the increase, if any, in the cost of living, using as the
basis of such computation the current applicable Consumer Price Index published
by the Bureau of Labor Statistics of the United States Department of Labor (the
"Index"). Any such increase shall be computed as follows:
(a) The Index number in the column for the City of Irvine,
California, entitled "all items," for the month of April shall be the "Current
Index Number" and the corresponding Index number for the immediately preceding
April, commencing with April 2001, shall be the "Base Index Number."
(b) The increase in the cost of living shall be determined by
dividing the Current Index Number by the Base Index Number and subtracting the
integer 1 from the quotient thereof, and then multiplying the remainder by One
Hundred Percent (100%) in accordance with the following formula:
Increase
in = Current Index Number - 1 x 100%
--------------------
Cost of Living Base Index Number
(c) The percentage increase in the cost of living, multiplied by the
Executive's then current salary, shall be the increase required to be determined
pursuant to this Section 3.2.
(d) If the publication of the Consumer Price Index is discontinued
for any reason, then the parties shall utilize comparable statistics of the cost
of living for the City of Irvine, California, the City of Los Angeles,
California, Orange County, California, or Los Angeles County, California, as
computed and published by an agency or instrumentality of the United States of
America or by a responsible financial periodical or recognized authority then to
be selected by the parties.
(e) In the absence of fraud or manifest error, any determination ___
made by GLDI's accountants pursuant to this Section 3.2 shall be conclusive and
binding upon GLDI and the Executive.
(f) The Executive's then current salary shall be adjusted as of May
1 of each fiscal year, commencing as of May 1, 2002, in accordance with the
provisions of this Section 3.2 and such adjustment shall remain in effect during
such fiscal year.
3.3 Payment of Salary. Payments of salary shall be made to the
Executive in equal installments from time to time on the same dates payments of
salary are generally made to all senior management employees of GLDI.
ARTICLE IV
Bonus
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The Executive may receive an annual bonus in an amount
determined by the Board of Directors of GLDI, in its discretion, if and when so
determined by the Board of Directors.
ARTICLE V
Certain Fringe Benefits
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5.1 Generally. The Executive shall be entitled to receive such benefits
and to participate in such benefit plans as are generally provided from time to
time by GLDI to its senior management employees; provided, however, that nothing
contained in this Section 5.1 shall be construed to obligate GLDI to provide any
specific benefits to its employees generally.
5.2 Vacations. The Executive shall be entitled to vacation time on an
annual basis in accordance with such policies as are from time to time adopted
by GLDI's Board of Directors with respect to its senior management employees.
5.3 Automobile. GLDI shall provide the Executive a luxury automobile
for use by the Executive in connection with the performance of his duties under
this Agreement. The Executive shall be entitled to receive reimbursement for
such automobile expenses as are incurred by the Executive in connection with the
performance of his duties under this Agreement. Such reimbursement shall include
the cost of operating the automobile, the cost of maintenance of such automobile
and the cost of insurance of such automobile.
5.4 Stock Options. The Executive shall be entitled to participate in
GLDI's stock option plans as may from time to time be in effect and to receive
such incentive or other stock options as may from time to time be granted to him
thereunder; provided, however, that nothing contained in this Section 5.4 shall
be construed to obligate GLDI, its Board of Directors or any committee of its
Board of Directors to grant any incentive or other stock option whatsoever to
the Executive.
5.5 Life Insurance. GLDI shall purchase and maintain in effect one or
more term insurance policies on the life of the Executive in an aggregate amount
of not less than One Million Dollars ($1,000,000). The beneficiary of each such
policy shall be the person or persons who shall from time to time be designated
in writing by the Executive to GLDI. In the absence of any written designation
to the contrary, the beneficiary of all such insurance policies shall be the
Executive's spouse.
5.6 Reimbursement of Medical Expenses. GLDI shall reimburse the
Executive for the full amount of any medical, dental and optical expenses not
covered under any group medical plan from time to time in effect for the benefit
of Company employees generally. GLDI may satisfy its obligation to the Executive
under this Section 5.6 by providing excess medical, dental, optical and other
health care insurance coverage for the Executive's benefit.
5.7 Annual Physical Examination. The Executive shall submit to a
complete physical examination and evaluation by a licensed medical doctor at
least annually. To the extent not covered by any group medical plan from time to
time in effect for the benefit of Company employees generally or other insurance
coverage provided by GLDI for the benefit of the Executive, GLDI shall reimburse
the Executive for the full cost of a complete annual physical examination.
5.8 Business, Travel and Entertainment Expenses. Upon submission of
appropriate evidence, the Company shall promptly pay or reimburse the Executive
for all reasonable business, travel and entertainment expenses incurred by the
Executive in connection with the performance of his duties and obligations
hereunder.
5.9 Moving Expenses. The Executive shall move his place of residence to
Orange County, California. Upon submission of appropriate evidence, the Company
shall promptly pay or reimburse the Executive for all reasonable costs and
expenses of such change of residence.
ARTICLE VI
Warrants
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In order to induce the Executive to enter into this Agreement
and to provide the Executive with incentive to continue to perform his duties
and obligations as an officer and employee of GLDI, simultaneously with the
execution and delivery of this Agreement, GLDI shall issue to the Executive
warrants to purchase Two Hundred Fifty Thousand (250,000) shares of common
stock, no par value, of GLDI. Such warrants shall have an exercise price per
share equal to the greater of (a) one hundred twenty percent (120%) of the last
closing market price of the shares of common stock prior to the date of this
Agreement or (b) One and One-Quarter Dollars ($1.25), and shall be exercisable
in installments as is provided in the form of warrant attached hereto as Exhibit
A. The form of warrant attached hereto as Exhibit A shall be utilized to
evidence the warrants issued by GLDI to the Executive pursuant to the provisions
of this Article VI. Simultaneously with the execution and delivery of this
Agreement, the Executive is executing and delivering to GLDI an investment
letter in form and in substance reasonably satisfactory to GLDI and its legal
counsel.
ARTICLE VII
Termination of Employment
-------------------------
7.1 Certain Definitions. The following terms shall have the following
respective meanings when utilized in this Agreement:
(a) "Bonus" shall mean, as of a given date, the most recent annual
bonus awarded by GLDI to the Executive.
(b) "Cause" shall mean any action by the Executive or any inaction
by the Executive which constitutes:
(i) fraud, embezzlement, misappropriation, dishonesty or breach
of trust;
(ii) a felony or a crime involving moral turpitude;
(iii) a material breach or violation of any or all of the
covenants, agreements and obligations of the Executive set forth in
this Agreement, other than as the result of the Executive's death or
Disability (as hereinafter defined);
(iv) abuse of alcohol (regardless of whether in connection with
his employment) or use of illegal drugs or other illegal substances
(regardless of whether in connection with his employment), or the
conviction of any crime involving alcohol, illegal drugs or other
illegal substances;
(v) a willful or knowing failure or refusal by the Executive to
perform any or all of his material duties and responsibilities as an
officer of GLDI, other than as the result of the Executive's death
or Disability; or
(vi) gross negligence by the Executive in the performance of any
or all of his material duties and responsibilities as an officer of
GLDI, other than as a result of the Executive's death or Disability;
provided, however, that if the basis for any termination of the Executive's
employment by GLDI as set forth in the Termination Notice (as hereinafter
defined) delivered by GLDI to the Executive is any or all of the definitions of
Cause set forth in Sections 7.1(b)(iii), 7.1(b)(iv), 7.1(b)(v) or 7.1(b)(vi) of
this Agreement, then, in such event, the Executive shall have thirty (30) days
from and after the date of his receipt of such Termination Notice to present a
reasonable plan to cure such action or inaction specified in the Termination
Notice, which plan may require more than thirty (30) days to cure the specified
action or inaction, but such plan must be reasonably satisfactory to GLDI and
the Executive must proceed diligently to effectuate such plan.
(c) "Compensation" shall mean the sum of the Executive's Salary (as
hereinafter defined) and Bonus.
(d) "Disability" shall mean any mental or physical illness,
condition, disability or incapacity which prevents the Executive from reasonably
discharging his duties and responsibilities as an officer of GLDI. If any
disagreement or dispute shall arise between GLDI and the Executive as to whether
the Executive suffers from any Disability, then, in such event, the Executive
shall submit to the physical or mental examination of a physician licensed under
the laws of the State of California, who is mutually agreeable to GLDI and the
Executive, and such physician shall determine whether the Executive suffers from
any Disability. The Executive waives any physician-patient confidentiality with
respect to any medical reports, findings, records or similar information
pertaining to any such matter, and authorizes full disclosure by the physician
to GLDI. In the absence of fraud or bad faith, the determination of such
physician shall be final and binding upon GLDI and the Executive. The entire
cost of such examination shall be paid for solely by GLDI.
(e) "Good Reason" shall mean:
(i) the assignment by the Board of Directors or the Executive
Committee of the Board of Directors to the Executive, without his
express written consent, of duties and responsibilities which
results in the Executive having less significant duties and
responsibilities or exercising less significant power and authority
than he had, or duties and responsibilities or power and authority
not comparable to that of the level and nature which he had,
immediately prior to such assignment;
(ii) the removal of the Executive from, or a failure to
reappoint the Executive to, his then current position or positions
with GLDI or its subsidiaries or affiliates, except (A) with the
Executive's express written consent or (B) in connection with any
termination of the Executive's employment by GLDI as the result of
the Executive's Protracted Disability (as hereinafter defined) or
for Cause;
(iii) the reduction of the Executive's Salary or the reduction
of any or all of the Executive's benefits set forth in Article V
above;
(iv) GLDI's failure to perform on a timely basis its obligations
under this Agreement;
(v) GLDI's requiring the Executive, without his express written
consent, to travel on Company business to an extent substantially
greater than the Executive's business travel obligations immediately
prior to such time;
(vi) GLDI's requiring the Executive, without his express written
consent, to change his place of permanent residency to place outside
of Orange County, California;
(vii) GLDI's moving its executive offices to a place outside of
Orange County, California, without the Executive's express written
consent; or
(viii) the failure of GLDI to obtain the express written
assumption of, and agreement to perform on a timely basis, GLDI's
obligations under this Agreement by any successor to GLDI as
required by Article X of this Agreement.
(f) "Protracted Disability" shall mean any Disability which prevents
the Executive from reasonably discharging his duties and responsibilities as an
officer of GLDI for a period of six (6) consecutive months.
(g) "Salary" shall mean, as of a given date, the Executive's then
current annual salary.
(h) "Termination Date" shall mean a specific date not less than
forty-five (45) nor more than ninety (90) days from and after the date of any
Termination Notice upon which the Executive's employment by GLDI shall be
terminated in accordance with the provisions of this Agreement.
(i) "Termination Notice" shall mean a written notice which sets
forth (i) the specific provision of this Agreement relied upon to terminate the
Executive's employment, (ii) in reasonable detail, the facts and circumstances
claimed to provide the basis for the termination of the Executive's employment,
and (iii) a Termination Date.
7.2 Termination.
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(a) Notwithstanding the provisions of Article II above, the
employment of the Executive by GLDI:
(i) shall automatically terminate upon the death of the
Executive pursuant to the provisions of Section 7.3 hereof;
(ii) may be terminated at any time by GLDI pursuant to the
provisions of Sections 7.4 or 7.5 hereof; and
(iii) may be terminated at any time by the Executive pursuant to
the provisions of Section 7.6 hereof.
(b) If either GLDI or the Executive shall desire to terminate the
Executive's employment by GLDI pursuant to any of the provisions of Sections
7.4, 7.5 or 7.6 of this Agreement, then, in such event, the party causing such
termination shall provide a Termination Notice to the other party.
(c) If the employment of the Executive by GLDI shall be terminated
pursuant to any of the provisions of this Article VII, then GLDI shall be
discharged from all of its obligations to the Executive under this Agreement
upon the payment to the Executive of the amount set forth in the Section of this
Article VII pursuant to which such termination shall occur. The Executive
acknowledges and agrees that his sole and exclusive remedy for the termination
of his employment by GLDI, regardless of whether such termination shall be
initiated by GLDI or the Executive, and regardless of whether such termination
shall be with or without Cause or with or without Good Reason, shall be the
payment by GLDI to the Executive of the amount set forth in the Section of this
Article VII pursuant to which such termination shall occur.
7.3 Termination Upon Death of Executive. If during the term of this
Agreement the Executive shall die, then the employment of the Executive by GLDI
shall automatically terminate on the date of the Executive's death. In such
event, not more than thirty (30) days after the date of the Executive's death,
GLDI shall pay to the Executive's estate or as otherwise directed by the
Executive's personal representative or executor, an amount in cash equal to the
Executive's Compensation (subject to applicable payroll and/or other taxes
required by law to be withheld) determined as of the date of the Executive's
death.
7.4 Disability of Executive.
-----------------------
(a) If at any time during the term of this Agreement the Executive
shall suffer any Disability, then GLDI shall be obligated to continue to pay in
the ordinary and normal course of its business to the Executive or his legal
representative, as the case may be, the Executive's Compensation (subject to
applicable payroll and/or other taxes required by law to be withheld) from
the date that the Executive shall first suffer any such Disability to the date
that the Executive's employment by GLDI shall be terminated pursuant to any of
the provisions of this Agreement.
(b) If the Executive shall suffer any Protracted Disability during
the term of this Agreement, then GLDI may terminate the Executive's employment
under this Agreement. In such event, in addition to any other benefits which may
have been provided by GLDI to the Executive or his legal representative, as the
case may be, pursuant to the provisions of Section 7.4(a) above, not later than
the Termination Date specified in the Termination Notice delivered by GLDI to
the Executive or his legal representative, as the case may be, GLDI shall pay to
the Executive or as otherwise directed by the Executive's legal representative
an amount in cash equal to the Executive's Compensation (subject to applicable
payroll and/or taxes required by law to be withheld) determined as of the date
of such Termination Notice. Subsequent to such Termination Date, the Executive
or his legal representative, as the case may be, shall also be entitled to
receive any benefits which may be payable under any disability insurance policy
or disability plan provided to the Executive by GLDI; provided that nothing
contained in this Section 7.4(b) shall obligate GLDI to provide any such
benefits to the Executive.
7.5 Termination of Employment by Company.
------------------------------------
(a) GLDI may terminate the employment of the Executive at any time
with Cause. In such event, GLDI shall be obligated to continue to pay in the
ordinary and normal course of its business to the Executive only his Salary
(subject to applicable payroll and/or other taxes required by law to be
withheld) through the Termination Date set forth in the Termination Notice.
(b) GLDI may terminate the employment of the Executive at any time
without Cause. If any such termination shall occur, then, in such event, GLDI
shall continue to pay in the ordinary and normal course of its business to the
Executive his Salary for a period of two years from and after the Termination
Date set forth in the Termination Notice (subject to applicable payroll and/or
other taxes required by law to be withheld).
7.6 Termination of Employment by Executive.
--------------------------------------
(a) The Executive may terminate his employment at any time with Good
Reason. If any such termination shall occur, then, in such event, GLDI shall
continue to pay in the ordinary and normal course of its business to the
Executive his Salary for a period of two years from and after the Termination
Date set forth in the Termination Notice (subject to applicable payroll and/or
other taxes required by law to be withheld).
(b) The Executive may terminate his employment at any time without
Good Reason. In such event, GLDI shall be obligated to continue to pay in the
ordinary and normal course of its business to the Executive only his Salary
(subject to applicable payroll and/or other taxes required by law to be
withheld) through the Termination Date set forth in the Termination Notice.
7.7 Survival. All of the provisions of this Agreement, other than those
contained in Articles I, IV, V, VI and VIII hereof, shall survive the
termination for any reason of the Executive's employment by GLDI or the
expiration of the term of this Agreement. The provisions of Article II and
Article III of this Agreement shall survive the termination for any reason of
the Executive's employment by the Company or the expiration of the term of this
Agreement only to the extent set forth in this Article VII.
ARTICLE VIII
Termination of Employment
Subsequent to a Change in Control of GLDI
-----------------------------------------
8.1 Change in Control of GLDI Defined. For purposes of this Article
VIII, the term "Change in Control of GLDI" shall mean any change in control of
GLDI of a nature which would be required to be reported (a) in response to Item
6(e) of Schedule 14A of Regulation 14A, as in effect on the date of this
Agreement, promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (b) in response to Item 1 of the Current Report on Form
8-K, as in effect on the date of this Agreement, promulgated under the Exchange
Act, or (c) in any filing by GLDI with the Securities and Exchange Commission;
provided, however, that, without limitation, a Change in Control of GLDI shall
be deemed to have occurred if:
(i) any "person" (as such term is defined in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act), other than GLDI, any
majority-owned subsidiary of GLDI or any compensation plan of GLDI
or any majority-owned subsidiary of GLDI, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of GLDI (whether by merger,
consolidation, reorganization or otherwise) representing fifteen
percent (15%) or more of the combined voting power of GLDI's then
outstanding securities;
(ii) during any period of two consecutive years during the term
of this Agreement, the individuals who at the beginning of such
period constitute the Board of Directors of GLDI cease for any
reason to constitute at least a majority of such Board of Directors,
unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who
were directors at the beginning of such period;
(iii) any "person" (as such term is defined in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act), other than GLDI, any subsidiary
of GLDI or any compensation, retirement, pension or other employee
benefit plan or trust of GLDI or any subsidiary of GLDI, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of HA or HAT, respectively, or any successor to HA or
HAT, respectively (whether by the acquisition of securities,
exercise of warrants, merger, consolidation, reorganization or
otherwise) representing a majority of the combined voting power of
the then outstanding securities of HA or HAT, as the case may be;
(iv) GLDI shall merge or consolidate with or into another
corporation or other entity, or enter into a binding agreement to
merge or consolidate with or into another corporation or other
entity, other than a merger or consolidation which would result in
the voting securities of GLDI outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
entity) not less than eighty-five percent (85%) of the combined
voting power of the voting securities of GLDI or such surviving
corporation or entity outstanding immediately after such merger or
consolidation;
(v) HA shall merge or consolidate with or into another
corporation or other entity, or enter into a binding agreement to
merge or consolidate with or into another corporation or other
entity, other than a merger or consolidation which would result in
the voting securities of HA outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
entity) not less than a majority of the combined voting power of the
voting securities of HA or such surviving corporation or entity
outstanding immediately after such merger or consolidation;
(vi) HAT shall merge or consolidate with or into another
corporation or other entity, or enter into a binding agreement to
merge or consolidate with or into another corporation or other
entity, other than a merger or consolidation which would result in
the voting securities of HAT outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving corporation or
entity) not less than a majority of the combined voting power of the
voting securities of HAT or such surviving corporation or entity
outstanding immediately after such merger or consolidation;
(vii) GLDI shall sell, lease, exchange, transfer, convey or
otherwise dispose of all or substantially all of its assets, or
enter into a binding agreement for the sale, lease, exchange,
transfer, conveyance or other disposition of all or substantially
all of its assets, in one transaction or in a series of related
transactions;
(viii) either or both of HA and HAT shall sell, lease, exchange,
transfer, convey or otherwise dispose of all or substantially all of
its respective assets, or enter into a binding agreement for the
sale, lease, exchange, transfer, conveyance or other disposition of
all or substantially all of its respective assets, in one
transaction or in a series of related transactions;
(ix) GLDI shall liquidate or dissolve, or any plan or proposal
shall be adopted for the liquidation or dissolution of GLDI; or (x)
either or both of HA and HAT shall liquidate or dissolve, or any
plan or proposal shall be adopted for the liquidation or dissolution
of either or both of HA and HAT;
provided, however, that any of the foregoing transactions between or among (A)
any or all of GLDI and any majority-owned subsidiary or subsidiaries of GLDI, or
(B) any majority-owned subsidiaries of GLDI, shall not be deemed to constitute a
"Change in Control of GLDI" hereunder.
8.2 Termination of Employment After Change in Control of Company.
------------------------------------------------------------
(a) Notwithstanding the provisions of Articles II and VII of this
Agreement, in the event that there shall occur any Change in Control of GLDI and
at any time within one year from and after the date of any such Change in
Control of GLDI, either GLDI shall terminate the employment of the Executive
without Cause or the Executive shall terminate his employment for Good Reason,
then, in any such event, the following shall occur:
(i) Not later than the Termination Date specified in the
Termination Notice delivered by GLDI to the Executive, or by the
Executive to GLDI, as the case may be, GLDI shall pay to the
Executive an amount, in cash, equal to his "base amount," as such
term is defined in Section 280G of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder, determined as of the date of the Termination Notice,
multiplied by Two and Ninety-Nine One Hundredths (2.99) (the "Change
in Control Termination Amount") (subject to applicable payroll
and/or other taxes required by law to be withheld); and
(ii) Any and all stock options granted to the Executive under
any stock option plan of GLDI as may from time to time be in effect,
and any and all warrants granted to the Executive by GLDI (including
without limitation those granted pursuant to the provisions of
Article VI above), which shall not by their terms have vested on or
before such Termination Date, shall vest on such Termination Date.
(b) The Change in Control Termination Amount shall be determined by
GLDI's regularly retained certified public accountants in consultation with
GLDI's regularly retained attorneys. In making such determination, GLDI's
regularly retained certified public accountants and attorneys shall liberally
construe the provisions of the Internal Revenue Code of 1986, as amended, and
the applicable rules and regulations thereunder. In the absence of fraud or
manifest error, any determination made pursuant to this Section 8.2(b) shall be
conclusive and binding upon GLDI and the Executive.
(c) Notwithstanding anything to the contrary set forth in Sections
8.2(a) and 8.2(b) above, the amount paid by GLDI to the Executive shall be
limited to the maximum amount which will not constitute a "parachute payment,"
as such term is defined in Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended. This limitation shall first be applied to amounts provided
pursuant to clause (ii) of Section 8.2(a) hereof (otherwise included in the
calculation of a parachute payment) to the extent thereof and then to amounts
provided pursuant to clause (i) of Section 8.2(a) hereof.
ARTICLE IX
Certain Restrictions on the Executive
-------------------------------------
9.1 Certain Restrictions. The Executive covenants and agrees with GLDI
as follows:
(a) He shall not at any time, directly or indirectly, for himself or
for any other person, firm, corporation, partnership, association or other
entity (collectively, a "Person") which competes in any manner with GLDI or any
of its subsidiaries or affiliates in the United States of America or its
territories and possessions or any other countries in which GLDI as of the date
of termination of this Agreement conducts its business directly or indirectly
through any of its subsidiaries or affiliates (collectively, the "Territory"),
employ, attempt to employ or enter into any contractual arrangement for
employment with, any employee or former employee of GLDI or any of its
subsidiaries or affiliates, unless such former employee shall not have been
employed by GLDI or any of its subsidiaries or affiliates for a period of at
least one year.
(b) He shall not, during the term of this Agreement and for a period
of two years from and after the date of termination of his employment by GLDI,
directly or indirectly, (i) acquire or own in any manner any interest in, or
loan any amount to, any Person which competes in any manner with GLDI or any of
its subsidiaries or affiliates in the Territory, (ii) be employed by or serve as
an employee, agent, independent contractor, officer, or director of, or as a
consultant to, any Person, other than GLDI and its subsidiaries and affiliates,
which competes in any manner with GLDI or its subsidiaries or affiliates in the
Territory, or (iii) compete in any manner with GLDI or its subsidiaries or
affiliates in the Territory. The foregoing provisions of this Section 9.1(b)
shall not prevent the Executive from acquiring and owning not more than five
percent (5%) of the equity securities of any Person whose securities are listed
for trading on a national securities exchange or are regularly traded in the
over-the-counter securities market.
(c) In the course of the Executive's employment by GLDI, the
Executive will have access to confidential or proprietary information of GLDI
and its subsidiaries and affiliates. The Executive shall not at any time divulge
or communicate to any Person, or use to the detriment of GLDI or its
subsidiaries or affiliates, any such confidential or proprietary information.
The term "confidential or proprietary information" shall mean information not
generally available to the public, including without limitation personnel
information, financial information, customer lists, supplier lists, ownership
information, marketing plans and analyses, trade secrets, know-how, computer
software, management agreements and procedures and techniques of operating and
managing the business of GLDI and its subsidiaries and affiliates. ___ The
Executive acknowledges and agrees that all confidential or proprietary
information is and shall remain the property of GLDI and its subsidiaries and
affiliates, and agrees to maintain all such confidential or proprietary
information in strictest confidence.
(d) Simultaneously with the execution and delivery of this
Agreement, the Executive shall execute and deliver to GLDI, and thereafter, the
Executive shall comply with the provisions of, GLDI's Employee Proprietary
Information and Inventions Agreement, a copy of which is attached hereto as
Exhibit B and incorporated herein by this reference.
9.2 Remedies. It is recognized and acknowledged by each of GLDI and the
Executive that a breach or violation by the Executive of any or all of his
covenants and agreements contained in Section 9.1 of this Agreement will cause
irreparable harm and damage to GLDI and its subsidiaries and affiliates in a
monetary amount which would be virtually impossible to ascertain and, therefore,
will deprive GLDI of an adequate remedy at law. Accordingly, if the Executive
shall breach or violate any or all of his covenants and agreements set forth in
Section 9.1 hereof, then GLDI and its subsidiaries and affiliates shall have
resort to all equitable remedies, including without limitation the remedies of
specific performance and injunction, both permanent and temporary, as well as
all other remedies which may be available at law.
9.3 Intent. It is the intent of the parties that the restrictions set
forth in Section 9.1 hereof shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement of
such restrictions may be sought. If any provision contained in Section 9.1
hereof shall be adjudicated by a court of competent jurisdiction to be invalid
or unenforceable because of its duration or geographic scope, then such
provision shall be reduced by such court in duration or geographic scope or both
to such extent as to make it valid and enforceable in the jurisdiction where
such court is located, and in all other respects shall remain in full force and
effect.
ARTICLE X
Successor to GLDI
-----------------
GLDI shall require any successor, whether direct or indirect,
and whether by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or properties and assets of GLDI, to execute
and deliver to the Executive, not later than the date of the consummation of any
such purchase, merger, consolidation or other transaction, a written instrument
in form and in substance reasonably satisfactory to the Executive and his legal
counsel pursuant to which any such successor shall agree to assume and to
perform on a timely basis or to cause to be performed on a timely basis all of
GLDI's covenants, agreements and obligations set forth in this Agreement (a
"Successor Agreement"). The failure of GLDI to cause any such successor to
execute and deliver a Successor Agreement to the Executive shall (a) constitute
a breach of the provisions of this Agreement by GLDI and (b) be deemed to
constitute a termination by the Executive of his employment hereunder (as of the
date upon which any such successor shall succeed to all or substantially all of
the business or properties and assets of GLDI) for Good Reason.
ARTICLE XI
Indemnification and Advancement of Expenses
-------------------------------------------
11.1 Indemnification. GLDI shall indemnify and hold harmless the
Executive from and against the full amount of any and all claims, demands,
suits, actions, judgements, losses, liabilities, costs, interest and expenses,
including without limitation fees and disbursements of trial and appellate
counsel, asserted or brought against the Executive by any Person with respect to
any action taken or omitted to be taken by the Executive in the course of his
employment by GLDI or otherwise related to or arising out of his employment by
GLDI or acting as a director, officer, employee or agent of GLDI or any of its
subsidiaries or affiliates. This right to indemnification shall be in effect to
the fullest extent available pursuant to law, and shall be in addition to any
other right to indemnification the Executive may possess pursuant to law, the
Articles of Incorporation and Bylaws of GLDI, or the Articles of Incorporation
and Bylaws or similar documents of any of GLDI's subsidiaries or affiliates.
11.2 Advancement of Expenses. In connection with any claim, demand,
suit, action or proceeding asserted or brought against the Executive by any
Person with respect to any action taken or omitted to be taken by the Executive
in the course of his employment by GLDI or otherwise related to or arising out
of his employment by GLDI or acting as a director, officer, employee or agent of
GLDI or any of its subsidiaries or affiliates, GLDI shall advance to the
Executive all costs and expenses, including without limitation fees and
disbursements of trial and appellate counsel, incurred or suffered by the
Executive in defending any such claim, demand, suit, action or proceeding;
provided, however, that the Executive shall first provide to GLDI a written
undertaking to repay any and all amounts so advanced by GLDI if he is ultimately
found not to be entitled to indemnification by GLDI pursuant to the provisions
of Section 607.0831(7) of the Florida Statutes. This right to advancement of
costs and expenses shall be in effect to the fullest extent available pursuant
to law, and shall be in addition to any other right to advancement of costs and
expenses the Executive may possess pursuant to law, the Articles of
Incorporation and Bylaws of GLDI, or the Articles of Incorporation and Bylaws or
similar documents of any of GLDI's subsidiaries or affiliates.
ARTICLE XII
Attorneys' Fees
---------------
In the event that any litigation shall arise between GLDI and the
Executive based, in whole or in part, upon this Agreement or any or all of the
provisions contained herein, then, in any such event, the prevailing party in
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
ARTICLE XIII
Miscellaneous Provisions
------------------------
13.1 Governing Law. This Agreement shall be governed by, and shall be
construed and interpreted in accordance, with the laws of the State of
California, without giving effect to the principles of conflicts of law thereof;
provided, however, that the provisions of Article IX of this Agreement may be
enforced in accordance with the laws of any jurisdiction having personal
jurisdiction over the parties.
13.2 Notices. Any and all notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand or overnight express
mail or delivery, or when delivered by United States mail, by registered or
certified mail, postage prepaid, return receipt requested, to the respective
parties at the following respective addresses:
If to GLDI: Group Long Distance, Inc.
0000 Xxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Chairman
with a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxx, P.A.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
If to the Executive: Xxxxx X. Xxxxx
c/o Group Long Distance, Inc.
0000 Xxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000-0000
or to such other address as either party may from time to time give written
notice of to the other in accordance with the provisions of this Section 13.2.
13.3 Entire Agreement. This Agreement constitutes the entire agreement
between GLDI and the Executive with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and arrangements,
both oral and written, between GLDI and the Executive with respect to such
subject matter. Without limiting the generality of the immediately preceding
sentence, that certain Employment Agreement dated as of November 15, 1999 by and
between GLDI and the Executive is terminated and shall hereafter be of no
further force or effect.
13.4 Amendments. This Agreement may not be amended or modified in any
manner, except by a written instrument executed by each of GLDI and the
Executive.
13.5 Benefits; Binding Effect. This Agreement shall be for the benefit
of, and shall be binding upon, each of GLDI and the Executive and their
respective heirs, personal representatives, executors, legal representatives,
successors and assigns.
13.6 Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part hereof, all of which are inserted conditionally on their being valid in
law. Except as otherwise provided in Section 9.3 above, if any one or more of
the words, phrases, sentences, clauses or sections contained in this Agreement
shall be declared invalid by any court of competent jurisdiction, then, in any
such event, this Agreement shall be construed as if such invalid word or words,
phrase or phrases, sentence or sentences, clause or clauses, or section or
sections had not been inserted.
13.7 No Waivers. The waiver by either party of a breach or violation of
any provision of this Agreement by the other party shall not operate nor be
construed as a waiver of any subsequent breach or violation. The waiver by
either party to exercise any right or remedy it or he may possess shall not
operate nor be construed as a bar to the exercise of such right or remedy by
such party upon the occurrence of any subsequent breach or violation.
13.8 Service of Process; Waiver of Trial by Jury.
-------------------------------------------
(a) Each of GLDI and the Executive agrees that service of any
process, summons, notice or document, by United States registered or certified
mail, to its or his address set forth in or as provided in Section 13.2 above
shall be effective service of such process, summons, notice or document for any
action, suit or proceeding brought against it or him by the other party in the
Federal District Court for the Central District of California or in the Superior
Court for Orange County, California.
(b) In recognition of the fact that the issues which would arise
under this Agreement are of such a complex nature that they could not be
properly tried before a jury, each of GLDI and the Executive waives trial by
jury.
13.9 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of any or all of the provisions hereof.
13.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the separate parties in separate counterparts, each of which
shall be deemed to constitute an original and all of which shall be deemed to
constitute the one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has executed and
delivered this Agreement on the date first written above.
GROUP LONG DISTANCE, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx, Chairman
and Chief Executive Officer
/s/ Xxxxx Xxxxx
-----------------------
Xxxxx X. Xxxxx
