EXHIBIT 10.12
EMPLOYMENT AGREEMENT
and
COVENANT NOT TO COMPETE
EMPLOYMENT AGREEMENT and COVENANT NOT TO COMPETE (the "Employment
Agreement"), by and between WORLDQUEST NETWORKS, INC. ("WorldQuest") and Xxxxxx
X. Xxxxxxxx ("Executive"), effective as of May 14, 2003.
WITNESSETH:
WHEREAS, WorldQuest desires to continue to utilize the services of the
Executive as its Vice President, Chief Financial Officer, Treasurer and
Secretary and the Executive is willing to render such services; and
WHEREAS, WorldQuest and the Executive desire to evidence in this
Employment Agreement the terms under which the Executive will perform such
services;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the Executive
and WorldQuest agree as follows:
1. Title and Duties
(a) The Executive's title will be Vice President, Chief
Financial Officer, Treasurer and Secretary of WorldQuest. The
Executive's duties and responsibilities will be as described in
WorldQuest's Bylaws (as in effect as of the date of this Employment
Agreement) and the Executive shall at all times report directly to the
President and Chief Executive Officer and the Board of Directors of
WorldQuest, or as otherwise agreed by the Executive. The Executive will
exercise due diligence and reasonable care in the performance of the
Executive's duties under this Employment Agreement.
2. Term
(a) Unless earlier terminated as provided for herein, the term
of this Employment Agreement will be for three years, beginning on
April 14, 2003, and ending on April 13, 2006 (the "Term").
(b) If the Executive's employment with WorldQuest is
terminated by the Executive due to the Executive's voluntary
resignation (other than voluntary resignation following "Constructive
Termination", as defined below) or by WorldQuest for "Cause" (as
defined below), this Employment Agreement shall terminate immediately
(except for the provisions of Paragraphs 4, 5, 6 and 7). For purposes
of this Employment Agreement, the Executive may be terminated for
"Cause" by majority vote of (excluding the Executive) the Board of
Directors of WorldQuest as a result of (i) refusal to implement or
adhere to policies or directives of the Board of Directors of
WorldQuest; or (ii) gross negligence that is materially injurious to
the operations or financial condition of WorldQuest; and such conduct
or condition causing termination for Cause is not cured within thirty
days after written notice is delivered to the Executive from
WorldQuest. For these purposes, no refusal to act or failure to adhere
shall be considered as grounds for Cause unless it is done, or omitted
to be done, in bad faith without reasonable belief that the action or
omission was in the best interest of WorldQuest. In the event
corrective action is not satisfactorily taken by the Executive, a final
written notice of termination shall be provided to the Executive by
WorldQuest.
(c) If the Executive's employment is terminated during the
Term of this Employment Agreement due to resignation following
"Constructive Termination" (as defined below) or for any other reason
other than the Executive's voluntary resignation or discharge for
Cause, this Employment Agreement shall terminate immediately (except
for the confidentiality provisions of Paragraph 4(a) and the provisions
of Paragraphs 5, 6 and 7) and the Executive shall receive:
(i) The Executive's Base Salary as described in
Paragraph 3(a) through the date of termination;
(ii) the Executive's regular Base Salary will be
continued for a period of six months;
(iii) to the extent determined by the stock plan
committee, in its sole discretion, full vesting in all stock
options previously granted to the Executive (irrespective of
the date of the grant of such stock options and irrespective
of the vesting schedule otherwise applicable to such stock
options; to the extent determined by the stock plan committee,
in its sole discretion, the Executive shall be permitted to
retain such options for future exercise or sell such stock
received on exercise as though the Executive had remained in
the employment of WorldQuest until the end of the regular
Term, and WorldQuest shall take such actions as are permitted
by applicable law to cause such vesting and option retention;
and
(iv) additionally, the provisions of Paragraphs 7(g)
and 7(h) shall remain in effect as though this Employment
Agreement expired at the end of its regular Term described in
Paragraph 2(a), irrespective of its earlier termination.
For purposes of this Employment Agreement a "Constructive
Termination" shall be deemed to have occurred in the event that (i) the
Executive's Base Salary as defined in Paragraph 3(a), bonus
compensation under Paragraph 3(b), other compensation as described in
Paragraphs 3(c) and 3(d) is reduced; (ii) a significant diminution in
the Executive's responsibilities, authority or scope of duties is
effected by the Board of Directors and such diminution is made without
the Executive's written consent (without regard to whether or not any
change is made to the Executive's title); (iii) WorldQuest materially
breaches this Employment Agreement or (iv) a Change in Control of
WorldQuest occurs. For purposes of this Employment Agreement, a "Change
in Control of WorldQuest" means the occurrence of any of the following
events after the date hereof: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) is or becomes the
"beneficial owner" (as defined in Rule l3d-3 under the Exchange Act),
directly or indirectly, of more than 20% of the total voting stock of
WorldQuest; (b) WorldQuest is merged with or into or consolidated with
another person and, immediately after giving effect to the merger or
consolidation, (A) less than 80% of the total voting power of the
outstanding voting stock of the surviving or resulting person is then
"beneficially owned" (within the meaning of Rule l3d-3 under the
Exchange Act) in the aggregate by (x) the stockholders of WorldQuest
immediately prior to such merger or consolidation, or (y) if a record
date has been set to determine the stockholders of WorldQuest entitled
to vote with respect to such merger or consolidation, the stockholders
of WorldQuest as of such record date and (B) any "person" or "group"
(as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) has
become the direct or indirect "beneficial owner" (as defined in Rule
l3d-3 under the Exchange Act) of more than 20% of the voting power of
the voting stock of the surviving or resulting person; (c) WorldQuest,
either individually or in conjunction with one or more of its
subsidiaries, sells, assigns, conveys, transfers, leases or otherwise
disposes of, or the subsidiaries sell, assign, convey, transfer, lease
or otherwise dispose of, all or substantially all of the properties and
assets of WorldQuest and the subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), to any person
(other than WorldQuest or a wholly owned subsidiary); or (d) the
liquidation or dissolution of WorldQuest. Any resignation by the
Executive as a result of assertion of a Constructive Termination shall
be communicated by delivery to the President and Chief Executive
Officer of WorldQuest of thirty days' advance written notice of such
Constructive Termination and the grounds therefor, during which period
WorldQuest shall be entitled to cure or remedy the matters set forth in
such notice to the Executive's reasonable satisfaction. Unless the
Executive shall withdraw such notice prior to the expiration of such
thirty day period, such resignation shall take effect upon the
expiration of thirty days from the date of the delivery of such notice.
Any other resignation by the Executive shall be communicated by thirty
days' advance written notice.
(d) If the Executive shall die, or become disabled and cannot
perform the Executive's duties, this Employment Agreement shall
terminate immediately. For purposes of this Employment Agreement, the
Executive shall be disabled as of the first date on which the Executive
shall become eligible to receive disability benefits under WorldQuest's
long-term disability plan (or Social Security disability benefits at a
time when WorldQuest does not maintain a long-term disability plan or
such plan is not available to the Executive). WorldQuest will maintain
for a period of twenty-four months from the date of the Executive's
death or disability, all Directors and Officers Liability Insurance
that WorldQuest was maintaining for the Executive and/or the
Executive's estate as of the date of the Executive's death or
disability.
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3. Compensation
(a) Each year during the Term hereof, the Executive will be
paid a base salary of $150,000 per annum ("Base Salary"), payable in
accordance with WorldQuest's payroll guidelines, subject to applicable
tax and benefit plan withholding. Increases may be made to the
Executive's Base Salary at the discretion of the President and Chief
Executive Officer, based upon the Executive's individual performance.
(b) The Executive shall be a participant in any incentive
compensation plan sponsored by WorldQuest, at the highest level of
executive participation.
(c) The Executive shall be designated as a participant in one
or more option or stock-based compensation plans established by
WorldQuest, and shall be entitled to purchase shares of common stock of
WorldQuest provided thereunder.
(d) The Executive shall be entitled to participate in all of
WorldQuest's benefit programs for senior management executives. The
Executive shall participate in, and be eligible to receive benefits
under, any "employee welfare benefit plans" and "employee pension
benefit plans" (as such terms are defined in the Employee Retirement
Income Security Act of 1974, as amended) and business travel insurance
plans and programs as shall apply to general and/or executive employees
of WorldQuest.
(e) The Executive shall be entitled to participate in such
other compensation arrangements and receive such other perquisites as
the Board of Directors of WorldQuest in its sole discretion determines,
provided that WorldQuest shall pay or reimburse the Executive for all
reasonable business, travel or entertainment expenses incurred in
connection with the performance of services under this Employment
Agreement. WorldQuest shall furnish the Executive with an office
commensurate with the Executive's title and adequate for the
performance of the Executive's duties, and with secretarial assistance
and similar services.
4. Confidentiality and Non-Competition
(a) The Executive recognizes and acknowledges that the
Executive will have access to certain information concerning WorldQuest
that is confidential and proprietary and constitutes valuable and
unique property of WorldQuest. The Executive agrees that the Executive
will not at any time, either during or after the Executive's
employment, disclose to others, use, copy or permit to be copied,
except pursuant to the Executive's duties on behalf of WorldQuest or
its successors, assigns or nominees, any secret or confidential
information of WorldQuest (whether or not developed by the Executive)
without the prior written consent of the Board of Directors of
WorldQuest.
(b) The Executive and WorldQuest agree that the Executive, by
virtue of his position with WorldQuest, is in possession of highly
sensitive information regarding WorldQuest's investors, contracts,
plans and operations, and those of its corporate affiliates, that the
Executive is WorldQuest's representative to current and potential
clients, that other entities each compete vigorously with WorldQuest
throughout various portions of WorldQuest's area of operations, and the
Executive's use of such knowledge for the benefit of a competitor of
WorldQuest would provide a competitive advantage to a competitor that
would be highly detrimental to WorldQuest. The Executive's skills,
knowledge and services are unique, and the success or failure of
WorldQuest is dependent upon the Executive's services. The Executive
agrees that WorldQuest has a legitimate business interest in protecting
this information and preventing competitors from utilizing such
information. Therefore, the Executive agrees that, for a period of
twelve months following the termination of this Employment Agreement by
the Executive other than due to Constructive Termination or discharge
without Cause, the Executive will not engage in any Prohibited
Competitive Activities as provided in Paragraph 4(c) below.
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(c) During the time period specified in Section 4(b), the
Executive shall not:
(1) Directly or indirectly own, operate, manage,
consult with, control, participate in the management or
control of, be employed by, maintain or continue any interest
whatsoever in any international interest telephony and/or
money transfer business or enterprise the principal markets of
which are the United States and/or India; or
(2) Directly or indirectly solicit business from any
individual or entity doing regular and substantial business
with WorldQuest in the United States and/or India at any time
during the Term of this Employment Agreement.
Such activities are defined as "Prohibited Competitive
Activities".
(d) WorldQuest and the Executive agree that money damages may
not be adequate to compensate WorldQuest for the Executive's breach of
any provision of this Paragraph 4 and that WorldQuest therefor will be
entitled to a decree for specific performance of other appropriate
remedy, including injunctive relief, to enforce the Executive's
performance of any such provision. The Executive expresses, agrees and
acknowledges that this Covenant Not to Compete is necessary for the
protection of WorldQuest because of the nature and scope of its
business and the Executive's position with, and services for,
WorldQuest. The Executive acknowledges that any breach of this Covenant
Not to Compete would result in irreparable damage to WorldQuest.
(e) The Executive expressly agrees and acknowledges as
follows:
(1) This Covenant Not to Compete is reasonable as to
time and geographical area and does not place any unreasonable
burden upon the Executive;
(2) The general public will not be harmed as a result
of enforcement of this Covenant Not to Compete;
(3) The Executive has requested or has had the
opportunity to request that his personal legal counsel review
this Covenant Not to Compete; and
(4) The Executive understands and hereby agrees to
each and every term and condition of this Covenant Not to
Compete.
5. Indemnification
If, at any time during or after the Term of this Employment
Agreement, the Executive is made a party to, or is threatened to be
made a party in, any civil, criminal or administrative action, suit or
proceeding by reason of the fact that the Executive is or was a
director, officer, employee, or agent of WorldQuest, or of any other
corporation or any partnership, joint venture, trust or other
enterprise for which the Executive served as such at the request of
WorldQuest, then the Executive shall be indemnified by WorldQuest
against expenses actually and reasonably incurred by the Executive or
imposed on the Executive in connection with, or resulting from, the
defense of such action, suit or proceeding, or in connection with, or
resulting from, any appeal therein if the Executive acted in good faith
and in a manner the Executive reasonably believed to be in or not
opposed to the best interest of WorldQuest, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the
Executive's conduct was unlawful, except with respect to matters as to
which it is adjudged that the Executive is liable to WorldQuest or to
such other corporation, partnership, joint venture, trust or other
enterprise for gross negligence or willful misconduct in the
performance of the Executive's duties. As used herein, the term
"expenses" shall include all obligations actually and reasonably
incurred by the Executive for the payment of money, including, without
limitation, attorney's fees, judgments, awards, fines, penalties and
amounts paid in satisfaction of a judgment or in settlement of any such
action, suit or proceeding, except amounts paid to WorldQuest or such
other corporation, partnership, joint venture, trust or other
enterprise by the Executive.
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6. Arbitration
Except as provided in Paragraph 4, any controversy or claim
arising out of or relating to this Employment Agreement, or any breach
thereof, except as provided in Paragraph 4 shall be adjudged only by
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon such award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The
arbitration shall be held in the City of Dallas, Texas, or such other
place as may be agreed upon at the time by the parties to the
arbitration. The arbitrator(s) shall, in their award, allocate between
the parties the costs of arbitration, which shall include reasonable
attorneys' fees of the parties, as well as the arbitrators' fees and
expenses, in such proportions as the arbitrator(s) deem just.
7. Other Provisions
(a) This Employment Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of
Texas, excluding any conflicts of law, rule or principle that might
otherwise refer to the substantive law of another jurisdiction.
(b) Except as otherwise indicated, this Employment Agreement
is not assignable without the written authorization of both parties;
provided that WorldQuest may assign this Employment Agreement to any
entity to which WorldQuest transfers substantially all of its assets or
to any entity which is a successor to WorldQuest by reorganization,
incorporation, merger or similar business combination. In the event of
any such transfer or assignment by WorldQuest, the rights and
privileges of the Board hereunder shall be vested in the Board of
Directors or other governing body of the transferee or successor
entity. However, notwithstanding anything to the contrary contained
herein, this Employment Agreement will be binding upon any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
WorldQuest, and WorldQuest will require any such successor by
agreement, in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Employment Agreement in the
same manner and to the same extent that WorldQuest would be required to
perform if no such succession had taken place. In addition to the
Executive's rights above, if a Change in Control of WorldQuest occurs
as described in Paragraph 2(c) above, the failure of WorldQuest to
obtain such agreement prior to the effectiveness of any such succession
shall be a breach of this Employment Agreement and shall entitle the
Executive to compensation from WorldQuest in the same amount and on the
same terms as the Executive would be entitled to hereunder if the
Executive resigned from the Executive's employment due to a
Constructive Termination, as described in Paragraph 2(c) above, except
that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the date of
termination. As used in this Employment Agreement, "WorldQuest" shall
mean WorldQuest as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 7(b) or which otherwise
becomes bound by all the terms and provisions of this Employment
Agreement by operation of law. This Employment Agreement and all rights
of the parties hereto shall inure to the benefit of and be enforceable
by the parties hereto, their assigns, personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devises and legatees.
(c) Except as otherwise provided herein, the provisions of
Paragraphs 4, 5 and 6 of this Employment Agreement shall survive the
termination of this Employment Agreement.
(d) Upon commencement of the term of this Employment
Agreement, this Employment Agreement supersedes all previous employment
agreements, written or oral, between WorldQuest and the Executive. This
Employment Agreement may be amended only by written amendment duly
executed by both parties hereto or their legal representatives and
authorized by action of the Board. Except as otherwise specifically
provided in this Employment Agreement, no waiver by either party hereto
of any breach by the other party hereto of any condition or provision
of this Employment Agreement to be performed by such other party shall
be deemed a waiver of a subsequent breach of such condition or
provision or a waiver of a similar or dissimilar provision or condition
at the same or at any prior or subsequent time.
(e) Any notice or other communication required or permitted
pursuant to the terms of this Employment Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States mail, first class, postage prepaid and registered with
return receipt requested, addressed
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to the intended recipient at his or its address set forth below and, in
the case of a notice or other communication to WorldQuest, directed to
the attention of the Board of Directors with a copy to the Secretary of
WorldQuest, or to such other address as the intended recipient may have
theretofore furnished to the sender in writing in accordance herewith,
except that until any notice of change of address is received, notices
shall be sent to the following addresses:
If to the Executive: If to WorldQuest
Xxxxxx X. Xxxxxxxx WorldQuest Networks, Inc.
000 Xxxxxx Xxxx Attn: President and
Xxxxxxx, Xxxxx 00000 Chief Executive Officer
00000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
(f) If any one or more of the provisions or parts of a
provision contained in this Employment Agreement including, without
limitation, the restrictions contained in Paragraph 4, shall for any
reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other
provision or part of a provision of this Employment Agreement, but this
Employment Agreement shall be reformed and construed as if such invalid
or illegal or unenforceable provision or part of a provision had never
been contained herein and such provisions or part thereof shall be
reformed so that it would be valid, legal and enforceable to the
maximum extent permitted by law.
(g) The Executive shall not be required to mitigate damages
(or the amount of any compensation provided under this Employment
Agreement to be paid) following the Executive's termination of
employment, by seeking employment or otherwise.
(h) WorldQuest shall maintain during the Term of this
Employment Agreement and for a period of twenty-four months thereafter
Directors and Officers Liability Insurance covering the Executive (or
the Executive's estate, if the Executive is deceased or incompetent),
which provides coverage at least as favorable to the Executive (or the
Executive's estate, if the Executive is deceased or incompetent), as
coverage under WorldQuest's policy in effect on the date of execution
of this Employment Agreement, and which coverage shall be increased
from time to time in such amounts as the Board may determine to be
appropriate in light of WorldQuest's operations.
(i) WorldQuest will not amend the provisions of its governing
documents which pertain to the Executive's indemnification in the
Executive's capacity as an officer and/or member of the Board of
WorldQuest except to substitute therefor provisions which are more
favorable to the Executive, except as otherwise required by law or the
rules of any securities exchange or similar entity, or by applicable
law.
WorldQuest Networks, Inc.
By: /s/ R. Xxxxxxx Xxxxxx
------------------------------------------
R. Xxxxxxx Xxxxxx
Its: President and Chief Executive Officer
AGREED AND ACCEPTED this 14th
day of April, 2003
and effective as of April 14, 2003.
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
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