EXHIBIT 10.4
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement is made and entered into on
this __ day of February, 1998, between URSUS TELECOM CORPORATION (the "Company")
and Xxxxxxx Xxxxxxx (the "Executive").
PRELIMINARY STATEMENT
The parties have previously entered into an Employment Agreement dated as
of January 1, 1998 (the "Agreement") and have agreed to amend certain provisions
of the Agreement as set forth below.
NOW, THEREFORE, in consideration of the agreements contained herein, and other
good and valuable consideration, the receipt and adequacy of which are hereby
conclusively acknowledged, the parties, intending to be legally bound, agree as
follows:
1. The provisions of this First Amendment shall govern and control over any
conflicting or inconsistent provisions in the Agreement, but except as modified
hereby, all provisions of the Agreement remain unmodified and in full force and
effect and are hereby reaffirmed by each of the parties hereto. Unless
otherwise defined herein, all capitalized terms shall have the same meanings as
provided therefor in the Agreement.
2. Section 3 of the Agreement is amended as follows:
(a) To provide that Base Salary shall be $225,000 for the year beginning
January 1, 1998, and that Base Salary shall increase by $25,000 each year
thereafter during the Term (I.E., Base Salary of $250,000 in 1999, $275,000
in 2000, $300,000 in 2001 and $325,000 in 2002).
(b) To provide that Executive shall receive an annual fixed bonus (the
"Fixed Bonus") of $45,000, payable at the time of the first normal pay
period of each new calendar year during the Term, commencing in January
1998. The Fixed Bonus shall be payable in addition to and exclusive of the
Base Salary, the Second Bonus, the Annual Bonus and any and all other
bonuses and compensation that may be paid to Executive during any fiscal
year.
(c) To provide that Executive shall be entitled to a second bonus (the
"Second Bonus") of $45,000 for each $1 million of EBITDAB that the Company
realizes during each fiscal year during the Term (starting with the fiscal
year commencing April 1, 1998), calculated on a pro rata dollar-for-dollar
basis (I.E., an increase in the Second Bonus of $0.045 for each $1 of
EBITDAB). If any Second Bonus, as so determined, is an amount that includes
a fraction of a cent, it shall be rounded up to the nearest whole cent.
The maximum Second Bonus payable in respect of any single fiscal year
shall be $180,000 (for EBITDAB of over $4 million, the Executive shall
receive the Annual Bonus, determined in the manner set forth in (d) below,
in addition to the Second Bonus).
The Second Bonus shall be payable in addition to and exclusive of the
Base Salary, the Fixed Bonus, the Annual Bonus and any and all other
bonuses and compensation that may be paid to Executive during any fiscal
year.
(d) To amend the second and third sentences in the second paragraph of
Section 3 by deleting the same in their entirety, and substituting
therefor:
"For each fiscal year during the term of this Agreement in which
EBITDAB exceeds $4 million, the Annual Bonus payable to Executive shall
equal twenty percent (20%) of Base Salary, plus an amount that equals an
additional five percent (5%) of Base Salary for each $1 million of EBITDAB
in excess of the first $4 million. The Annual Bonus shall be computed on a
pro rata dollar-for-dollar basis with EBITDAB in excess of $4 million
(I.E., an increase in the Annual Bonus of 0.000005% of Base Salary for
each $1 increase in EBITDAB). If any Annual Bonus, as so determined, is an
amount that includes a fraction of a cent, it shall be rounded up to the
nearest whole cent. If the Company shall have at least $4 million in
EBITDAB in any fiscal year during the Term, then the Annual Bonus shall be
payable in respect of such fiscal year in addition to and exclusive of the
Base Salary, the Fixed Bonus, the Second Bonus and any and all other
bonuses and compensation that may be paid to Executive during such year."
(e) To provide that the aggregate amount of Fixed Bonus, Second Bonus and
Annual Bonus that the Executive may receive in respect of any single fiscal
year shall not exceed 200% of the Executive's Base Salary as in effect at
the end of such fiscal year.
(f) To provide that the Second Bonus shall be payable monthly, based on
the EBITDAB reflected on the Company's unaudited financial statements for
the current fiscal year through the end of such month, and subject to
adjustment to reflect cumulative EBITDAB for subsequent months in the
fiscal year and to reconcile the same to the EBITDAB reflected on the
Company's financial statements as filed on Forms 10-Q and 10-K (and any
successor such Forms). To the extent any Second Bonus is payable for any
month in which Executive was not employed for the full month, the Second
Bonus payable for such month shall be prorated based on the actual number
of days during the month that Executive was employed by the Company.
(g) To provide that for purposes of paying periodic installments of the
Second Bonus and Annual Bonus, the EBITDAB for the respective period for
which it being paid shall be annualized. For example, if the Company
records EBITDAB of $250,000 for the first month of a fiscal year, and
$150,000 in the second month of such fiscal year then the Second Bonus for
the first such month would be $11,250, and for the second such month would
be $3,750. The calculation for the first month would be to annualize
$250,000 of one months' EBITDAB to equal $3,000,000 of annual EBITDAB,
corresponding to a
$135,000 annual Second Bonus and a payment of 1/12 such amount ($11,250)
since only one month had expired. For the second month, the cumulative
$400,000 of two months' EBITDAB would annualize to $2,400,000, producing a
$90,000 annual Second Bonus, of which $15,000 would accrue for the two
months, and less the $11,250 paid for the first month would leave $3,750 to
be paid.
(h) To provide that if the Agreement shall terminate at any time prior to
the Company's fiscal year end due to expiration of the Term without
renewal, then the Fixed Bonus, Second Bonus and Annual Bonus shall be
payable on the same terms and conditions as would have applied if, and
shall be calculated in the same manner as if, Executive had remained
employed by the Company under the Agreement through the end of such fiscal
year. If the Agreement shall terminate at any time prior to the
Company's fiscal year end by reason of termination by the Company without
"cause" or termination by Executive for "good reason", then the provisions
of section 10 of the Agreement, amended as provided in 4 and 5 below, shall
apply with respect to the payment of bonuses.
(i) Notwithstanding any conflicting provisions hereof, the Executive shall
not be required to refund any advance payments of the Second Bonus or
Annual Bonus as a result of any interim reconciliation based on unaudited
EBITDAB; but only based upon the EBITDAB reflected in the Company's annual
audited financial statements.
3. The last sentence of Section 8 of the Agreement is deleted and amended in
its entirety to read as follows: "Xxxxxxx hereby disclaims any right to receive
a pro rata portion of any bonus that has not yet been paid to him with respect
to the fiscal year in which such termination occurs."
4. Section 10 is amended to provide that if the last day of the balance of the
term of the Agreement, or if the last day of the twelve month period following
termination (whichever is applicable), is prior to the end of a fiscal year of
the Company, then the Annual Bonus and Second Bonus payable for such year shall
be calculated and paid with respect to the full fiscal year.
5. For purposes of Sections 8 and 10 of the Agreement, the Second Bonus shall
be treated as if it were part of the Annual Bonus (i.e., any portion of it that
has not yet been paid shall not be paid in the event of termination of the Term
for "cause", but shall be paid in the event of termination of the Term by the
Company without "cause" or by the Executive for "good reason.")
IN WITNESS WHEREOF, this Agreement has been executed and delivered in the
manner prescribed by law on the date first written above.
URSUS TELECOM CORPORATION
By: ______________________ ______________________________
Authorized Signatory Xxxxxxx Xxxxxxx
