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EXHIBIT 10.23
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of December 14, 1998, between WORLD ACCESS, INC., a Delaware
corporation f/k/a WAXS INC. (the "Company"), and XXXX X. XXXXXX (the
"Employee"), an individual resident of the State of Georgia.
1. TERM. The term (the "Term") of this Agreement shall begin on the
date hereof (the "Effective Date") and shall continue in effect for a period of
three (3) years from the Effective Date (the "Initial Term"); provided, however,
the Term shall be extended automatically for an additional year (each an
"Additional Term") on each anniversary of the Effective Date unless either party
hereto gives written notice to the other party not to so extend at least ninety
(90) days prior thereto, in which case no further extension shall occur;
provided further, however, that notwithstanding any such notice by the Company
not to extend, the Term shall not expire prior to the expiration of twenty-four
(24) months after the occurrence of a Change in Control (as hereinafter
defined).
2. EMPLOYMENT AND DUTIES. The Employee shall serve as the Executive
Vice President and Chief Financial Officer of the Company, reporting only to the
Company's Chief Executive Officer, and shall have supervision and control over,
and responsibility for, the general financial management and operation of the
Company, and shall have such other powers and duties as may from time to time be
prescribed by the Company's Chief Executive Officer or board of directors,
provided that such duties are consistent with his present duties and with the
Employee's position as a senior executive officer in charge of the general
financial management of the Company. The Company shall provide the Employee with
a private office, secretarial and administrative assistance, office equipment,
supplies and other facilities and services suitable to the Employee's position.
3. SALARY. For all services to be rendered by the Employee pursuant to
this Agreement, the Company hereby agrees to pay the Employee a base salary at
an annual rate of $300,000.00 per year (the "Base Salary"), payable in
accordance with the Company's payroll practices in effect from time to time. Any
increase in Base Salary or other compensation granted by the compensation
committee of the Company's board of directors shall in no way limit or reduce
any other obligation of the Company hereunder. Once established at an increased
specified rate, the Base Salary hereunder shall not thereafter be reduced, and
the term Base Salary used in this Agreement shall refer to the Base Salary as so
increased.
4. BONUS. In addition to his Base Salary, in the discretion of the
Company's board of directors, the Employee may be awarded for each calendar year
during the Term an annual bonus (an "Annual Bonus") either pursuant to a bonus
or incentive plan of the Company or otherwise on terms no less favorable than
those awarded to other executive officers of the Company.
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5. BENEFITS. The Employee shall be entitled to all benefits and
conditions of employment provided by the Company to its executive officers,
including, without limitation, insurance, participation in the Company's
vacation policy, and participation in any stock option or incentive compensation
plans, pension, profit sharing or other retirement plans, subject (in each case)
to the terms of such plans and any provisions, rules, regulations and laws
applicable to such plans.
6. REIMBURSEMENT FOR BUSINESS EXPENSES. The Employee shall be
reimbursed for all reasonable out-of-pocket business expenses incurred by him in
the direct performance of his duties during his employment with the Company
pursuant to the terms of this Agreement and in accordance with the Company's
policies in effect from time to time. All requests for reimbursement shall be
substantiated by invoices and other pertinent data reasonably satisfactory to
the Company.
7. PERFORMANCE. The Employee shall devote all of his working time and
efforts to the business and affairs of the Company and to the diligent, faithful
and competent performance of the duties and responsibilities assigned to him
pursuant to this Agreement, except for vacations, weekends and holidays.
Notwithstanding the foregoing, the Employee may render charitable, civic and
outside board services so long as such services do not materially interfere with
the Employee's ability to discharge his duties, including, without limitation,
such outside services as the Employee is currently performing.
8. NON-DISCLOSURE OF PROPRIETARY INFORMATION; NON-COMPETITION;
NON-SOLICITATION.
8.1. CONFIDENTIAL INFORMATION; TRADE SECRETS. As used in this
Agreement, the term "Confidential Information" shall mean valuable, non-public,
competitively sensitive data and information relating to the Company's business
or the business of any entity affiliated with the Company, other than Trade
Secrets (as defined below). "Confidential Information" shall include, among
other things, information specifically designated as a Trade Secret that is,
notwithstanding the designation, determined by a court of competent jurisdiction
not to be a "trade secret" under applicable law. As used in this Agreement, the
term "Trade Secrets" shall mean information or data of or about the Company or
any entity affiliated with the Company, including, without limitation, technical
or non-technical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data, financial plans,
product plans, or lists of actual or potential customers or suppliers, that (i)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (ii) are subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" under applicable law, the foregoing definition shall be deemed
amended to the extent necessary to render it consistent with applicable law.
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8.2. NON-DISCLOSURE. The Employee will be exposed to Trade
Secrets and Confidential Information as a result of his employment by the
Company as provided in this Agreement. The Employee acknowledges and agrees that
any unauthorized disclosure or use of any of the Trade Secrets or Confidential
Information of the Company would be wrongful and would likely result in
immediate and irreparable injury to the Company. In consideration of the
Employee's right to employment (or continued employment) under the terms of this
Agreement, except as appropriate in connection with the performance of his
obligations under this Agreement, the Employee shall not, without the express
prior written consent of an officer of the Company other than the Employee,
redistribute, market, publish, disclose or divulge to any other person or
entity, or use or modify for use, directly or indirectly, in any way for any
person or entity (i) any Confidential Information during the Term of this
Agreement and for a period of two (2) years after the final date of the Term of
this Agreement; and (ii) any Trade Secrets at any time (during or after the Term
of this Agreement) during which such information or data shall continue to
constitute a "trade secret" under applicable law. The Employee agrees to
cooperate with any reasonable confidentiality requirements of the Company. The
Employee shall immediately notify the Company of any unauthorized disclosure or
use of any Trade Secrets or Confidential Information of which the Employee
becomes aware (the "1934 Act").
8.3. NON-COMPETITION. The Employee shall not, either directly
or indirectly, alone or in partnership, be connected or concerned with or
participate in any other competing business or pursuit during any employment by
the Company, except that the Employee may own up to three percent of the
outstanding securities of a competing business the securities of which are
registered with the Securities and Exchange Commission if such company is
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended.
8.4. NON-SOLICITATION. For a period of one (1) year
immediately following any termination of the Employee's employment, the Employee
will not solicit, or participate in any solicitation of, the customers,
suppliers, employees or representatives of the Company (or any of its
subsidiaries or affiliated companies) to breach any contract with the Company,
terminate any relationship with the Company or leave the Company. For purposes
of this Agreement, customers shall be limited to actual customers or
actively-sought prospective customers of the Company or any subsidiary or
affiliate of the Company with whom the Employee has had substantial contact
during the Term of this Agreement.
9. CERTAIN DEFINITIONS.
9.1. ACCRUED COMPENSATION. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the "Termination Date" (as hereinafter defined) but
not paid as of the Termination Date, including, without limitation, (i) Base
Salary, (ii) reimbursement for reasonable and necessary expenses incurred by the
Employee on behalf of the Company during the period ending on the Termination
Date, (iii) vacation pay, (iv) bonuses, including, without limitation, any
Annual Bonus, and incentive compensation, and (v) all other amounts to which the
Employee is entitled under any compensation plan of the Company at the times
such payments are due.
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9.2. BASE AMOUNT. For purposes of this Agreement, "Base
Amount" shall mean the Employee's annual Base Salary at the highest rate in
effect on, or at any time during the ninety (90) day period prior to, the
Termination Date and shall include all amounts of the Employee's Base Salary
that are deferred under any qualified and non-qualified employee benefit plans
of the Company or any other agreement or arrangement.
9.3. CAUSE. For purposes of this Agreement, a termination of
employment is for "Cause" if the Employee has been convicted of a felony or a
felony prosecution has been brought against the Employee or if the termination
is evidenced by a resolution adopted in good faith by two-thirds (2/3) of the
Company's board of directors that the Employee (i) intentionally and continually
failed substantially to perform his reasonably assigned duties with the Company
(other than a failure resulting from the Employee's incapacity due to physical
or mental illness or from the Employee's assignment of duties that would
constitute "Good Reason" (as hereinafter defined)) which failure continued for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Employee specifying the manner
in which the Employee has failed substantially to perform, or (ii) intentionally
engaged in illegal conduct or gross misconduct which results in material
economic harm to the Company; provided, however, that (A) where the Employee has
been terminated for Cause because a felony prosecution has been brought against
him and no conviction or plea of guilty or plea of nolo contendere or its
equivalent results therefrom, then said termination shall no longer be deemed to
have been for Cause and the Employee shall be entitled to all the benefits
provided by Section 10.1(i) hereof from and after the date on which the
prosecution of the Employee has been dismissed or a judgement of acquittal has
been entered, whichever shall first occur; and (B) no termination of the
Employee's employment shall be for Cause as set forth in clause (ii) above until
(x) there shall have been delivered to the Employee a copy of a written notice
setting forth that the Employee was guilty of the conduct set forth in clause
(ii) and specifying the particulars thereof in detail, and (y) the Employee
shall have been provided an opportunity to be heard in person by the Company's
board of directors (with the assistance of the Employee's counsel if the
Employee so desires). No act, or failure to act, on the Employee's part shall be
considered "intentional" unless the Employee has acted or failed to act with a
lack of good faith and with a lack of reasonable belief that the Employee's
action or failure to act was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Company's board of directors or upon the instructions of any senior
officer of the Company or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Employee in
good faith and in the best interests of the Company. Any termination of the
Employee's employment by the Company hereunder shall be deemed to be a
termination other than for Cause unless it meets all requirements of this
Section 9.3.
9.4. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall have occurred if:
(i) a majority of the directors of the Company shall
be persons other than
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persons: (A) for whose election proxies shall have been
solicited by the Company's board of directors, or (B) who are
then serving as directors appointed by the Company's board of
directors to fill vacancies on the board of directors caused
by death or resignation (but not by removal) or to fill
newly-created directorships;
(ii) a majority of the outstanding voting power of
the Company shall have been acquired or beneficially owned (as
defined in Rule 13d-3 under the 1934 Act or any successor rule
thereto) by any person (other than the Company, a subsidiary
of the Company or the Employee) or Group (as defined below),
which Group does not include the Employee; or
(iii) there shall have occurred:
(A) a merger or consolidation of the Company
with or into another corporation (other than (1) a
merger or consolidation with a subsidiary of the
Company or (2) a merger or consolidation in which (a)
the holders of voting stock of the Company
immediately prior to the merger as a class continue
to hold immediately after the merger at least a
majority of all outstanding voting power of the
surviving or resulting corporation or its parent and
(b) all holders of each outstanding class or series
of voting stock of the Company immediately prior to
the merger or consolidation have the right to receive
substantially the same cash, securities or other
property in exchange for their voting stock of the
Company as all other holders of such class or
series);
(B) a statutory exchange of shares of one or
more classes or series of outstanding voting stock of
the Company for cash, securities or other property;
(C) the sale or other disposition of all or
substantially all of the assets of the Company (in
one transaction or a series of transactions); or
(D) the liquidation or dissolution of the
Company;
unless more than twenty-five percent (25%) of the voting stock
(or the voting equity interest) of the surviving corporation
or the corporation or other entity acquiring all or
substantially all of the assets of the Company (in the case of
a merger, consolidation or disposition of assets) or of the
Company or its resulting parent corporation (in the case of a
statutory share exchange) is beneficially owned by the
Employee or a Group that includes the Employee.
9.5. GROUP. For purposes of this Agreement, "Group" shall mean
any two or more persons acting as a partnership, limited partnership, syndicate,
or other group acting in
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concert for the purpose of acquiring, holding or disposing of voting stock of
the Company.
9.6. DISABILITY. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Employee's ability
to substantially perform his duties with the Company for a period of one hundred
eighty (180) consecutive days and the Employee has not returned to his full time
employment prior to the Termination Date as stated in the "Notice of
Termination" (as hereinafter defined).
9.7. GOOD REASON.
9.7.1. For purposes of this Agreement, "Good Reason"
shall mean a good faith determination by the Employee, in the
Employee's sole and absolute judgment, that any one or more of
the following events has occurred, without the Employee's
express written consent:
(i) the assignment to the Employee of any
duties inconsistent with the Employee's position
(including, without limitation, status, titles and
reporting requirements), authority, duties or
responsibilities as in effect immediately prior to
the date hereof, or any other action by the Company
that results in a material diminution in such
position, authority, duties or responsibilities,
excluding for this purpose isolated and inadvertent
action not taken in bad faith and remedied by the
Company promptly after receipt of notice thereof
given by the Employee;
(ii) a reduction by the Company in the
Employee's Base Salary, as the same may be increased
from time to time, or a change in the eligibility
requirements or performance criteria under any bonus,
incentive or compensation plan, program or
arrangement under which the Employee is covered
immediately prior to the Termination Date which
adversely affects the Employee;
(iii) any failure to pay the Employee any
compensation or benefits to which he is entitled
within five (5) days of the date due;
(iv) the Company's requiring the Employee to
be based anywhere other than within fifty (50) miles
of the Employee's job location as of the date hereof,
except for reasonably required travel on the
Company's business which is not greater than such
travel requirements prior to the date hereof;
(v) the taking of any action by the Company
that would materially adversely affect the physical
conditions existing in or under which the Employee
performs his employment duties;
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(vi) the insolvency or the filing (by any
party, including the Company) of a petition for
bankruptcy by the Company;
(vii) any purported termination of the
Employee's employment for Cause by the Company which
does not comply with the terms of Section 9.3 hereof;
or
(viii) any breach by the Company of any
provision of this Agreement.
9.7.2. The Employee's right to terminate his
employment pursuant to this Section 9 shall not be affected by
his incapacity due to physical or mental illness.
9.8. NOTICE OF TERMINATION. For purposes of this Agreement,
"Notice of Termination" shall mean a written notice of termination from the
Company of the Employee's employment which indicates the specific termination
provision in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Employee's employment under the provision so indicated.
9.9. TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean, in the case of the Employee's death, his date of
death, in the case of the Employee's voluntary termination, the last day of
employment, and in all other cases (other than in the case of a successor or an
assignee, which is provided for in Section 14.1 hereof), the date specified in
the Notice of Termination; provided, however, that if the Employee's employment
is terminated by the Company for Cause or due to Disability, the date specified
in the Notice of Termination shall be at least thirty (30) days from the date
the Notice of Termination is given to the Employee; and provided further that in
the case of Disability the Employee shall not have returned to the full-time
performance of his duties during such period of at least thirty (30) days.
10. BENEFITS AND PAYMENTS UPON TERMINATION OF EMPLOYMENT.
10.1. COMPENSATION AND BENEFITS. If, during the term of this
Agreement, the Employee's employment with the Company shall be terminated, the
Employee shall be entitled to the following compensation and benefits in the
following circumstances:
(i) If the Employee's employment with the Company
shall be terminated (A) by the Company for Cause or
Disability, or (B) by reason of the Employee's death, then the
Company shall pay to the Employee all Accrued Compensation.
(ii) If the Employee's employment with the Company
shall be terminated by the Company pursuant to Section 13.2
hereof, the Employee shall be entitled to the following:
(A) the Company shall pay the Employee all
Accrued Compensation;
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(B) the Company shall pay the Employee as
severance pay and in lieu of any further compensation
for periods subsequent to the Termination Date an
amount in cash equal to one (1) times the Base
Amount;
(C) for twelve (12) months or such longer
period as may be provided by the terms of the
appropriate program, practice or policy, the Company
shall, at its expense, continue on behalf of the
Employee and his dependents and beneficiaries the
life insurance, disability, medical, dental and
hospitalization benefits generally made available to
the Company's executive officers at any time during
the 90-day period prior to the Termination Date or at
any time thereafter, provided that (1) the Company's
obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the
Employee obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case
the Company may reduce the coverage of any benefits
it is required to provide the Employee hereunder as
long as the aggregate coverages and benefits of the
combined benefit plans are no less favorable to the
Employee than the coverages and benefits required to
be provided hereunder, and (2) this clause (C) shall
not be interpreted so as to limit any benefits to
which the Employee or his dependents or beneficiaries
may be entitled under any of the Company's employee
benefit plans, programs or practices following the
Employee's termination of employment, including,
without limitation, retiree medical and life
insurance benefits; and
(D) the restrictions on any outstanding
incentive awards (including, without limitation,
restricted stock and granted performance shares or
units) under any incentive plan or arrangement shall
lapse and such incentive award shall become 100%
vested, all stock options, warrants and stock
appreciation rights granted to the Employee on or
prior to the date of this Agreement shall become
immediately exercisable and 100% vested and,
notwithstanding anything to the contrary contained in
the plan, agreement or other instrument relating to
such stock option, warrant or stock appreciation
rights with regard to the period of time within which
such stock option, warrant or stock appreciation
rights must be exercised following the Employee's
termination of employment or provision of services to
the Company, all such stock options, warrants and
stock appreciation rights may be exercised at any
time and from time to time until the one (1) year
anniversary of the Termination Date, and all
performance units granted to the Employee shall
become 100% vested.
(iii) If the Employee's employment with the Company
shall be terminated
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by the Employee pursuant to Section 13.3 hereof, then the
Employee shall be entitled to the following:
(A) the Company shall pay the Employee all
Accrued Compensation;
(B) the Company shall pay the Employee as
severance pay and in lieu of any further compensation
for periods subsequent to the Termination Date an
amount in cash equal to one-half (1/2) times the Base
Amount;
(C) for six (6) months or such longer period
as may be provided by the terms of the appropriate
program, practice or policy, the Company shall, at
its expense, continue on behalf of the Employee and
his dependents and beneficiaries the life insurance,
disability, medical, dental and hospitalization
benefits generally made available to the Company's
executive officers at any time during the 90-day
period prior to the Termination Date or at any time
thereafter, provided that (1) the Company's
obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the
Employee obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case
the Company may reduce the coverage of any benefits
it is required to provide the Employee hereunder as
long as the aggregate coverages and benefits of the
combined benefit plans are no less favorable to the
Employee than the coverages and benefits required to
be provided hereunder, and (2) this clause (C) shall
not be interpreted so as to limit any benefits to
which the Employee or his dependents or beneficiaries
may be entitled under any of the Company's employee
benefit plans, programs or practices following the
Employee's termination of employment, including,
without limitation, retiree medical and life
insurance benefits; and
(D) the restrictions on any outstanding
incentive awards (including, without limitation,
restricted stock and granted performance shares or
units) under any incentive plan or arrangement shall
lapse and such incentive award shall become 100%
vested, all stock options, warrants and stock
appreciation rights granted to the Employee on or
prior to the date of this Agreement shall become
immediately exercisable and 100% vested and,
notwithstanding anything to the contrary contained in
the plan, agreement or other instrument relating to
such stock option, warrant or stock appreciation
rights with regard to the period of time within which
such stock option, warrant or stock appreciation
rights must be exercised following the Employee's
termination of employment or provision of services to
the Company, all such stock options, warrants and
stock appreciation rights may be exercised at any
time and from time to
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time until the one (1) year anniversary of the
Termination Date, and all performance units granted
to the Employee shall become 100% vested.
(iv) The amounts provided for in subsections 10.1(i),
10.1(ii)(A) and (B) and 10(iii)(A) and (B) shall be paid (A)
in a lump sum in cash within five (5) days of the Employee's
Termination Date, or (B) at the Employee's option made
pursuant to a written election delivered to the Company before
the Termination Date, in three (3) substantially equal annual
payments commencing no later than five (5) days after the
Employee's Termination Date. Should the Employee elect to
receive such payments in installments, the amount of the
Company's outstanding obligation to the Employee shall be
credited with interest on a monthly basis at a rate equal to
the "Applicable Federal Rate," as defined in Section 1274(d)
of the Internal Revenue Code of 1986, as amended (the "Code"),
then in effect.
(v) The Employee shall not be required to mitigate
the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, and no such payment
shall be offset or reduced by the amount of any compensation
or benefits provided to the Employee in any subsequent
employment, except as provided in subsection 10.1(ii)(C) and
10.1(iii)(C).
10.2. NO SEVERANCE. The severance pay and benefits provided
for in this Section 10 shall be in lieu of any other severance or termination
pay to which the Employee may be entitled under any Company severance or
termination plan, program, practice or arrangement; provided, however, if the
Employee would be entitled to the severance pay and benefits under that certain
Severance Protection Agreement dated as of November 1, 1997 by and between World
Access, Inc. and the Employee (the "Severance Protection Agreement"), then the
severance pay and benefits provided for in the Severance Protection Agreement
shall be in lieu of the severance pay and benefits provided for in this Section
10.
10.3. OTHER COMPENSATION AND BENEFITS. The Employee's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans and other applicable
programs, policies and practices then in effect.
11. EXCISE TAX PAYMENTS.
11.1. EXCISE TAX. Notwithstanding anything contained herein to
the contrary, if any portion of the payments and benefits provided hereunder and
benefits provided to, or for the benefit of, the Employee under any other plan
or agreement of the Company (such payments or benefits are collectively referred
to as the "Payments") would be subject to the excise tax (the "Excise Tax")
imposed under Section 4999 of the Code or would be nondeductible by the Company
pursuant to Section 280G of the Code, the Payments shall be reduced (but not
below zero) if and to the extent necessary so that no portion of any Payment to
be made or benefit to be provided to the Employee shall be subject to the Excise
Tax or shall be nondeductible by the
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Company pursuant to Section 280G of the Code (such reduced amount is hereinafter
referred to as the "Limited Payment Amount"). Unless the Employee shall have
given prior written notice specifying a different order to the Company to
effectuate the Limited Payment Amount, the Company shall reduce or eliminate the
Payments by first reducing or eliminating those payments or benefits, if any,
which are not payable in cash and then by reducing or eliminating cash payments,
in each case in reverse order beginning with payments or benefits which are to
be paid the farthest in time from the Determination (as hereinafter defined).
Any notice given by the Employee pursuant to the immediately preceding sentence
shall take precedence over the provisions of any other plan, arrangement or
agreement governing the Employee's rights and entitlements to any benefits or
compensation.
11.2. INITIAL DETERMINATION. An initial determination as to
whether the Payments shall be reduced to the Limited Payment Amount and the
amount of such Limited Payment Amount shall be made by a nationally-recognized
accounting firm selected by the Company and reasonably acceptable to the
Employee (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation, to the Company and the Employee within thirty
(30) days of the Termination Date and if the Accounting Firm determines that no
Excise Tax is payable by the Employee with respect to a Payment or Payments, it
shall furnish the Employee with an opinion reasonably acceptable to the Employee
that no Excise Tax will be imposed with respect to any such Payment or Payments.
Within ten (10) days of the delivery of the Determination to the Employee, the
Employee shall have the right to dispute the Determination (the "Dispute"). If
there is no Dispute, the Determination shall be binding, final and conclusive
upon the Company and the Employee subject to the application of Section 11.3
below.
11.3. FINAL DETERMINATION. As a result of the uncertainty in
the application of Sections 4999 and 280G of the Code, it is possible that the
Payments to be made to, or provided for the benefit of, the Employee either have
been made or will be made by the Company which, in either case, will be
inconsistent with the limitations provided in Section 11.1 (hereinafter referred
to as an "Excess Payment" or "Underpayment", respectively). If it is established
pursuant to a final determination of a court of competent jurisdiction or an
Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved that an Excess Payment has been made, such Excess Payment
shall be deemed for all purposes to be a loan to the Employee made on the date
the Employee received the Excess Payment, and the Employee shall repay the
Excess Payment to the Company on demand (but not less than ten (10) days after
written notice is received by the Employee), together with interest on the
Excess Payment at the "Applicable Federal Rate" (as defined in Section 1274(d)
of the Code) from the date of the Employee's receipt of such Excess Payment
until the date of such repayment. In the event that it is determined by (i) the
Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS, (ii) pursuant to a determination by a court of competent
jurisdiction, or (iii) upon the resolution, to the Employee's satisfaction, of
the Dispute, that an Underpayment has occurred, the Company shall pay an amount
equal to the Underpayment to the Employee within ten (10) days of such
determination or resolution, together with interest on such amount at the
Applicable
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Federal Rate from the date such amount would have been paid to the Employee
until the date of payment.
12. ONE MILLION DOLLAR DEDUCTION LIMIT.
12.1. SECTION 162(M). Notwithstanding anything contained
herein to the contrary, if any portion of the Payments would be nondeductible by
the Company pursuant to Section 162(m) of the Code, the Payments to be made to
the Employee in any taxable year of the Company shall be reduced (but not below
zero) if and to the extent necessary so that no portion of any Payment to be
made or benefit to be provided to the Employee in such taxable year of the
Company shall be nondeductible by the Company pursuant to Section 162(m) of the
Code. The amount by which any Payment is reduced pursuant to the immediately
preceding sentence, together with interest thereon at the Applicable Federal
Rate, shall be paid by the Company to the Employee on or before the fifth
business day of the immediately succeeding taxable year of the Company, subject
to the application of the limitations of the immediately preceding sentence and
this Section 12. Unless the Employee shall have given prior written notice
specifying a different order to the Company to effectuate this Section 12, the
Company shall reduce or eliminate the Payments in any one taxable year of the
Company by first reducing or eliminating those payments or benefits which are
not payable in cash and then by reducing or eliminating cash payments, in each
case in reverse order beginning with payments or benefits which are to be paid
the farthest in time from the Section 162(m) Determination (as hereinafter
defined). Any notice given by the Employee pursuant to the immediately preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Employee's rights and entitlements to any
benefits or compensation.
12.2. SECTION 162(M) DETERMINATION. The determination as to
whether the Payments shall be reduced pursuant to Section 12.1 hereof and the
amount of the Payments to be made in each taxable year after the application of
Section 12.1 hereof shall be made by the Accounting Firm at the Company's
expense. The Accounting Firm shall provide its determination (the "Section
162(m) Determination"), together with detailed supporting calculations and
documentation, to the Company and the Employee within thirty (30) days of the
Termination Date. The Section 162(m) Determination shall be binding, final and
conclusive upon the Company and the Employee.
13. TERMINATION. The Employee's employment hereunder may be terminated
without any breach of this Agreement only in accordance with this Section 13.
13.1. TERMINATION BY THE COMPANY FOR CAUSE. The Company may
terminate the Employee's employment at any time for Cause by providing
to the Employee a Notice of Termination, whereupon the Employee shall
be entitled to all of the benefits and payments provided for under
Section 10 hereof.
13.2. TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company
may terminate the Employee's employment at any time without Cause by
providing to the
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Employee a Notice of Termination, whereupon the Employee shall be
entitled to all of the benefits and payments provided for under Section
10 hereof.
13.3. TERMINATION BY THE EMPLOYEE. The Employee's employment
may be terminated by the Employee at any time by providing the Company
with notice of such termination and specifying in the notice the
effective date of such termination, which shall not be less than one
hundred twenty (120) days after giving such notice, whereupon the
Employee's employment shall terminate on the date specified in such
notice and the Employee shall be entitled to all of the benefits and
payments provided for under Section 10 hereof; provided, however, that
following receipt of such notice, the Company may specify, in its
discretion, the date on which the Employee's employment shall terminate
so long as the date so specified is not more than one hundred twenty
(120) days after the date on which the Employee shall have given
notice, in which case the Employee's employment shall terminate on the
date so specified by the Company.
13.4. TERMINATION UPON DISABILITY. The Company may terminate
the Employee's employment upon the Disability of the Employee by
providing to the Employee a Notice of Termination, whereupon the
Employee shall be entitled to all of the benefits and payments provided
for under Section 10 hereof.
13.5. DEATH. In the event of the Employee's death during his
employment hereunder, the Employee's employment shall be automatically
terminated.
14. SUCCESSORS AND ASSIGNS.
14.1. ASSUMPTION AND AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the Company, its successors and
assigns, and the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) or assign, by agreement in form
and substance satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession or assignment shall be a
breach of this Agreement and shall entitle the Employee to compensation from the
Company in the same amount and on the same terms as he would be entitled to
hereunder if his employment had been terminated pursuant to Section 13.2 hereof,
except that for purposes of implementing the foregoing, the date on which any
such succession or assignment becomes effective shall be deemed the Termination
Date hereunder. As used in the Agreement, Company shall mean the Company as
hereinbefore defined and any successor or assign that executes and delivers the
agreement provided for in this Section 14.1 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
14.2. RIGHTS OF EMPLOYEE. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of and be enforceable by the
Employee's personal or legal
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representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Employee should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Employee's devise, legatee or other designee or, if there
be no such designee, to the Employee's estate.
15. INJUNCTIVE RELIEF. The Company and the Employee agree that damages
are an inadequate remedy for, and that the Company or any successor to the
business of the Company would be irreparably harmed by, any breach of Section 8
of this Agreement, and that the Company, any successor to the business of the
Company or any permitted assignee of the Company shall be entitled to equitable
relief in the form of a preliminary or permanent injunction upon any breach of
Section 8 hereof.
16. NOTICES. For the purpose of this Agreement, notices and all other
communications to either party hereunder provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when delivered in person
or mailed by first-class mail or airmail, postage prepaid, addressed:
If to the Employee:
Xx. Xxxx X. Xxxxxx
000 X. Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
If to the Company:
World Access, Inc.
000 X. Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
or to such other address(es) as either party may have furnished to the other
party in writing in accordance with this Section.
17. MISCELLANEOUS. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver (i) is agreed
to in writing and is signed by the Employee and a representative of the Company,
its successor or permitted assignee and (ii) has been approved by the board of
directors of the Company, its successor or any permitted assignee of the
Company. No waiver by either party to this Agreement at any time of breach by
the other party of, or compliance by the other party with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
to be a waiver of similar or dissimilar provisions or conditions at the same or
any prior or subsequent time. No agreements or representations, oral or
otherwise, expressed or implied, with respect to the subject matter of this
Agreement have been made by either party that are not expressly set forth in
this Agreement.
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18. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which other provisions shall remain in
full force and effect, nor shall the invalidity or unenforceability of a portion
of any provision of this Agreement affect the validity or enforceability of the
balance of such provision.
19. COUNTERPARTS. This document may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute a single agreement.
20. HEADINGS. The headings of the paragraphs contained in this document
are for reference purposes only and shall not, in any way, affect the meaning or
interpretation of any provision of this Agreement.
21. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal substantive laws, and not the choice of law
rules, of the State of Georgia.
22. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof, other than the provisions of Section 8
hereof, shall, on the written request of one party served upon the other, be
settled by binding arbitration in Xxxxxx County, Georgia in accordance with the
commercial arbitration rules then recognized by the American Arbitration
Association, and judgment upon the award rendered may be entered and enforced in
any court having jurisdiction thereof.
23. FEES AND EXPENSES. The Company shall pay all legal fees and related
expenses incurred by the Employee as they become due as a result of or in
connection with (i) the Employee's termination of employment (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Employee seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
without limitation, any such fees and expenses incurred in connection therewith)
or by any other plan or arrangement maintained by the Company under which the
Employee is or may be entitled to receive benefits, (iii) the Employee's hearing
before the Company's board of directors as contemplated in Section 9.3 of this
Agreement, and (iv) any tax audit or proceeding to the extent attributable to
the application of any Excise Tax with respect to any Payment or Payments
hereunder, plus in each case interest on any delayed payment at the "Applicable
Federal Rate," as defined in Section 1274(d) of the Code, as then in effect.
24. ENTIRE AGREEMENT. Other than the Severance Protection Agreement,
which shall continue in full force and effect until the Termination Date, this
Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior agreements (if any), understandings and arrangements (oral
or written) between the parties hereto.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and delivered by its duly authorized officer, and the Employee has
executed and delivered this Agreement, all as of the date first written above.
WORLD ACCESS, INC.
By:
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Xxxxxx X. Xxxx
Chairman of the Board
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XXXX X. XXXXXX
