EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 20, 1998 by and between
International Telecommunication Data Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into
an employment agreement dated July 21, 1997; and
WHEREAS, the Executive's position has been changed officially as of
July 20, 1998 to be Chief Information Officer; and
WHEREAS, the Executive has been serving in such capacity for a period
of time prior to July 20, 1998; and
WHEREAS, the Company and the Executive desire to revise the prior
employment agreement to reflect such change and make other changes, all in
accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby covenant and
agree as follows:
1. Employment. The Company hereby employs the Executive as its Senior
Vice President and Chief Information Officer, and the Executive hereby agrees to
function as such for the Company, for the period set forth in Section 2 hereof,
all upon the terms and conditions hereinafter set forth.
2. Term of Employment.
(a) Unless (i) earlier terminated as provided in Section 7 hereof or
(ii) renewed as provided in Section 2(b) hereof, the term of the Executive's
employment under this Agreement shall be for a period beginning on July 20, 1998
and ending on August 14, 2000 (the "Initial Term").
(b) The term of the Executive's employment under this Agreement shall
be automatically renewed for additional one-year terms (each, a "Renewal Term")
upon the expiration of the Initial Term or any Renewal Term unless the Company
or the Executive delivers to the other, at least 120 days prior to the
expiration of the Initial Term or the then current Removal Term, as the case may
be, a written notice specifying that the term of the Executive's employment will
not be renewal at the end of the Initial Term or such Renewal Term, as the case
may be.
(c) The period from July 20, 1998 until August 14, 2000 or, in the
event that the Executive's employment hereunder is earlier terminated as
provided in Section 7 hereof or renewed as provided in Section 2(b) hereof, such
shorter or longer period, as the case may be, is hereinafter called the
"Employment Term."
(d) In the event that the Executive continues in the full-time employ
of the Company after the end of the Employment Term (it being expressly
understood and agreed that the Company does not now, nor hereafter shall have,
any obligation to continue the Executive in its employ whether or not on a
full-time basis, after the Employment Term ends), then the Executive's continued
employment by the Company shall, notwithstanding anything to the contrary
expressed or implied herein, be terminable by the Company at will.
3. Duties.
(a) The Executive shall be employed as Senior Vice President and
Chief Information Officer of the Company and shall faithfully and competently
perform such duties as the Board of Directors of the Company shall from time to
time determine, which duties shall be consistent with such position. The
Executive shall perform his duties at the offices of the Company in Stamford,
Connecticut and/or Champaign, Illinois, with travel to such other locations time
to time as the Board of Directors of the Company may reasonably prescribe.
Except as may otherwise be approved in advance by the Board of Directors of the
Company, and except during vacation periods and personal days and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive shall devote his full time throughout the Employment Term to the
services required of him hereunder. The Executive shall render his services
exclusively to the Company during the Employment Term and shall use his best
efforts, judgment and energy to improve and advance the business and interests
of the Company in a manner consistent with the duties of his position.
(b) The Executive's duties shall include but not be limited to the
following:
(1) Provide managerial and executive services to the Company.
(2) Provide management for the product development efforts of the
Company.
(3) Provide a research, development and advisory function to the
Company with regards to all technology aspects of servicing the wireless and
wireline telecommunications industry.
(4) Provide support for the development, implementation and
distribution of the products and services of the Company.
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(5) Support and manage the internal and external data processing
environments of the Company.
4. Compensation.
(a) Salary. As compensation for the complete and satisfactory
performance by the Executive of the services to be performed by the Executive
hereunder during the Employment Term, the Company shall pay the Executive a base
salary at the annual rate of $150,000 increased (but not reduced) from time to
time in such amounts as the Company may, in its reasonable discretion, deem to
be appropriate (said amount, together with any such increases, being hereinafter
referred to as the "Salary"). Any Salary payable hereunder shall be paid in
regular intervals in accordance with the Company's payroll practices from time
to time in effect. All compensation payable under this Agreement shall be
subject to applicable federal and state withholding tax requirements and other
deductions approved by the Executive.
(b) Bonus Payments. For each calendar year during the Employment
Term, the Executive is eligible to receive an annual bonus in the reasonable
discretion of the Board of Directors subject to the satisfaction of such
reasonable performance criteria as shall be established for him with respect to
such year.
(c) Loan. The Company previously has loaned the Executive $24,000 on
the commencement of employment and Executive has agreed to repay said loan to
the Company, in full, on the earlier of Executive not being employed by the
Company or before February 15, 1999, with interest at the rate of 8% per annum,
provided however, the Company already has forgiven $17,000 of principal and if
Executive is employed by the Company on February 15, 1999, the Company will
forgive the remaining $7,000 of principal and all accrued interest, all as more
specifically set forth on the promissory note attached hereto.
5. Benefits. During the Employment Term, the Executive shall:
(a) be eligible to participate in executive fringe benefits that may
be provided by the Company for its executive employees in accordance with the
provisions of any such plan, as the same may be in effect from time to time.
(b) be eligible to participate in any medial and health plans (at no
cost to the Executive) or other executive welfare benefit plans that may be
provided by the Company for its executive employees in accordance with the
provisions of any such plans, as the same may be in effect from time to time.
(c) be entitled to annual paid vacation in accordance with the
Company
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policy that may be applicable to executive employees from time to time, such
vacation to be in no event less than two weeks in each calendar year.
(d) be entitled to sick leave and sick pay in accordance with any
Company policy that may be applicable to executive employees from time to time;
(e) be entitled to life insurance coverage (payable to his designated
beneficiary) of not less than $500,000 and long term disability insurance
coverage provided by the Company to executive employees; provided that the
Executive shall be entitled to receive term life insurance in an amount equal to
that provided other officers;
(f) be entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Executive in the performance of
his duties hereunder in accordance with the Company's policies for executive
employees;
(g) received reimbursement for documented and approved expenses
related to the relocation of the Executive to Connecticut, which did not exceed
$32,0000, provided however, Executive will reimburse the Company for 37% of said
expenses, if Executive is not employed by the Company for any reason on February
15, 1999; and
(h) has received a second mortgage loan in an amount not to exceed
$100,000, at 6% per annum, interest only, with principal payments of 20% of the
outstanding principal balance and interest prior to the third anniversary of the
loan, 40% prior to the 6th anniversary and 100% prior to the 10th anniversary.
Said loan will be due in full immediately if Executive ceases to be employed by
the Company for any reason. Said loan will have additional terms and conditions
customary for mortgage loans in Connecticut.
6. Stock Plans and Options. During the Employment Term, the Executive
shall be eligible to participate in any stock option, incentive and similar
plans established by the Company from time to time and at any time and the
Company shall grant to the Executive or cause to be granted to him stock options
and other benefits similar to the options and benefits granted to other
executive officers subject in all cases to the satisfaction by the Executive of
the terms and conditions of such plans and to the reasonable exercise by the
Board of Directors of any discretion granted to it or them thereunder.
7. Termination: Effect of Termination.
(a) The Executive's employment hereunder shall be terminated upon the
occurrence of any of the following:
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(i) death of the Executive;
(ii) termination of the Executive's employment hereunder by the
Company because of the Executive's inability to perform his duties on
account of disability or incapacity for a period of one hundred (100)
or more days, whether or not consecutive, or seventy-five (75)
consecutive days, occurring within any period of twelve (12)
consecutive months;
(iii) written notice by the Company to the Executive of the
termination of his employment hereunder by the Company at any time
"for cause,"
(iv) written notice by the Executive to the Company of the
termination of the Executive's employment hereunder by the Executive
because of a material diminution of the Executive's duties, authority
or responsibility or a materially impairment by action of the Company
of his ability to perform his duties or responsibilities, regardless
of whether such diminution of duties or impairment is accompanied by
a change in the Executive's title of Senior Vice President and Chief
Information Officer;
(v) written notice by the Executive to the Company of a material
breach by the Company of any provision of this Agreement if such
breach continues for thirty (30) days after written notice thereof to
the Company; or
(vi) written notice by the Executive to the Company of the
termination of the Executive's employment hereunder by the Executive
at any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than a breach of any provision of
this Agreement by the Company (as described in clause (iv) above.
The following, and only the following, actions, failures or events by or
affecting the Executive shall constitute "cause" for termination within the
meaning of clause (iii) above:
(1) conviction of having committed a felony, (2) acts of dishonesty or moral
turpitude that are materially detrimental to the Company, (3) willful acts or
omissions which the Executive knew were likely to materially damage the business
of the Company, (4) failure by the Executive to obey the reasonable and lawful
orders of the Board of Directors or the Chief Executive Officer (5) willful
breach by the Executive of his obligations under this Agreement, or (6) failure
by the Executive to perform duties in accordance with the reasonable directions
of the Board of Directors or the Chief Executive Officer.
(b) In the event that the Executive's employment with the Company is
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terminated by the Executive pursuant to the clause (v) above, then the Company
shall pay to the Executive, as severance pay in a single lump sum payment, an
amount equal to 12 months of Base Salary within thirty (30) days after the
Executive's termination of employment, based on the Executive's Base Salary
immediately preceding the event specified in clause (v), without reduction or
offset for any other monies which the Executive may thereafter earn or be paid.
(c) In the event that the Executive's employment with the Company
terminates pursuant to clauses (i), (ii) or (iii) above, then notwithstanding
anything to the contrary expressed or implied herein, except as required by
applicable law and Section 8 hereof, the Company shall not be obligated to make
any payments to the Executive or on his behalf of whatever kind or nature by
reason of the Executive's cessation of employment (including, without
limitation, by reason of termination of the Executive's employment by the
Company for "cause"), other than (i) such amounts, if any, of his Salary as
shall have accrued and remained unpaid as of the date of said cessation and (ii)
such other amounts which may be then otherwise payable to the Executive from the
Company's benefit plans or reimbursement policies, if any.
8. Change in Control.
(a) In the event of a Change in Control (as hereinafter defined), (i)
all unvested stock options and other benefits shall become fully vested and
immediately exercisable and shall remain so for a period of six months
thereafter or, if longer, for the period during which such option or other
benefit would otherwise be exercisable in accordance with its terms or the
application plan and (ii) Executive shall be entitled to the compensation
provided in Section 7(b) hereof within thirty (30) days after the Change in
Control; provided, however, that prior to the occurrence of the Change in
Control the Executive may elect to defer payment of any amounts payable pursuant
to this Section until the calendar year beginning at least 30 days after the
Change in Control.
(b) Change in Control shall mean (i) any transfer or other
transaction whereby the right to vote more than fifty percent (50%) of the then
issued and outstanding capital stock of (A) the Company or (B) any subsidiary of
the Company to which the Company shall have transferred all or substantially all
of its business, is transferred to any party or affiliated group of parties,
(ii) any merger or consolidation of the Company (or a subsidiary of the Company
of the type described in clause (i)(B) above) with any other business entity, at
the conclusion of which transaction the persons who were holders of all the
voting stock of the Company immediately prior to the transaction hold less than
fifty percent (50%) of the total voting stock of the successor entity
immediately following the transaction, or (iii) any sale, lease, transfer or
other disposition of all or substantially all the assets of the Company (or a
subsidiary of the type described in clause (i)(B) above).
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(c) Notwithstanding any other provision of this Agreement, in the
event that any payment or benefit received or to be received by the Executive
(i) is deemed to be in connection with a Change in Control (whether payable
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, its successors, any person whose actions result in a
Change in Control or any corporation ("Affiliates") affiliated (or which, as a
result of the completion of the transactions causing a Change in Control will
become affiliated) with the Company within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code") (collectively with the
payment sand benefits pursuant to this Agreement if deemed to be paid pursuant
to a Change in Control, "Total Payments") and (ii) is determined by the
Company's independent certified accounting firm (the "Tax Advisor") that an
excise tax is payable by Executive under Section 4999 of the Code, then the
Company will pay to the Executive additional compensation which will be
sufficient to enable Executive to pay such excise tax as well as the income tax,
medicare tax and excise tax on such additional compensation, such that, after
the payment of income, medicare and excise taxes, Executive is in the same
economic position in which he would have been if the provisions of Section 4999
of the Code had not been applicable. The additional compensation required by
this Section 8(c) will be paid to Executive promptly after the date or dates on
which the amount of such additional compensation is determinable, in whole or in
part by the Tax Advisor.
9. Restrictions on Executive. During the period commencing on the
date hereof and ending one (1) year after the termination of the Executive's
employment by the Company for any reason, the Executive shall not directly or
indirectly induce or attempt to induce any of the employees of the Company to
leave the employ of the Company.
10. Covenant Not To Compete. During the period commencing on the date
hereof, and ending one (10 year after the termination of the Executive's
employment due to Sections 7(a)(iii) or 7(a)(vi) hereof, except if termination
is a result of a Change in Control, the Executive shall not, except as a passive
investor in publicly held companies, or directly or indirectly engage in,
associate with, or own or control any interest in, or act as principal,
director, officer, agent, or employee of, or consultant to: (i) Cincinnati Xxxx
Information Systems, Systematics, Xxxxxxx Systems, Cable Services Group,
Computer Sciences Corporation, Electronic Data Systems, Alltel, Comsoft, LHS,
Danet, Subscriber Computing, HO Software and Baja Systems or their successors or
assigns, or (ii) any person, firm or corporation, located in the eastern third
of the United States, whose activity is (a) a venture or business, substantially
similar to that of Company and/or (b) which is in competition with the Company.
Notwithstanding anything to the contrary contained herein, to the extent the
Company (i) makes an absolute assignment of the bulk of its assets for the
benefit of creditors, (ii) consents to the appointment of a bankruptcy trustee,
(iii) institutes
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bankruptcy proceedings or (iv) experiences a cessation, the provisions of this
Section 10 shall lapse.
11. Proprietary Information.
(a) For purposes of this Agreement, "proprietary information" shall
mean any information relating to the business of Company or any entity in which
Company has an ownership interest that has not previously been publicly released
by duly authorized representatives of the Company and shall include (but shall
not be limited to) information encompassed in all proposals, marketing and sales
plans, financial information, costs, pricing information, computer programs,
customer information, customer lists, and all methods, concepts or ideas in or
reasonably related to the business of Company or any entity in which Company has
an interest. The Executive agrees to regard and preserve as confidential all
proprietary information, whether he has such information in his memory or in
writing or other physical form. The Executive will not, without written
authority from Company to do so, directly or indirectly, use for his benefit or
purposes, nor disclose to others, either during the term of his employment
hereunder or thereafter, except as required by the conditions of his employment
hereunder or a otherwise required by law, any proprietary information. The
Executive agrees not to remove from the premises of the Company or any
subsidiary or affiliate of Company, except as an executive of the Company in
pursuit of the business of the Company or any of its subsidiaries , affiliates
or any entity in which the Company has an ownership interest, or except as
specifically permitted in writing by the Company any document or object
containing or reflecting any proprietary information. The Executive recognizes
that all such documents and objects, whether developed by him or by someone else
during the term of his employment with the Company are the exclusive property of
the Company.
(b) All proprietary information and all of the Executive's interests
in trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedure, copyrights and developments
hereafter to the end of the period of employment hereunder developed by
Executive as a result of, or in connection with, his employment hereunder, shall
belong to the Company; and without further compensation, but at the Company's
expense, forthwith upon request of the Company, Executive shall execute any and
all such assignments and other documents and take any and all such other action
as the Company may reasonably request in order to vest in the Company all
Executive's right, title and interest in and all of the aforesaid items, free
and clear of liens, charges and encumbrances.
(c) The Executive expressly agrees that the covenants set forth in
Sections 9, 10, and 11 of this Agreement are being given to the Company in
connection with the employment of the Executive by the Company and that such
covenants are intended to protect the Company against the competition by the
Executive, within the terms
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stated, to the fullest extent deemed reasonable and permitted in law and equity.
In the event that the foregoing limitations upon the conduct of the Executive
are beyond those permitted by law, such limitations, both as to time and
geographical area, shall be, and be deemed to be, reduced in scope and effect to
the maximum extent permitted by law.
12. Injunctive Relief. The Executive acknowledges that the injury to
the Company resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money damages, and, accordingly, the Company may, in
addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction of the matter restraining any such violation; and no bond or
other security shall be required in connection with such injunction.
13. Non-Assignability.
(a) Neither this Agreement nor any right or interest hereunder shall
be assigned by the Executive, his beneficiaries, or legal representatives
without the Company's prior written consent; provided, however, that nothing in
this Section shall preclude the Executive from designating a beneficiary to
receive any benefit payable hereunder upon his death or incapacity.
Notwithstanding the foregoing, in the case of a Change in Control, this
Agreement and any right or interest of the Company hereunder shall be assignable
by the Company without the consent of the Executive; provided, however, that in
the event of such an assignment without the consent of the Executive, the
Company shall remain liable for the payment of all amounts payable to the
Executive hereunder and the transferee shall agree to be bound by all of the
provisions hereof in a writing delivered to the Executive.
(b) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to exclusion, attachment, levy
or similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to effect any such action shall be null, void and no effect.
14. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
15. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Executive,
at his home address or addresses as either party shall have designated in
writing to the other party hereto.
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16. No Set-Off. The company will pay promptly when due all sums to be
paid the Executive under this Agreement without abatement, deduction or
reduction of any kind or without any kind of setoff against any such sums; it
being the intention of the parties that all such sums shall continue to be
payable in all events unless the Company's obligation to pay such sums shall be
terminated pursuant to the express provisions of this Agreement.
17. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
18. Severability. If any part of this Agreement is held by a court of
competent jurisdiction to be invalid, illegible or incapable of being enforced
in whole or in part by reason of any rule of law or public policy, such part
shall be deemed to be severed from the remainder of this Agreement for the
purpose only of the particular legal proceedings in question and all other
covenants and provisions of this Agreement shall in every other respect continue
in full force and effect and no covenant or provision shall be deemed dependent
upon any other covenant or provision.
19. Arbitration. Any controversy, claim, or breach arising out of or
relating to this Agreement or the breach thereof may, in the sole discretion of
the Company, be settled by arbitration in Stamford, Connecticut in accordance
with the rules of the American Arbitration Association and the judgment upon the
reward rendered shall be entered by consent in any court having jurisdiction
thereof.
20. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
21. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall deemed an original, but all of which together
shall constitute one and the same instrument.
23. General Releases. The parties agree to exchange mutual general
releases in the event of a lump sum payment to the Executive pursuant to the
Change of
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Control provisions or Section 7(b).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
INTERNATIONAL TELECOMMUNICATIONS EXECUTIVE
DATA SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
--------------------------------- ------------------------
Xxxxx X. Xxxxx Xxxxx X. Xxxxx
COO
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