EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1998 by and between
International Telecommunication Data Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxxxx (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 5, 1996 and as amended effective August 1, 1997
("Prior Agreement"); and
WHEREAS, the Company and the Executive desire to amend and restate such
Prior Agreement, 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 the Executive
Vice President Operations and General Counsel, 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 January 1, 1998 and ending on December 31, 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 Renewal Term, as the case may
be, a written notice specifying that the term of the Executive's employment will
not be renewed at the end of the Initial Term or such Renewal Term, as the case
may be.
(c) The period from January 1, 1998 until December 31, 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. The Executive shall be employed as Executive Vice President
Operations and General Counsel 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 from 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.
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 $250,000 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.
-2-
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 plans, as the same may be in effect from time to time;
(b) be eligible to participate in any medical and health plans 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
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; and
(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, including, without limitation, the expense of maintaining memberships
in such federal, state and local professional and bar associations as agreed
upon by the Company and the Executive.
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:
(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
-3-
disability or incapacity for a period of one hundred eighty (180) or more days,
whether or not consecutive, 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 Executive Vice
President Operations and General Counsel;
(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 paragraph (v) above) or other than the occurrence of any event
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, (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.
(b) In the event that the Executive's employment with the Company is
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 36 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
-4-
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 including any interest under the
Phantom Stock Agreement then held by the Executive 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 terms
of the applicable 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).
(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
-5-
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 payments and 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 (1) 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 except if employed as an attorney by any
company or firm, 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 any person, firm or company, or any division or
subsidiary, whose primary activity 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 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
-6-
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 as 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 interest 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 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
-7-
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 assignable 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, commutation, 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 of 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.
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
-8-
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. 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.
20. 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, including
the prior Agreement 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.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. 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 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 TELECOMMUNICATION EXECUTIVE
DATA SYSTEMS, INC.
By /s/ Xxxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxxxx
------------------------------ ---------------------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxxxx
9
