10.14
EXECUTIVE SERVICES AGREEMENT
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THIS EXECUTIVE SERVICES AGREEMENT (the "Agreement") dated to be effective
as of the 22nd day of February 2000, by and between TELEMONDE, INC., a Delaware
corporation (the "Company"), and XXXX X. XXXXXXXX, a resident of New York (the
"Executive").
In consideration of the mutual covenants herein contained and of the mutual
benefits herein provided, the Company and the Executive agree as follows:
1. Term of Employment. The Company will employ the Executive and the
Executive will accept employment by the Company on the terms and conditions
herein contained for the period (the "Employment Period") provided in Section 5.
2. Duties and Functions. The Executive shall be employed as Executive Vice
President/Chief Financial Officer for the Company, and shall perform such
services and duties for the Company as may be assigned or delegated to him from
time to time by the President and the Board of Directors of the Company. Such
duties shall include all functions customarily performed by an Executive Vice
President/Chief Financial Officer, subject to the control of the Board of
Directors of the Company. During the Employment Period, the Executive will
devote his full time and efforts to the business of the Company (developing and
operating select international voice, data and internet services through a
network of building facilities and voice and data switching infrastructure,
collectively defined herein as "the Business") and will not, on his own behalf
or otherwise, be directly or indirectly involved in any other business if such
involvement would materially interfere with his full time employment by the
Company. The Executive shall be assigned to the Company's New York, New York
offices, and shall be able, where practicable and without interfering with his
services to "telecommute" from his home office located on Long Island, New York.
3. Compensation and Related Matters.
a. Salary. The Company agrees to pay to Executive during the
Employment Period an amount in respect of base salary equal to Two Hundred Fifty
Thousand Dollars ($250,000) per year (the "Base Salary"), payable by the Company
to the Executive in equal installments in accordance with the Company's usual
payroll policies; provided, however, that the Base Salary shall be reviewed by
the Board prior to the end of each anniversary date of this Agreement, and any
increase in salary granted by the Board at such annual review, as determined in
the sole discretion of the Board, shall become effective the following month.
Participation in any deferred compensation, discretionary bonus, retirement, and
other executive benefit plans and in fringe benefits shall not reduce the Base
Salary payable to the Executive under this Section 3(a).
b. Bonuses. The Company shall pay to the Executive a signing bonus of
$40,000 within 30 days of Commencement Date. During each calendar year the
Company shall pay
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to the Executive a guaranteed bonus amount equal to $150,000 within 60 days of
the start of each calendar year commencing January 1, 2001. An additional bonus
amount of up to $50,000 may be paid to the Executive within 60 days of the start
of each calendar year commencing January 1, 2001, upon achievement of Company's
financial objectives, which objectives shall be mutually agreed upon between the
Executive and the Board of Directors of the Company.
c. Expenses. The Company shall reimburse the Executive directly, in
accordance with the Company's policy in effect from time to time, for all
reasonable travel, entertainment and other business expenses incurred by
Executive in the performance of his duties and responsibilities hereunder.
d. Non-Qualified Stock Options.
(i) Grant of Options. The Company hereby grants to the Executive
5,800,000 nonqualified stock options (the "Options") to purchase all or any part
of an aggregate number of shares of Common Stock of the Company (the "Option
Shares") at an exercise price of $.50 per share (the "Exercise Price"). The date
of the grant of the Options will be the Commencement Date.
(ii) Vesting and Options Exercise Period. 1,400,000 of the Options
shall be vested and exercisable on June 1, 2000 at which time 1,400,000 Option
Shares shall be vested and exercisable in full. There will be eleven (11)
additional vesting dates ("Vesting Date") beginning with September 1, 2000,
continuing thereafter in three (3) month intervals and ending with March 1,
2003. 400,000 of the Options shall be vested and exercisable at each Vesting
Date at which time 400,000 Option Shares shall be vested and exercisable in
full. The Options shall have a life of ten (10) years from the Commencement
Date, regardless of the Executives status in the Company. If the Executive is
terminated for cause or resigns prior to March 1, 2003, any remaining Option
Shares not yet vested shall expire. If the Executive is terminated for any other
reason whatsoever prior to March 1, 2003 (including death or disability of the
Executive) any remaining Option Shares not yet vested shall be immediately
vested and exercisable in full on such termination date.
(iii) Method of Exercise. The Executive shall exercise the Options by
delivery of a notice to the Company, Attn: Corporate Secretary.
(iv) Transferability. The Options shall not be transferable or
assignable, in whole or in part. The Options shall be exercisable only by the
Executive or his heirs. Any prohibited transfer of the Options shall be null and
void.
(v) Tax Withholding. The Company may take such steps as it deems
necessary or desirable for the withholding of any taxes that are required by
laws or regulations of any governmental authority (federal, state or local,
domestic or foreign) to withhold taxes in connection with any of the Options
subject hereto. Furthermore, the Executive is solely and entirely liable for any
tax liabilities arising out of the Employment or any of the Options subject
hereto.
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Provided however, that the Company shall be liable for the payment of any tax
liabilities, if any, imposed upon the Executive in the event that the grant of
the Options results in a tax liability to the Executive at the time of grant; in
such event however, if the Executive later exercises the Options, the Executive
shall reimburse the Company for the amount paid by the Company to (or on behalf
of) the Executive with respect to such tax liability.
(vi) No Rights as Stockholder. The Executive shall not have any rights
as a stockholder with respect to any of the Option Shares until the date of
issuance by the Company to the Executive of a stock certificate representing
such Option Shares. The Executive shall not be entitled to any dividends, cash
or otherwise, or any adjustment of the Option Shares for such dividends, if the
record date therefore is prior to the date of issuance of such stock
certificate. Upon valid exercise of the Options by the Executive, the Company
agrees to cause a valid stock certificate for the number of Option Shares then
purchased to be issued and delivered to the Executive within five (5) business
days thereafter.
(vii) Corporate Proceedings of the Company.
a. The existence of the Options shall not affect in any way
the right or power of the Company or its officers, directors and shareholders,
as the case may be, to (i) make or authorize any adjustment, recapitalization,
reorganization or other change in the capital structure or business of the
Company, (ii) participate in any merger or consolidation of the Company, (iii)
issue any Common Stock, bonds, debentures, preferred or prior preference stock
or any other securities affecting the Common Stock or the rights of holders
thereof, (iv) dissolve or liquidate the Company, or (vi) perform any other
corporate act or proceedings, whether of a similar character or otherwise.
Provided however, that in the event that the Company takes any action identified
in (i) above, the number of "Option Shares" granted pursuant to this paragraph
3(d) shall be adjusted accordingly to reflect such action, for any of the Option
Shares not yet exercised.
b. If the Company merges into or with or consolidates with
(such events collectively referred herein as a "Merger") any corporation or
corporations and is not the surviving corporation, or the Company becomes a
wholly-owned subsidiary of any corporation, then the surviving or parent
corporation must assume the Options, or substitute new options of the surviving
or parent corporation for the Options, having an equivalent value and terms.
c. In the event of a dissolution or liquidation of the
Company, the Company shall cause written notice of such dissolution or
liquidation (and the material terms and conditions thereof) to be delivered to
the Executive at least ten (10) days prior to the proposed effective date (the
"Effective Date") of such event. The Executive shall be entitled to exercise the
Options until the Effective Date. To the extent that the liquidation is
consummated after the Effective Date, the Options shall terminate and the
Company shall have no further obligations of any type hereunder. The provisions
of this and the preceding paragraph shall not apply to any merger or
reorganization, the principal purpose of which is to change the jurisdiction of
the domicile of the Company.
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d. The issuance by the Company of shares of stock of any
class of securities convertible into shares of stock of any class, including
Common Stock, for cash, property, labor or services rendered, either upon direct
sale or upon the exercise of rights, options, or warrants to subscribe
therefore, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of Option
Shares or the Exercise Price.
(viii) Registration Rights. The Executive shall have piggyback
registration rights commensurate with those available to other senior executives
of the Company, including those who hold any shares through the Employee Benefit
Trust.
(ix) Legend. The Executive hereby agrees that the certificates
representing the Options Shares will be stamped or otherwise imprinted with
legends in such form as the Company or its counsel may require with respect to
any applicable restrictions on sale or transfer and the stock transfer records
of the Company will reflect stock-transfer instructions with respect to such
Option Shares.
(x) Sales Restrictions. The Executive undertakes to abide by and
adhere to any and all restrictions placed on the stock as a result of
regulatory requirements, including, but not limited to, management lock-up
periods, regardless of their length, provided such restrictions are on the same
terms and conditions existing for other senior management executives of the
Company.
(xi) Vesting Upon Sale of Assets or Change in Control. In the event
that during the Employment Period the Company sells all or substantially all of
its assets or there is a change of control of the Company, the Executive shall
immediately vest in all remaining Option Shares not yet vested and these Option
Shares shall be exercisable in full on such change in control date. For purposes
of this paragraph, "change of control" means:
a. acquisition in one or more transactions of fifty percent
(50%) or more of the voting power of the voting securities of the Company by any
person, or by two or more persons acting as a group, other than directly from
the Company;
b. acquisition in one or more transactions of twenty-five
percent (25%) but less than fifty percent (50%) of the voting power of the
voting securities of the Company by any person, or by two or more persons acting
as a group (excluding officers and directors of the Company), and the adoption
by the Board of Directors of a resolution declaring that a change in control of
the Company has occurred; or
c. a merger, consolidation, reorganization, recapitalization
or similar transaction, involving the securities of the Company upon the
consummation of which fifty percent (50%) or more in voting power of the voting
securities of the surviving corporation(s) is held by persons other than former
shareholders of the Company.
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(xii) Executive Shall Pay Excise Tax for any Excess Parachute Payment.
In the event any amount payable to the Executive under this Agreement would
constitute an amount deemed as an "excess parachute payment" under SS. Section
280G of the Internal Revenue Code, the Executive shall pay any excise tax
imposed as a result thereof.
e. Participation in Retirement and Executive Benefit Plans.
The Executive shall be entitled to participate in any plan of the Company
relating to pension, thrift, profit sharing, medical coverage, education, or
other retirement or executive benefits that the Company may adopt for the
benefit of its senior executives.
f. Fringe Benefits. During the Employment Period, the
Company shall provide Executive with the benefits described below (collectively,
the "Fringe Benefits"):
(i) A $750,000 renewable whole life insurance
policy for the Period of Employment at a
maximum annual premium not to exceed $10,000
(such policy amount to be adjusted downward
to the extent necessary to meet the $10,000
premium cap);
(ii) Long-term disability insurance coverage
subject to meeting any standard medical
preconditions with benefits at a rate of 60%
of Base Salary through age sixty-five (65),
less any disability benefits paid under any
group long-term disability plan of the
Company; and
(iii) An automobile and gasoline allowance of $700
per month.
(iv) Medical/dental coverage for the Executive
and his immediate family
(v) Three (3) weeks paid vacation (unused to be
accrued and paid to Executive upon
Termination of Employment on a pro-rata
basis).
(vi) Short-term disability coverage as required
by New York State Law.
(vii) Eleven (11) paid US Holidays
(viii) A reasonable amount of paid unavoidable
absence time subject to the control and
discretion of the Board of Directors.
(ix) Paid jury duty as required.
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The Executive shall be solely responsible for the payment of any tax
liability incurred for the fringe benefits provided to the Executive pursuant to
this Section 3(f).
4. Competition; Confidential Information. The Executive and the
Company recognize that due to the nature of his employment and his relationship
with the Company, the Executive has had and will have access to, and has
acquired and will acquire, and has assisted and will assist in developing,
confidential and proprietary information relating to the business and
operations of the Company, including, without limiting the generality of the
foregoing, information with respect to the present and prospective development
of the Company, product development and costs, business plans, services,
products, systems, customers, agents, and sales and marketing methods of the
Company. The Executive acknowledges that such information has been and will be
of central importance to the Company's business and that disclosure of it to or
its use by others could cause substantial loss to the Company. The Executive
and the Company also recognize that an important part of the Executive's duties
will be to develop goodwill for the Company through his personal contact with
the Company's customers and suppliers, and that there is a danger that this
goodwill, a proprietary asset of the Company, may follow the Executive if and
when his relationship with the Company is terminated. Accordingly, the Executive
agrees as follows:
a. He shall not:
(i) During the Employment Period, and for a period
of one (1) year following the termination of the Employment Period (provided
that the Company continues to pay to the Executive an amount equal to his Base
Salary in effect at the date of such termination, together with the Bonuses and
the Fringe Benefits, during such period), own, manage, operate, control, be
employed by, engage in or participate in the ownership, management, operation or
control of, or be connected in any manner with or have any other direct or
indirect financial interest in any business, firm, person, partnership,
corporation, enterprise or concern which is engaged in any business of the type
and character competitive with the Business conducted by the Company or any
Affiliates in any jurisdiction or marketing area of the United States or Europe
in which the Company or any of its subsidiaries or Affiliates is doing business.
Notwithstanding the foregoing, the Executive shall not be prohibited from
owning up to five percent (5%) of any class of securities of a company which is
listed on a recognized stock exchange or for which prices are quoted on the
National Association of Securities Dealers Automated Quotation System;
(ii) During the Employment Period, solicit or
attempt to solicit, directly or indirectly and in any capacity, any person or
entity that is a customer or client of the Company or any of its Affiliates, or
any potential supplier, agent, joint venture partner, investor, customer or
client, to which, during the Employment Period, the Company or any Affiliates
has made a presentation, or with which, during the Employment Period, the
Company or any Affiliates has been having discussions or doing business, not to
buy or do business with the Company or such Affiliates, or to buy from or do
business with another company with regard to products and services which are a
part of the Business of the Company or any of its Affiliates;
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(iii) For a period of one (1) year following the
termination of the Employment Period, solicit or attempt to solicit, directly or
indirectly and in any capacity, any person or entity that was a customer or
client of the Company or any of its Affiliates during the Employment Period;
(iv) During the Employment Period and thereafter,
make use of, disclose or divulge to any third party any trade secrets or any
other information of a proprietary, secret or confidential nature relating to
the Business of the Company or of an Affiliate, which the Company maintains as a
trade secret except for information that was lawfully learned or lawfully
acquired subsequent to the Employment Period, or information which is readily
available from public sources or otherwise in the public domain;
(v) During the Employment Period and thereafter,
use or allow to be used other than by the Company any trade or business name, or
other xxxx, symbol, logo or other means of identification which was, or is
confusingly similar to, one which was used by the Company or by an Affiliate and
protected by the Company's trademark, copyright or other proprietary right;
(vi) During the Employment Period and for a period
of one (1) year following the termination of the Employment Period, whether on
the Executive's behalf or in conjunction with or on behalf of any other person,
firm or company, solicit, encourage or entice away from the Company or from an
Affiliate (or attempt to do so) any officer or employee (whether or not such
person would commit a breach of contract by so doing);
(vii) During the Employment Period and thereafter,
interfere or seek to interfere with the continuance of services, equipment,
materials, supplies or other goods to the Company or to an Affiliate (or the
terms relating to such service, equipment, materials or supplies), from any
vendor, subcontractor, supplier or other person or business entity who has been
supplying services or goods to the Company or to an Affiliate.
b. For purposes of this Agreement, the term "Affiliate"
shall mean any person, corporation, subsidiary, or other business entity which,
whether directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company.
c. It is recognized that damages in the event of breach, or
threat of breach, of this Section 4 would be difficult, if not impossible, to
ascertain, and it is therefore agreed that the Company or any Affiliate shall
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach. The existence of this right
shall not preclude any other rights or remedies at law or in equity that the
Company or an Affiliate may have. The prevailing party in any dispute arising
out of this Agreement in whatever forum shall be entitled to reasonable
attorneys' fees from the other party. The parties agree that the restrictions
and agreements contained herein are reasonable, are the product of arms-length
negotiation, and are necessary for the Company and the Affiliates to protect the
goodwill and other assets of the Company or of the Affiliates.
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d. It is agreed that a breach of any of the clauses of this
Section 4 shall automatically toll and suspend the period of the restraint for
the amount of time that the breach continues.
5. Employment Period: Termination.
a. Employment Period. The Employment Period shall commence
on March 1, 2000 (the "Commencement Date") and shall terminate on March 1,
2003; provided, however, that the Employment Period shall automatically be
extended for successive periods of one (1) year each thereafter, unless either
the Company or the Executive shall give sixty (60) days' prior
written notice to the other that it or he wishes to terminate this Agreement
upon the expiration of its then current term.
b. Death; Disability. Notwithstanding the foregoing, the
Employment Period shall terminate on the death or, upon written notice by the
Company, the disability of the Executive. "Disability" shall mean any illness,
accident or other similar situation as a result of which, in the reasonable
judgment of a physician selected by the Board of Directors of the Company,
Executive has been rendered unable to properly and substantially perform his
duties hereunder for a period of six (6) consecutive months. In the event of
sickness or illness of or accident to the Executive which prevents him from
working and Executive has exhausted all paid time-off benefits, the Company
shall have no obligation to pay Executive for time missed from work except as
may be required by applicable law.
c. Termination. In addition, nothing in this Agreement shall
be construed to prevent the Company from terminating the Executive's employment
hereunder and the Employment Period immediately and at any time either with or
without cause. As used in this Agreement, "cause" shall mean (i) the Executive's
illegal or dishonest conduct which adversely affects or may adversely effect the
reputation, goodwill, or business position of the Company or which involves the
Company's funds or assets; (ii) the failure of the Executive to carry out his
duties as an employee of the Company or any Affiliate or to devote substantially
all his working time to the business of the Company; (iii) wilful misconduct on
the part of the Executive, including, without limitation, any theft,
embezzlement, misappropriation of the Company's or any Affiliate's property or
self-dealing; (iv) Executive's conviction of a felony; (v) Executive's breach of
Section 4 hereof; or (vi) the happening of any event (except as described in
Section 5(b)) which would make it impossible for Executive to perform his
obligations hereunder. The Company shall not construe a termination with or
without cause by the Company as a breach of this Agreement.
d. No Further Liability. If the Executive is terminated for
cause or resigns, upon such termination or resignation, the Company shall have
no further liability hereunder, except to make those payments described in
paragraphs three (3) and four (4) hereof. If the Company without cause
terminates the Executive, he will be entitled to be paid by the Company his then
monthly salary together with Bonuses and with Fringe Benefits through the end of
the current Employment Period or for a period of twelve (12) calendar months
following the month in which the
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Executive is terminated, whichever is the longer (Bonuses to be prorated through
the end of such period).
e. Extension of Employment Period. The Executive and the
Company agree that the decision to extend the Employment Period shall be in
each party's sole and absolute discretion.
f. Return of Materials. Upon the termination of the
Employment Period, the Executive agrees to immediately return any and all
property of the Company in his possession, including, without limitation, any
books, records, documents, customer lists, or copies thereof, of the Company.
6. Controlling Agreement. By execution of this Agreement the Executive
and the Company agree that any existing contractual relationships for the
employment of Executive shall cease, whether said contract is with the Company
or any affiliate of the Company, and that this Agreement shall control the terms
of such employment relationship.
7. No Assignments. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto, except
that this Agreement shall be binding upon and inure to the benefit of any
successor corporation to the Company.
8. Entire Agreement. This Agreement contains the entire understanding
of the Executive and the Company with respect to employment of the Executive and
supersedes any and all prior understandings, written or oral. This Agreement may
not be amended, waived, discharged or terminated orally, but only by an
instrument in writing.
9. Severability. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as to time,
duration, geographical area, activity or subject by any court of competent
jurisdiction, it is agreed that the court may modify the offending provision to
render it enforceable, and the Company shall be entitled to enforce the
provision or provisions for such time or duration, within such geographical
area, and as to such activity or subject, as may be determined to be reasonable
by the court. If, moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect by any court of competent jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained therein.
10. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered main, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon actual receipt; to the Company: 40
0
Xxxxxxx Xxxxxx, Xxxxxx X0X 0XX, Xxxxxxx to the attention of the Board, with a
copy to the Secretary of the Company; to the Executive: 00 Xxxxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 with a copy to his attorneys: Law Offices of Xxxxxx X.
Xxxxx LLP, 0 Xxxxxxxxxx Xxxxxxxxxx, Xxxxx 0000 Xxxxxxxx, Xxx Xxxx 00000.
11. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
12. Facsimiles. This Agreement may be executed by a facsimile
signature, which shall have the same force and effect as a manually executed
signature. This Agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York.
14. Surviving Provisions. Except as otherwise provided herein, the
obligations of the Company under Sections 3, 4 and 5 and the Executive under
Section 4 shall survive the expiration of the Employment Period.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed the day and year first above written.
TELEMONDE, INC.
ATTEST:
By: ___________________________________
Secretary Title: ________________________________
WITNESS: EXECUTIVE
/s/ Xxxxxx Xxxxxxxx Xxxxx /s/ Xxxx X. Xxxxxxxx
--------------------------- ---------------------------------------
Xxxx X. Xxxxxxxx
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