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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made January 2, 1997, by and between TELEHUB
COMMUNICATIONS CORPORATION, a Nevada corporation, whose address is 0000
Xxx-Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx 00000, and XXXXXXX X. XxXXXXXXXX,
an individual residing at 0000 Xxxx Xxxxx Xxxxx, XxXxxxx, Xxxxxxxx 00000
("Executive").
RECITALS
WHEREAS, TELEHUB desires to hire and employ Executive as its Chief
Operating Officer, and potentially also as an officer for TELEHUB affiliates.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. EMPLOYMENT. TELEHUB, its subsidiaries and affiliate corporations
(collectively, the "Company") agree to employ Executive and Executive hereby
agrees to be employed by the Company on a full-time basis. Executive represents
and warrants that the execution of this Agreement and his performance under
this Agreement does not breach any other agreement and does not require the
consent of any other person.
2. DUTIES. Executive shall be employed as TELEHUB's Chief Operating
Officer and shall perform the duties, bear the responsibilities commensurate
with his position and serve the Company faithfully and to the best of his
ability, under the direction of the Board (for purposes of this Agreement, the
term "Board" shall mean the Board of Directors of the ultimate parent
corporation in the Company) and Chief Executive Officer. In addition, the
Executive will hold, without additional compensation, such other offices and
directorships for the Company to which he may be appointed or elected from
time-to-time. In its sole discretion the Company may assign Executive to a
position of lesser responsibility, subject to Executive's right of termination
under Section 8.6 below. Executive's conduct must promote the best interests of
the Company and must not discredit the Company, its products or services.
3. EXCLUSIVITY. Executive shall devote substantially his full business
time, efforts, attention, skill and energy to the Company's business. Executive
shall disclose all other business activities to the Board and Executive shall
not engage in any other business activity that requires significant personal
services by Executive. After notifying the Board, Executive may take reasonable
personal time for:
3.1. personal investments that do not require significant services by
Executive;
3.2. participation in volunteer or charitable activities;
3.3. participation in industry-related organizations;
3.4. serving as a Director in Xxxxxx Group Companies;
3.5. with prior Board approval, serving as a Director for other
companies; and
3.6. activities approved in advance by the Board; except that Executive
shall cease any such outside activity if the Board determines that such
activity will interfere or conflict with the Company's interests.
4. CONFLICTS OF INTERIM. Executive shall not engage in any activity
that, in the Board's judgment, may interfere or conflict with the proper
performance of Executive's duties or the Company's interest. If Executive has
any interest in a proposed transaction involving the Company, that interest
must be fully disclosed to the Board and the disinterested Board members
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must approve the transaction.
5. CONFIDENTIALITY. The relationship between the Company and Executive is
one of confidence and trust. Executive agrees that the provisions of this
Section are fair and reasonable because as a result of his employment by
the Company he will have access to proprietary Company information and that
such information is a highly-valued asset of the Company.
5.1. Confidential Information. The term "Confidential Information"
means all information relating to the Company, its affiliate's customers
and suppliers considered by the Company to be confidential including,
without limitation:
5.1.1. the Company's plans, products, processes and personnel;
5.1.2. the nature of the Company's services and any area where such
services are performed or planned to be performed;
5.1.3. research, development, manufacturing, purchasing, and
engineering;
5.1.4. markets, marketing strategies, customer lists and prospect
lists;
5.1.5. merchandising, selling, pricing, tariffs or contractual terms,
5.1.6. inventions, discoveries, concepts and ideas, whether patentable
or not, processes, methods, formulas, and techniques, trade
secrets, related improvements and knowledge;
5.1.7. financial and accounting information;
5.1.8. the Company's technology, expertise or business; and
5.1.9. any component of Confidential Information or anything derived
from Confidential Information.
The Company's determination that specific information constitutes
Confidential Information shall be binding, except for information already in
the public domain other than by Executive's Act and except for information
which is no longer a trade secret as defined by the Uniform Trade Secrets Act.
5.2. Non-disclosure. Executive agrees that he shall at no time, whether
during his employment or at any time thereafter, disclose or use any
Confidential Information for any purpose other than the conduct of the
Company's business. Upon the breach or threatened breach of this covenant by
Executive, the Company shall be entitled without notice to obtain relief
pursuant to Section 11 below.
5.3. Notice to Company. Executive will immediately notify the Company if
he learns that Confidential Information has been disclosed or is about to be
disclosed, whether by Executive's acts, acts of third parties, law, regulation
or court order. Executive will cooperate with the Company's efforts to prevent
or limit disclosure of Confidential Information.
5.4. Ownership. Any Confidential Information that is directly
originated, developed or perfected to any degree by Executive during his
employment by the Company shall be and remain the sole property of the Company
and shall be deemed trade secrets of the Company. To the extent that any
Confidential Information constitutes an original work of authorship by
Executive which is protectable by copyright, Executive acknowledges that such
work is a "work for hire" as defined by the U.S. Copyright Act (17 U.S.C.
Section 101 et seq.).
5.5. Assignment. The Executive hereby assigns to the Company all of his
intellectual property rights (including copyrights, patents, and trademarks)
that may exist due to his direct involvement in the Company.
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5.6. Return Confidential Information. Upon termination of Executive's
employment or upon request by the Board, Executive or his legal representative
shall deliver to the Company all original and duplicates and/or copies of all
documents, records, notebooks, computer records or media, and similar materials
containing Confidential Information then in his possession.
5.7. Further Assurances. Executive agrees to execute such separate and
further confidentiality agreements embodying and enlarging upon the provisions
of this Section as the Company may reasonably request
6. COMPENSATION AND BENEFITS. In consideration of the services to be
rendered pursuant to this Agreement, Executive shall receive the following
compensation and benefits during the term of his employment
6.1. Salary. The Company shall pay Executive an annual base salary, payable
semimonthly in arrears. The annual base salary during the term hereof shall be
$175,000, the Company will also pay Executive an incentive bonus up to 50% of
Executive's base salary per year at the discretion of the Board. The Board shall
annually review the amounts of the base salary and bonus.
6.2. Benefits. The Company shall provide Executive with the benefits of
such insurance plans, hospitalization plans, retirement plans and other employee
benefits generally provided to executive employees of the Company and for which
Executive may be eligible under the terms and conditions thereof. The Company
shall also reimburse Executive for the annual premiums incurred by Executive for
Disability and $1,000,000 Term Life insurance policies, on terms approved by the
Board and to become effective within six months.
6.3. Stock Options. The Company intends to create stock option plans
for directors, officers and employees. Executive will be eligible to receive
stock options in accordance with the terms of such plans.
6.4. Annual Leave. Executive shall be entitled to vacations, sick
leaves, personal days and other time off in accordance with the Company's
policies in effect for officers and executive employees of the Company.
6.5. Reimbursement of Commuting and Office Expenses. The Executive
currently does not reside in the vicinity of the Company's California business
office. Accordingly, the Executive shall commute to the Company's business
offices in Illinois and California. The Company shall promptly reimburse the
Executive for
6.5.1. all travel expenses, hotel accommodations and car rentals
directly incurred when commuting to the Company's Illinois
business office; and
6.5.2. Executive's actual secretarial costs and other office operating
expenses to the extent directly attributable to the Company's
business; after receiving an itemized account of such expenses
with reasonable supporting documentation.
6.6. Car Allowance. the Company shall pay Executive a car allowance of
$900 per month, in addition to Executive's other compensation.
6.7. Reimbursement of Expenses. Upon receipt of an itemized accounting
of such expenses with reasonable supporting documentation, the Company shall
reimburse Executive for all
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reasonable and necessary out-of-pocket expenses incurred by Executive in
connection with the business of the Company and in performance of Executive's
duties under this Agreement.
7. DURATION. EXECUTIVE employment shall commence on the date of this
Agreement and continue until terminated in accordance with Section 8. The
initial term of Employee's employment shall be five years ("Initial Term"), with
renewal terms of one year. After termination of Executive's employment, the
applicable provisions of Sections 5,8, and 9 shall remain in full force and
effect until the time specified in each such section.
8. TERMINATION. Executive's employment may be terminated as follows:
8.1. Expiration of Term. Upon written notice by either party delivered
at least 30 days before the expiration of the Initial Term or renewal term
(collectively, "Term"), Executive's employment will terminate at the expiration
of the Term.
8.2. Death. If Executive dies during the Term of his employment, the
Company shall pay his estate the compensation that would otherwise be payable
to him for the month in which his death occurs, and his employment shall be
deemed terminated on the last day of such month. The Company also shall pay
Executive's estate the bonus specified in Section 6.1; if the Executive dies
during the first year of employment, the bonus will be 50% of Executive's
annual salary, otherwise the bonus will be the amount of the previous year's
bonus pro rated for the portion of the year served.
8.3. Disability. If the Executive is prevented from performing his
employment duties by reason of illness or incapacity for 180 days in any 365
day period, the Company may terminate his employment upon 60 days written
notice to Executive or his or her duly appointed legal representative.
8.4. Change of Control. Either party may terminate Executive's
employment upon at least 30 days written notice upon the occurrence of any of
the following events:
8.4.1. sale by the Company of substantially all of its assets to a
single purchaser or associated group of purchasers who are not
affiliates of the Company;
8.4.2. Sale, exchange or other disposition in one transaction of 35%
or more of the outstanding voting stock of the Company to
persons, firms or corporations who are not affiliates of the
Company;
8.4.3. merger or consolidation of the Company in a transaction not
involving an affiliate of the Company in which the shareholders
of the Company receive less than 50% of the outstanding voting
stock of the new continuing corporation or successor entity;
8.4.4. a bona fide decision by the Company to terminate its business
and liquidate its assets (but only if such liquidation
is not part of a plan to carry on the Company's business through
its shareholders).
For the purpose of this Agreement, the term "affiliate" means a person, firm or
corporation that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control of the Company.
8.5. Cause. The Company may immediately terminate Executive's
employment at any time for:
8.5.1. gross negligence or non-performance by Executive of any material
duties as an executive officer of the Company which continues
after 60 days written notice specifying such negligence or
non-performance; or
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8.5.2. the commission of any theft, fraud, embezzlement or similar
crime involving the commission of any felony, for acts of
dishonesty or moral turpitude, for intentional violations of
the securities laws or for a material breach of any provision of
this Agreement.
8.6. Demotion. The Executive may terminate his employment upon 30 days
written notice if the Company assigns the Executive to a position of lower
responsibility and Executive rejects such assignment.
8.7. Discretion. Either party, in its sole discretion, may terminate
Executive's employment at any time upon 30 days prior written notice.
8.8. Severance. If Executive's employment is terminated during the
Initial Term pursuant to subsections 8.4 or 8.6, or the Company terminates
Executive's employment pursuant to subsection 8.7, the Company shall pay
Executive a Termination Fee equal to twice Executive's then-current annual
salary, plus benefits plus the bonus specified in Section 6.1; if employment is
terminated during the first year of employment, the bonus will be 50% of
Executive's annual salary, otherwise the bonus will be the amount of the
previous year's bonus pro rated for the portion of the year served.
9. COVENANT NOT TO COMPETE. Since Executive will be a key employee of
the Company, Executive shall have access to Confidential Information, and the
national scope of the Company's proposed business, Employee agrees that the
restrictions on his future activities contained in this Section are fair,
reasonable and necessary.
9.1. Covenant Period. The covenants contained in this Section shall
continue until one year after the later of:
9.1.1. termination of Executive's employment;
9.1.2. the Company receives revenue from wholesale long distance
services;
9.1.3. the Company receives revenue from Open Access Mediation
Services; or
9.1.4. the Company becomes subject to the reporting requirements of
sections 12 or 15(d) of the federal Securities Exchange Act
of 1934.
(the "Covenant Periods"). Subsections 9.1.2, 9.1.3, and 9.1.4 do not
apply if they have not occurred within one year after termination of
Executive's employment.
9.2. Restrictions on Future Employment. Until the Covenant Period
expires, Executive shall not, directly or indirectly, own, manage, operate,
control, be employed by, assist or participate in the ownership, management,
operation or control of a business operating in the United States that is
engaged in the following activities:
9.2.1. the provision of management, billing and control services
using Advanced Intelligent Network technologies;
9.2.2. the provision of wholesale long distance services using
Asynchronous Transfer Mode techniques; or
9.2.3. the provision of Open Access Mediation Services.
This restriction applies whether or not the Company is authorized to provide and
actually provides such services during of Executive's employment by the Company.
9.3. Non-solicitation. Executive shall not directly or indirectly:
9.3.1 induce any employee of the Company to leave the employ of the
Company;
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9.3.2. interfere with the relationship between the Company and
any employee;
9.3.3. hire any Company employee to work for any organization of
which Executive is an officer, director, employee,
consultant, independent contractor or owner of an equity or
other financial interest; or
9.3.4. solicit or service any actual or prospective supplier, client,
customer of the Company who was solicited or serviced
during Executive's employment;
9.3.5. interfere or attempt to interfere with transaction involving
the Company; until the Covenant Period expires.
10. SECURITIES MATTERS. Since the Executive will have access to
Confidential Information, his ability to engage in securities transactions
(including securities issued by the Company and by others) will be limited.
Executive agrees to:
10.1. not engage in any transactions that violate the securities
laws;
10.2. file all reports required by securities regulatory authorities;
10.3. provide information about securities transactions when
requested by the Company;
10.4. follow written Company policies concerning securities
transactions;
10.5. execute any "lock-up" agreements or other restrictions on
transactions which were approved by the Board;
10.6. comply with securities law requirements for all
transactions. While Executive may request Board permission for proposed
securities transactions, Executive is still responsible for compliance with
legal requirements.
11. INJUNCTIVE RELIEF. Upon a material breach or threatened material breach
by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of this
Agreement, the Company shall be entitled to an injunction restraining Executive
from such breach, together with any other relief or remedy available, for such
breach or threatened breach, including the recovery of damages. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
for such breach or threatened breach. If the Company takes legal action to
enforce the provisions of this Agreement or to enjoin Executive from violating
this Agreement, the prevailing party, as part of its damages, shall be entitled
to recover its legal fees and expenses incurred in such action from the losing
party.
12. SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision or
portion of this Agreement shall be adjudicated to be invalid or unenforceable,
this Agreement shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such Section in the particular jurisdiction in
which such adjudication is made.
13. NOTICES. All communications, requests, consents and other notices
under this Agreement shall be given in writing and delivered by facsimile,
courier, registered or certified mail (postage prepaid) to the receiving party
at the address set forth above or the recipient's last known address. Notice
shall be deemed given on the date of delivery as shown by the facsimile
confirmation or delivery receipt.
14. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada
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15. ASSIGNMENT. The Company may assign its rights and obligations under
this Agreement to any successor corporation or, subject to Section 8.4, to any
acquirer of substantially all of the business of the Company, and all covenants
and agreements hereunder shall inure to the benefit of and be enforceable by or
against any such assignee. Neither this Agreement nor any rights or duties
hereunder may be assigned or delegated by Executive.
16. NO WAIVER. A waiver by the Company of a breach of any provision of
this Agreement by Executive shall not operate or be construed as a waiver of any
subsequent or other breach by Executive.
17. AMENDMENTS. No provision of this Agreement shall be altered,
amended, revoked or waived, except by an instrument in writing, signed by the
Company and Executive.
18. BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, heirs, successors and assigns.
19. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
20. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties and supersedes all prior understandings,
agreements or representations by or between the parties, whether written or
oral.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: TELEHUB COMMUNICATIONS CORPORATION,
a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice Chairman
EXECUTIVE: /s/ Xxxxxxx X. XxXxxxxxxx
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Xxxxxxx X. XxXxxxxxxx
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