EMPLOYMENT AGREEMENT
This agreement ("Agreement") by and between Group Long
Distance, Inc., a Florida corporation (the "Company") and the employee named at
the end of this Agreement (the "Employee") is made effective as of February 28,
1997.
In consideration of the mutual covenants herein contained, the
parties agree as follows:
1. Position and Responsibilities.
1.1 The Employee shall serve in the position and capacity
identified on Exhibit A attached to this Agreement and shall perform the duties
commensurate with such capacity for the Company and for any subsidiary or
affiliate of the Company, if applicable. The Company shall also take all steps
within the Company's control to cause the Employee to be a member of the Board
of Directors of the Company. The Employee shall not be assigned any duties
inconsistent with his position as identified on Exhibit A hereto.
1.2 During the term of this Agreement, the Employee agrees not
to engage in the telecommunication business, either directly or indirectly,
other than on behalf of the Employer and its affiliated companies without the
written approval of the Board of Directors of the Employer. The term
telecommunication business shall be deemed to include long distance business
(national and international), mobile communications, beepers, local access
communications and debit card or other prepaid calling services and other
similar business. Further, during the period of employment, the Employee agrees
not to undertake any outside business investment opportunity that may reasonably
be deemed to conflict with the interests of
the Employer or an usurpation of corporate opportunity for the Employer, without
the written approval of the Board of Directors of the Employer.
2. Employment Term.
2.1 The initial term of employment shall be for a period of
two years, commencing with the effective date hereof, unless sooner terminated
as provided in this Agreement. This Agreement shall be renewed annually for a
term of one year unless the Company or the Employee gives notice to the other of
termination at least 30 days prior to the expiration of the initial term, or any
successive term, as the case may be. Each of the Employee and the Company at his
or its sole discretion and without any reason, may elect not to renew this
Agreement at the end of the initial term or any successive term.
2.2 Notwithstanding the provisions of paragraph 2.1 above, the
Company shall have the right to terminate the Employee's employment for Cause
(as defined in paragraph 2.3 below); provided, however, that the Employee shall
not be deemed to have been terminated for Cause unless and until the Board of
Directors at a meeting duly called and held for that purpose shall have
determined that the Employee committed an act falling within the definition of
Cause and specifying the basis for such determination.
2.3 For purposes of this Agreement, the term "Cause" shall
mean the Employee's: (a) engagement in gross misconduct materially injurious to
the Company; (b) knowing and willful neglect or refusal to attend to the
material duties assigned to him by the Board of Directors of the Company, which
is not cured within 30 days after written notice; (c) intentional
misappropriation of property of the Company to the Employee's own use; (d)
commission of an act of fraud or embezzlement; or (e) conviction for a crime
(excluding minor traffic offenses).
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2.4 Any purported termination of the Employee's employment by
the Company hereunder shall be communicated by a Notice of Termination to the
Employee in accordance with paragraph 15. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate those
specific termination provisions in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provisions so
indicated.
2.5 For purposes of this Agreement the date of termination
shall be: (a) if this Agreement is terminated by the Company for Incapacity (as
defined in paragraph 4.1 below), the date on which a Notice of Termination is
given, (b) if the Employee's employment is terminated by the Company for any
other reason (other than death), the date on which a Notice of Termination is
given or (c) if the Employee terminates his employment for any reason, the date
on which he gives the Company notice of such termination.
3. Compensation.
3.1 The Company shall pay to the Employee for the services to
be rendered by the Employee hereunder a salary for the initial term of
employment under this Agreement at the rate per annum set forth on Exhibit B to
this Agreement. The salary shall be payable in accordance with the Company's
regular policies, but not less frequently than monthly. Such salary will be
reviewed at least annually after the initial term and may be increased by the
Board of Directors of the Company, based upon the recommendations of the
Employee Compensation Committee of the Board of Directors.
3.2 The Employee may be entitled to a revenue and
profitability bonus during the initial term of employment under this Agreement
at the rates set forth on Exhibit B to this Agreement. The Employee shall also
be entitled to a subjective bonus as set forth on Exhibit
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B to this Agreement. A portion, subject to applicable laws and regulations, of
these bonuses can be directed to a pension or profit sharing type plan at the
discretion of the Employee.
3.3 The Employee shall be granted options to purchase shares
of the Company's Common Stock as set forth under Exhibit B to this Agreement
under the Company's stock option plan in accordance with the terms of such plan.
3.4 The Employee shall be entitled to participate in, and
receive benefits from, any vacation, holiday, insurance, medical, disability, or
other employee benefit plan of the Company which may be in effect at any time
during the course of his employment by the Company and which shall be generally
available to senior executives of the Company occupying positions of comparable
status or responsibility. During the term hereof, the Company shall provide for
the Employee's use a Company automobile and shall pay all maintenance and
operating expenses related thereto, including, without limitation, depreciation
and full risk insurance costs. In addition, the Company shall obtain
comprehensive health and travel insurance for the Employee.
3.5 The Company agrees promptly to reimburse the Employee for
all reasonable and necessary business expenses incurred by him on behalf of the
Company in the course of his duties hereunder, which shall include providing the
Employee with a vehicle and paying the expenses of maintenance, insurance and
gasoline for such vehicle.
4. Death; Incapacity.
4.1 If, during the Employment Term hereunder, because of
illness or other incapacity, the Employee shall fail for a period of six (6)
consecutive months ("Incapacity"), to render the services contemplated
hereunder, then the Company, at its option, may terminate the Employment Term
hereunder by notice to the Employee, effective on the giving of such notice;
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provided, however, that the Employee shall be entitled to continue to receive
60% of his salary hereunder for a two-year period of time from the Notice of
Termination.
4.2 In the event of the death of the Employee during the
Employment Term, the Employment Term hereunder shall terminate on the date of
death of the Employee; provided, however, that the Employee (or his estate)
shall be entitled to any benefits accrued under the Company's death, disability
or other benefit plan and shall be entitled to receive a lump sum payment equal
to his then annual salary.
5. Severance Compensation Upon Termination of Employment.
5.1 If the Employee's employment with the Company shall be
terminated (a) by the Company other than pursuant to paragraph 2.2 or
paragraph 4, or (b) by the Employee for Good Reason (as defined in paragraph 5.2
below), then the Company shall:
(i) pay to Employee as severance pay, payable at the
time of termination, either (a) an amount equal to half his then annual salary;
or (b) if the Company terminates Employee's employment, or Employee terminates
his employment with the Company, in connection with a Major Event (as defined in
paragraph 5.3 below), an amount equal to the Employee's then annual salary; and
(ii) arrange to provide Employee, for a
twelve-month period (or such shorter period as Employee may elect), with
disability, accident and health insurance substantially similar to those
insurance benefits which Employee is receiving immediately prior to the earlier
of a Major Event, if any, or the date of termination to the extent obtainable
upon reasonable terms; provided, however, if it is not so obtainable the Company
shall pay to the Employee in cash the annual amount paid by the Company for such
benefits during the previous year of the Employee's employment.
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5.2 For purposes of this Agreement, the term "Good Reason"
shall mean any of the following:
(i) a Major Event;
(ii) the assignment to the Employee by the
Company of duties inconsistent with, or a substantial alteration in the nature
or status of, Employee's responsibilities on the later of the date of this
Agreement or on the last date on which such responsibilities are increased;
(iii) a reduction by the Company in the Employee's
base salary as in effect on the later of the date of this Agreement or the last
date on which such base salary is increased;
(iv) a relocation of the Company's principal
executive offices to a location outside the Fort Lauderdale, Florida area, or
the relocation by the Company of the Employee to any place other than the
principal executive offices of the Company, except for required travel by the
Employee on the Company's business;
(v) any material breach by the Company of any
material provision of this Agreement; provided, however, that the Employee shall
give written notice to the Company which shall indicate those specific
provisions in this Agreement relied upon and which shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination;
(vi) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company; or
(vii) any purported termination of the Employee's
employment by the Company which is not effected pursuant to a Notice of
Termination satisfying the requirements
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of paragraph 2.4 above, and for purposes of this Agreement, no such purported
termination shall be effective.
5.3 For purposes of this Agreement, a "Major Event" shall be
deemed to have occurred if (i) there shall be consummated any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's common stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's common stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (ii) there shall be
consummated any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company; (iii) proceedings or actions for the liquidation or dissolution of
the Company are initiated by the Company; or (iv) any "person" (as defined in
Sections 13(d) and 14(d) of the Exchange Act) (other than persons who
beneficially own more than 30% of the capital stock of the Company on a fully
diluted and as converted basis outstanding as of the date hereof) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended ("Exchange Act")), directly or indirectly, of 30% or more of
the Company's outstanding capital stock on a fully diluted and as converted
basis at such time; provided, however, that a "Major Event" shall not be deemed
to have occurred solely by reason of the consummation of a firmly underwritten
public offering by the Company of common stock registered under the Securities
Act of 1933, as amended.
5.4 (a) The Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor, except to the extent provided in paragraph 5.1
above, shall the amount of any
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payment provided for under this Agreement be reduced by any compensation earned
by the Employee as a result of employment by another employer or by retirement
benefits after the date of termination, or otherwise.
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish the Employee's existing rights, or rights which would accrue
solely as a result of the passage of time, under any benefit plan of the
Company, or other contract, plan or arrangement.
8. Non-competition.
8.1 From and after the date hereof to and including the first
(1st) anniversary of the date of termination of this Agreement, the Employee
shall not directly or indirectly become employed by any person, corporation,
partnership or other entity which is primarily engaged in, the business of
reselling long distance basic "1 plus" and "800" services, in each case in the
Territory. The term "Territory" shall mean any county or city in which the
Company then conducts its business. The Employee shall be deemed directly or
indirectly to engage in a business if he participates therein as a director,
officer, stockholder, employee, agent, consultant, manager, salesman, partner or
individual proprietor, or as an investor who has made advances or loans,
contributions to capital or expenditures for the purchase of stock, or in any
capacity or manner whatsoever; provided, however, that the foregoing shall not
be deemed to prevent the Employee from investing in securities if such class of
securities in which the investment is so made constitutes no more than 10% of
the voting stock of any company's securities.
9. Arbitration. Any dispute, controversy or claim
arising under or in connection with this Agreement, or the breach hereof, shall
be settled exclusively by arbitration
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in accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. Judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration held pursuant to this Section 10 shall take place in Florida. Should
either party hereto, or any heir, personal representative, successor or assign
of either party hereto, resort to litigation or arbitration to enforce this
Agreement, the party or parties prevailing in such litigation shall be entitled,
in addition to such other relief as may be granted, to recover its or their
reasonable attorney's fees and costs in such litigation or arbitration from the
party or parties against whom enforcement was sought.
11. Successor to the Company. (a) The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement expressly, absolutely and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
assignment had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinabove defined and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this paragraph 11 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of
and be enforceable by the Employee's personal and legal representatives,
executors, administrators, heirs, distributees, devises and legatees. If the
Employee should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
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the terms of this Agreement to the Employee's estate. This Agreement shall not
otherwise be assignable by the Employee.
12. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement, except as provided in paragraph 11 hereof.
13. Headings. The headings of the paragraphs hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
14. Interpretation. In case 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, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.
15. Notices. All notices under this Agreement shall be in
writing and shall be deemed to have been given at the time when delivered
personally or by facsimile transmission, sent by recognized overnight courier
service, or mailed by registered or certified mail, addressed to the address set
forth at the end of this Agreement, or to such changed address as such party may
have fixed by notice; provided, however, that any notice of change of address
shall be effective only upon receipt.
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16. Waivers. If either party should waive any breach of
any provision of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
17. Complete Agreement; Amendments. The foregoing is the
entire agreement of the parties with respect to the subject matter hereof and
supersedes in its entirety any letter agreements or other writings by and among
the Employee and the Company. This Agreement may not be amended, supplemented,
cancelled or discharged except by written instrument executed by both parties
hereto.
18. Governing Law. This Agreement is to be governed by
and construed in accordance with the laws of Florida, without giving effect to
principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date set forth below, and the parties acknowledge that this
Agreement memorializes their agreement since the effective date set forth below.
Group Long Distance, Inc. Employee
By: /s/ Xxxxxx Xxxxx /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------ ------------------------
Xxxxxx Xxxxx Xxxxxx X. Xxxxx, Xx.
Vice President-Administration
and Secretary
/s/ C. Xxxxxxx Xxxxx
------------------------------
C. Xxxxxxx Xxxxx
Director and Chairman of the
Compensation Committee
of the Board of Directors
Address for Notices: Address for Notices:
0000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000 0000 XX 000xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000 Xxxxx Xxxxxxx, XX 00000
Attn: Secretary
Execution Date: March 14, 1997
Name of Employee: Xxxxxx X. Xxxxx, Xx.
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EXHIBIT A
Job Description
President, Chief Executive Officer
Reports to: Board of Directors
Supervises: Vice President
Controller
Managers
General Function:
To provide leadership, direction and guidance of company activity to insure the
short and long term profitability of the Company; equitable treatment and
development of employees; and the maintenance of the Company within the
community.
Major duties and responsibilities:
1. Maintains control of the company marketing, personnel, operations and
administration through the various department heads.
2. Provide direct guidance of personnel activities which effect the key
management team, including marketing, salary, administration,
management incentive, department performance objectives, to insure
solid team efforts toward the attainment of Company goals.
3. To direct the development and implementation of operational policies
which reflect and implement Company policies.
4. To recommend expansion and acquisition of business opportunities.
5. To represent the Company and provide leadership in business
associations and business activities.
EXHIBIT B
XXXXXX X. XXXXX, Xx.
President and Chief Executive Officer.
Annual Base Salary: $130,000 per year for the first year, $150,000 per year for
the second year commencing on the first anniversary of the effective date
hereof.
Revenue and Profitability Bonus: $65,000 per year for fiscal year 1997, $75,000
per year for fiscal year 1998, upon the Company's attainment of
$24,000,000 in combined pre-tax revenues and $500,000 in combined
pre-tax profits, payable in a lump sum minus the total of a biweekly
draw of $1500 against the payment of such bonus. Said bonus shall be
calculated at the conclusion of each fiscal year, in conjunction with
the following formula:
Fiscal Year 1997:
Bonus = $65,000 X Revenue Factor (RF) X Profit Factor (PF) -
Draw
Fiscal Year 1998:
Bonus = $75,000 X Revenue Factor (RF) X Profit Factor (PF) -
Draw
RF = Actual Revenue (or 0 if less than $18,000,000)
$24,000,000
PF = Adjusted Profit Before Tax
$500,000
Examples:
Fiscal Year 1997 Revenue = $26,000,000
Profit = $800,000
Bonus = $65,000 X 1.08 X 1.6 = $112,320
- Draw
Subjective Bonus: In addition to the Revenue and Profitability Bonus, the
Employee shall also be entitled to a Subjective Bonus. In the event
that the Employee successfully recruits a Chief Financial Officer, he
shall be entitled to a $5,000 bonus. Such bonus shall be payable in a
lump sum on the first May 31 following the Employee's successful
recruitment of the Chief Financial Officer.
