EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), executed this _______ day of
_______ 1999 to be effective as of January 1, 2000, is between AMERICAN
TELESOURCE INTERNATIONAL, INC., a Delaware corporation (the "Employer"), and H.
Douglas Saathoff ("Employee").
R E C I T A L S:
F. The Employer and Employee entered into an Executive Employment
Agreement dated effective January 1, 1997 for a period of three years.
G. The Employer decided not to renew the Executive Employment Agreement,
and has given notice to Employee that the Executive Employment
Agreement will not renew and will therefore terminate effective
December 31, 1999.
H. The Employer and Employee agreed to enter into a new employment
agreement for a one year term on the terms and conditions herein
provided.
I. The Employer considers the maintenance of a sound management team,
including Employee, essential to protecting and enhancing its best
interests and those of its stockholders.
J. Employee will be an officer of the Employer and Employee will be a
member of Employer's management team.
NOW, THEREFORE, in consideration of the Employer's agreement to employ
Employee pursuant to the terms of this Agreement and Employee's future
employment with Employer, and other good and valuable consideration, the parties
agree as follows:
Section 1. Employment. The Employer hereby employs Employee, and Employee
hereby accepts employment, upon the terms and subject to the conditions stated
in this Agreement.
Section 2. Duties. Employee shall be employed as Chief Financial Officer
of the Employer, or such other positions with Employer to which he may be
appointed by the Board of Directors of the Employer (the "Board"). It is
understood that Employee may be requested from time to time to provide
assistance or services to, or act as an officer or director of the Employer or
any of its subsidiaries or other affiliates. Employee shall perform such
services and, if elected as a director or officer of any such company, shall
hold such office (and discharge its duties) without additional compensation
other than the compensation set forth in this Agreement; provided, however, that
this Agreement does not prohibit (or require) the affiliates of Employer from
offering additional compensation. Employee agrees to devote his full work time
and best efforts to the performance of the duties as an Employee of Employer and
to the performance of such other duties as assigned him from time to time by the
Board or the Chairman of the Board.
Section 3. Term. The initial term of employment of Employee hereunder
shall continue for one year, from January 1, 2000 ("Employment Date") until
December 31, 2000, unless earlier terminated pursuant to Section 6 herein.
Section 4. Compensation and Benefits. In consideration for the services
of Employee hereunder, the Employer shall compensate Employee as follows:
(a) Base Salary. Until the termination of Employee's employment
hereunder, Employer shall pay Employee a base salary at the rate of at least
$2014.15 per week ("Base Salary"), payable in accordance with the regular
payroll practices of the Employer for executives, less such deductions or
amounts as are required to be deducted or withheld by applicable laws or
regulations and less such other deductions or amounts, if any, as are authorized
by Employee. The Base Salary may not be decreased at any time during the term of
Employee's employment hereunder Any increase in Base Salary shall be in the sole
discretion of the Compensation Committee of the Board.
(b) Executive Bonus Plan. Employee shall be eligible to receive from the
Employer such management incentive bonuses as may be provided in management
incentive bonus plans adopted from time to time by Employer.
(c) Vacation. Employee shall be entitled time off in accordance with the
Employee's vacation and absence policy, as it may be modified from time to time
during Employee's employment hereunder, provided that Employee will have no less
than four (4) weeks of paid vacation during the initial term of this Agreement,
and each subsequent year if the initial term is extended.
(d) Life Insurance Benefits. Employer shall pay the premiums allocable to
a term life insurance policy in the face amount of $150,000 covering Employee as
the named insured, subject to Employee's passing a standard physical examination
in order to permit issuance of the policy at standard (non-rated) premiums and
satisfaction of any other standard underwriting requirements. Employee shall be
the owner of such policy and shall have the right to designate the beneficiary
of the policy proceeds. Employee shall be liable for income taxes with respect
to premium amounts includable in Employee's taxable income.
(e) Group Insurance Benefits. Employee shall be entitled to participate
in the Employer's group health and disability programs as are made available to
the Employer's other executives and officers and the Employee's participation in
such programs shall be at the same rates which are available to the Employer's
other executives and officers.
(f) Savings Plans. Employee shall be entitled to participate in
Employer's 401(k) plan, or other retirement or savings plans as are made
available to the Employer's other executives and officers on the same terms
which are available to the Employer's other executives and officers;
(g) Health Club Membership. Employer shall pay for or reimburse Employee
for a family membership at a health and fitness club of Employee's choosing,
provided that the total cost of the membership does not exceed $75 per month.
Section 5. Expenses. The parties anticipate that in connection with the
services to be performed by Employee pursuant to the terms of this Agreement,
Employee will be required to make payments for travel, entertainment of business
associates and similar expenses. Employer shall reimburse Employee for all
appropriate and reasonable expenses authorized by Employer and incurred by
Employee in the performance of his duties hereunder. Employee shall comply with
such budget limitations and approval and reporting requirements with respect to
expenses as Employer may establish from time to time.
Section 6. Termination.
(a) General. Employee's employment hereunder shall commence on the
Employment Date and continue until the end of the term specified in Section 3,
except that the employment of Employee hereunder shall terminate prior to such
time in accordance with the following:
(i) Death or Disability. Upon the death of Employee during the term
of his employment hereunder or, at the option of Employer, in the event of
Employee's Disability, upon 30 days' notice to Employee. "Disability" with
respect to an Employee shall be deemed to exist if the Employee meets the
definition of either "disabled" or "disability" under the terms of the
Employer's long-term disability benefit program (including the definitions
for total or partial disability). Any refusal by Employee to submit to a
reasonable medical examination to determine whether Employee is so disabled
shall be deemed to constitute conclusive evidence of Employee's
disability.
(ii) For Cause. For "Cause" immediately upon written notice by
Employer to Employee. A termination shall be for "Cause" if:
(7) Employee commits fraud, bribery, embezzlement or other
material dishonesty with the respect to the business of Employer,
or Employer discovers that Employee has committed any such act in
the past with respect to a previous employer; or
(8) Employee commits a felony or any criminal act involving
moral turpitude or Employer discovers that Employee has
committed any such act in the past; or
(9) Employee commits a material breach of any of the covenants,
representations, terms or provisions hereof; or
(10) Employee violates any instructions or policies of Employer
with respect to the operation of its business or affairs or
Employee fails to obey written directions delivered to Employee
by the Employer's Board or Chairman of the Board; or
(11) Employee commits or omits to perform any act the performance
of which or the omission of which constitutes substantial
failure of Employee to diligently and effectively perform his
duties to Employer or adversely affects or could adversely
affect the Employer's business reputation; or
(12) Employee uses illegal drugs.
(iii) Without Cause. Without Cause immediately upon notice by
Employer to Employee.
(b) Severance Pay.
(i) Termination Upon Death or Disability or For Cause. Employee
shall not be entitled to any severance pay or other compensation upon
termination of his employment pursuant to Section 6(a)(i) or (ii) except
for his Base Salary accrued but unpaid as of the date of termination,
unpaid expense reimbursements under Section 5 for expenses incurred in
accordance with the terms hereof prior to termination, compensation for
accrued, unused vacation as of the date of termination ("Accrued Amounts"),
and in the event of termination pursuant to Section 6(a)(i) for Disability,
an amount equal to twenty-six times the difference between the Base Salary
in effect at the time of termination and twenty-six weeks' worth of
benefits to be paid under the Employer's long term disability plan. This
amount shall be paid in a lump sum no later than ten (10) business days
following the date of Employee's termination.
(ii) Termination Without Cause. In the event Employee's employment
hereunder is terminated pursuant to Section 6(a)(iii) prior to the
expiration of the initial term of this Agreement (as such initial term may
have been extended), Employer shall pay Employee, as consideration for the
execution of a separation and release agreement and in lieu of any further
compensation payable hereunder other than Accrued Amounts, a cash amount
equal to twenty-six (26) times Employee's then current Base Salary. Such
separation payment shall be Employee's sole remedy in connection with such
termination. The Separation payment shall be made as specified above
without regard to the number of months remaining in the term of this
Agreement, and shall be paid within ten (10) business days of the
Employee's execution of a separation and release agreement.
(c) Change in Control. If a "Change in Control" occurs during Employee's
employment under this Agreement, and if Employee's employment is terminated
"Without Cause" pursuant to Section 6(a)(iii) above prior to the end of a period
of twenty-four (24) months beyond the month in which a "Change in Control" of
the Employer occurs, or if Employee voluntarily terminates his employment prior
to the end of a period three (3) months beyond the month in which a Change in
Control of the Employer occurs, Employee shall receive the amount determined
pursuant to Section 6(b)(ii) above. A "Change in Control" of Employer shall be
deemed to have occurred if (i) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Act")), becomes the "beneficial owner" (as such term is defined in Rule
13d-3 under the Act), directly or indirectly, of outstanding securities of
Employer representing 40% of more of the combined voting power of the
outstanding securities of the Employer, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute a majority of the Board (except
that any new director who is elected by the Board to fill a vacancy created by
the death, resignation or disqualification of a member of the Board shall not be
considered a new member of the Board for purposes of this definition), or (iii)
the shareholders of Employer approve (A) a merger or consolidation of Employer
with any other entity, other than a merger or consolidation which would result
in the voting securities of
Employer outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 60% of the combined voting power of the voting
securities of Employer, or (B) a plan of complete liquidation of Employer, or
(C) an agreement or agreements for the sale or disposition, in a single
transaction or series of related transactions, by the Employer of all or
substantially all of the property and assets of Employer.
Section 7. Inventions; Assignment.
(a) Inventions Defined. All rights to discoveries, inventions,
improvements, designs and innovations (including all data and records pertaining
thereto) that relate to the business of Employer, including its affiliates,
whether or not able to be patented, copyrighted or reduced to writing, that
Employee may discover, invent or originate during the term of his employment
hereunder, and for a period of six months thereafter, either alone or with
others and whether or not during working hours or by the use of the facilities
of Employer ("Inventions"), shall be the exclusive property of Employer.
Employee shall promptly disclose all Inventions to Employer, shall execute at
the request of Employer any assignments or other documents Employer may deem
necessary to protect or perfect its rights therein, and shall assist Employer,
at Employer's expense, in obtaining, defending and enforcing Employer's rights
therein. Employee hereby appoints Employer as his attorney-in-fact to execute
on his behalf any assignments or other documents deemed necessary by Employer to
protect or perfect its rights to any Inventions.
(b) Covenant to Assign and Cooperate. Without limiting the generality of
the foregoing, Employee shall assign and transfer to Employer the world-wide
right, title and interest of Employee in the Inventions. Employee agrees that
Employer may apply for and receive patent rights (including Letters Patent in
the United States) for the Inventions in Employer's name in such countries as
may be determined solely by Employer. Employee shall communicate to Employer
all facts known to Employee relating to the Inventions and shall cooperate with
Employer's reasonable requests in connection with vesting title to the
Inventions and related patents exclusively in Employer and in connection with
obtaining, maintaining and protecting Employer's exclusive patent rights in the
Inventions.
(c) Successors and Assigns. Employee's obligations under this Section 7
shall inure to the benefit of Employer, its affiliates and their respective
successors and assigns and shall survive the expiration of the term of this
Agreement for such time as may be necessary to protect the proprietary rights of
Employer and its affiliates in the Inventions.
Section 8. Confidential Information.
(a) Acknowledgment of Proprietary Interest. Employee acknowledges the
proprietary interest of Employer and its affiliates in all Confidential
Information (as defined below). Employee agrees that all Confidential
Information learned by Employee during his employment with Employer or
otherwise, whether developed by Employee alone or in conjunction with others or
otherwise, is and shall remain the exclusive property of Employer. Employee
further acknowledges and agrees that his disclosure of any Confidential
Information will result in irreparable injury and damage to Employer.
(b) Confidential Information Defined. "Confidential Information" means all
trade secrets, copyrightable works, confidential or proprietary information of
Employer or its affiliates, including without limitation, (i) information
derived from reports, investigations, experiments, research and work in
progress, (ii) methods of operation, (iii) market data, (iv) proprietary
computer programs and codes, (v) drawings, designs, plans and proposals, (vi)
marketing and sales programs, (vii) the identities of clients or customers ,
(viii) historical financial information and financial projections, (ix) pricing
formulae and policies, (x) all other concepts, ideas, materials and information
prepared or performed for or by Employer and (xi) all information related to the
business, services, products, purchases or sales of Employer or any of its
suppliers and customers, other than information that is publicly available.
(c) Covenant Not To Divulge Confidential Information. Employer is entitled
to prevent the disclosure of Confidential Information. As a portion of the
consideration for the employment of Employee and for the compensation being paid
to Employee by Employer, Employee agrees at all times during the term of his
employment hereunder and thereafter to hold in strict confidence and not to
disclose or allow to be disclosed to any person, firm or corporation, other than
to persons engaged by Employer to further the business of Employer, and not to
use except in the pursuit of the business of Employer, the Confidential
Information, without the prior written consent of Employer.
(d) Return of Materials at Termination. In the event of any termination or
cessation of his employment with Employer for any reason, Employee shall
promptly deliver to Employer all documents, data and other information derived
from or otherwise pertaining to Confidential Information. Employee shall not
take or retain any documents or other information, or any reproduction or
excerpt thereof, containing or pertaining to any Confidential Information.
Section 9. Non-Solicitation.
(a) Solicitation of Employees. During Employee's employment with Employer
and for a period of twelve (12) months after termination of such employment at
any time and for any reason, and regardless of whether any payments are made to
Employee under this Agreement as a result of such termination, Employee shall
not solicit, participate in or promote the solicitation of any person who was
employed by Employer or any of its affiliates at the time of Employee's
termination of employment with Employer to leave the employ of Employer or any
of its affiliates, or, on behalf of himself or any other person, hire, employ or
engage any such person. Employee further agrees that, during such time, if an
employee of Employer or any of its affiliates contacts Employee about
prospective employment, Employee will inform such employee that he or she cannot
discuss the matter further without the consent of Employer (and the applicable
affiliate).
(b) Solicitation of Clients, Customers, Etc. During Employee's employment
with Employer and for a period of twelve (12) months after termination of
Employee's employment at any time and for any reason, and regardless of whether
any payments are made to Employee under this Agreement as a result of such
termination, Employee shall not, directly or indirectly, solicit any person who,
at the time of termination of Employee's employment with Employer, was a client,
customer, policyholder, vendor, consultant or agent of Employer or its
affiliates to discontinue business, in whole or in part, with Employer or its
affiliates. Employee further agrees that, during such time, if such a client,
customer, policyholder, vendor, or consultant or agent contacts Employee about
discontinuing business with Employer or moving that business elsewhere, Employee
will inform such client, customer, policyholder, vendor, consultant or agent
that he or she cannot discuss the matter further without the consent of Employer
(and the applicable affiliate).
Section 10. No-Compete.
(a) Competition During Employment. Employee agrees that during the term of
his employment with Employer, neither he nor any of his affiliates, will
directly or indirectly compete with Employer or its affiliates in any way, and
that he will not act as an officer, director, employee, consultant, shareholder,
lender, or agent of any entity which is engaged in any business of the same
nature as, or in competition with, the businesses in which Employer and its
affiliates are now engaged or in which Employer or its affiliates become engaged
during the term of employment; provided, however, that this Section 10(a) shall
not prohibit Employee or any of his affiliates from: (i) purchasing or holding
an aggregate equity interest of up to 1%, so long as Employee and his affiliates
combined do not purchase or hold an aggregate equity interest of more than 5%,
in any business in competition with Employer and its affiliates. Furthermore,
Employee agrees that during the term of employment, he will undertake no
planning for the organization of any business activity competitive with the work
he performs as an employee of Employer and Employee will not combine or conspire
with any other employees of Employer and its affiliates for the purpose of the
organization of any such competitive business activity.
(b) Competition Following Employment. In order to protect Employer against
the unauthorized use or the disclosure of any Confidential Information of
Employer and its affiliates presently known or hereinafter obtained by Employee
during his employment under this Agreement, Employee agrees that for a period of
twelve (12) months after the termination or cessation of his employment with
Employer at any time and for any reason, and regardless of whether any payments
are made to Employee under this Agreement as a result of such termination,
neither Employee nor any of his affiliates, shall, directly or indirectly, for
itself or himself or on behalf of any other corporation, person, firm,
partnership, association, or any other entity (whether as an individual, agent,
servant, employee, employer, officer, director, shareholder, investor,
principal, consultant or in any other capacity):
(i) engage or participate in any business which engages in
competition with such businesses being conducted by Employer or any of
its affiliates during the term of employment anywhere in any state in
the United States or in any foreign country where the Employer or any
of its affiliates provides telecommunications services, including,
without limitation, domestic and international call services or
domestic and international telecommunications networks of voice, data,
fax or video transmission to or from the United States and Latin
America or within Latin America, or any other business in which the
Employer or any of its affiliates has been actively engaged during the
term Employee performed services for the Employer; provided, however,
that this provision shall not prohibit Employee or any of his
affiliates from purchasing or holding an aggregate equity interest of
up to 1%, so long as Employee and his affiliates combined do not
purchase or hold an aggregate equity interest of more than 5%, in any
business in competition with Employer;
(ii) assist or finance any person or entity in any manner or in
any way inconsistent with the intents and purposes of this Agreement.
Section 11. General.
(a) Notices. All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested or by written telecommunication, to the relevant address set forth
below, or to such other address as the recipient of such notice or communication
shall have specified to the other party in accordance with this Section 11(a):
If to Employer, to:
American TeleSource International, Inc.
12500 Network Boulevard, Suite 407
San Antonio, Texas, 78249
Attention: Chairman of the Board
(or the subsequent headquarters of Employer as known to Employee)
If to Employee, to the Employee's last known address appearing on
Employer's records
(b) Withholding. All payments required to be made to Employee by
Employer under this Agreement shall be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.
(c) Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by Employee of his obligations under any of Sections
7, 8, 9, and 10 Employer shall suffer immediate, great and irreparable injury
and shall have no adequate remedy at law. Accordingly, in event of such
breach, Employer shall be entitled, in addition to other remedies and without
showing actual damages, to specific performance and other appropriate injunctive
and equitable relief.
(d) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.
(e) Waivers. No delay or omission by either party in exercising any right,
power or privilege hereunder shall impair such right, power or privilege, nor
shall any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege.
(f) Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
(g) Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(h) Interpretation of Agreement. This Agreement shall be construed
according to its fair meaning and not for or against either party. Use of the
words "herein," "hereof," "hereto," "hereunder" and the like in this Agreement
refer to this Agreement only as a whole and not to any particular section or
subsection of this Agreement, unless otherwise noted. The masculine gender
shall be deemed to denote the feminine or neuter genders, the singular to denote
the plural, and the plural to denote the singular, where the context so permits.
(i) Binding Agreement; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and shall be enforceable by the personal
representatives and heirs of Employee and the successors and assigns of
Employer. The affiliates of Employer shall be considered third party
beneficiaries of this Agreement with respect to any services provided by
Employee to them and in connection with Employee's covenants in Sections 7,8,9
and 10 hereof. This Agreement may be assigned by the Employer; provided that in
the event of any such assignment, the Employer shall remain liable for all of
its obligations hereunder and shall be liable for all obligations of all such
assignees hereunder. If Employee dies while any amounts would still be payable
to him hereunder, such amounts shall be paid to Employee's estate. This
Agreement is not otherwise assignable by Employee.
(j) Entire Agreement. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and may not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(k) Governing Law. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
(l) Arbitration. Without limiting Employer's right to seek equitable
remedies under Section 11(c) above, Employer and Employee agree that any
dispute or controversy arising under or in connection with this Agreement shall
be settled by arbitration. Arbitration under this Agreement shall be governed
by the Federal Arbitration Act and proceed in San Antonio, Texas in accordance
with the rules of the American Arbitration Association ("AAA"). Arbitration
will be conducted before a panel of three neutral arbitrators selected from a
AAA list of proposed arbitrators with business law experience. Either party may
take any legal action needed to protect any right pending completion of the
arbitration. The arbitrator will determine whether an issue is arbitrable and
will give effect to applicable statutes of limitation. The arbitrator has the
discretion to decide, upon documents only or with a hearing, any motion to
dismiss for failure to state a claim or any motion for summary judgment.
Discovery shall be governed by the Federal Rules of Civil Procedure and the
Federal Rules of Evidence. All information developed by the arbitration or
litigation shall be held in confidence subject to such protective orders as the
arbitrator deems useful to ensure complete confidentiality. The decision of the
arbitrator shall be final and binding on all parties to this Agreement, and
judgment thereon may be entered in any court having jurisdiction over the
parties. All costs of the arbitration proceeding or litigation to enforce the
arbitration award shall be paid by the party against whom the arbitrator
decides.
(m) Employee Representations. Employee represents and certifies to
Employer that he: (i) has received a copy of this Agreement for review and
study and has had ample time to review it before signing; (ii) has read this
Agreement carefully; (iii) has been given a fair opportunity to discuss and
negotiate the terms of this Agreement; (iv) understands its provisions; (v) has
had the opportunity to consult his attorney; (vi) has determined that it is in
his best interest to enter into his Agreement; (vii) has not been influenced to
sign this Agreement by any statement or representation by Employer or its
counsel not contained in this Agreement; and (viii) enters into this Agreement
knowingly and voluntarily.
EXECUTED as of the date and year first above written.
AMERICAN TELESOURCE INTERNATIONAL, INC.
By /s/ Arthur L. Smith
-------------------
Chairman of Board of Directors
/s/ H. Douglas Saathoff
---------------------------
H. Douglas Saathoff