EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the 10th
day of February, 2000 by and between Clariti Telecommunications International,
Ltd., a Delaware corporation ("Company"), and James M. Boyd, Jr.
("Executive").
Company desires to employ Executive, and Executive desires to be employed
by Company, upon the terms and conditions outlined in this Agreement.
The Company and the Executive agree as follows:
1. Employment and Term. Company hereby employs Executive and Executive
hereby accepts employment for a three- (3) year term commencing on February 10,
2000 ("Start Date") and continuing until February 10, 2003 unless sooner
terminated as provided for in this Agreement ("Term of Employment"). Company
and Executive have the option to renegotiate this Agreement beyond the three-
year period. Executive hereby warrants and represents to Company that he is
free to enter into this Agreement and is not a party to any agreement, written
or otherwise, or bound by any restrictions, which limit or restrict him from
entering into this Agreement or performing the services, duties and
responsibilities called for hereunder.
2. Duties.
2.1 Executive shall perform the duties of Vice President of Finance/
Chief Accounting Officer and/or such executive duties of Company and its
affiliates as may be, from time to time, requested of him by the Company's
Board of Directors or President of the Company. The Executive shall report to
the President of the Company or such executive officer as the President shall
designate.
2.2 Executive shall devote his full professional time and best efforts
to the performance of his duties and responsibilities to advance the interests
of the Company. During the term of this Agreement (as defined in Section 1
hereof), Executive shall not be employed, involved or otherwise engaged in,
either directly or indirectly, any other employment for gain, profit or other
pecuniary advantage, without the prior written consent of the Company. At no
time shall Executive engage in any activity that conflicts with the business of
the Company or its subsidiaries and/or its affiliates. Nothing set forth in
this section 2.2 shall prevent Executive from devoting of such Executive's time
and attention to charitable or community activities, but only to the extent
that Executive's pursuance of any outside activities does not adversely effect
the Executive's ability to perform Executive's duties to the Company.
2.3 Except for required travel on Company business or unless Company
agrees otherwise, Executive shall perform his duties and responsibilities at
the Company's principal executive offices located in the greater Philadelphia
area and such locations as are mutually agreed upon by the Executive and the
Company in order to carry out the Executive's duties hereunder.
3. Compensation.
3.1 For all duties and responsibilities to be performed by Executive
hereunder, Executive shall be entitled to receive an annual salary as set forth
below ("Base Salary"). The Base Salary, less any sums required to be withheld
by law, shall be payable in equal monthly installments or such other more
frequent regular installments as the Company may, from time to time, determine.
For purposes hereof, Base Salary shall be:
3.1.1 For the twelve-month period commencing on the Start Date, the
Base Salary shall be One Hundred and Thirty Five Thousand Dollars ($135,000).
3.1.2 For each year thereafter, the Base Salary shall be increased by
an amount determined by the Board of Directors or their designee, but in no
event less than eight percent (8%) after the first year, and nine percent (9%)
after the second year. Each percentage increase for a particular year shall be
based on the Base Salary for the immediately preceding year.
4. Fringe Benefits. Company shall pay for or provide Executive with the
following benefits:
4.1 Executive shall be entitled to four (4) weeks paid vacation to be
used at the Executive's discretion. Executive shall be entitled to four (4)
weeks paid vacation during each full year of this Agreement to be used at the
Executive's discretion. Vacation time shall accrue on a pro-rata basis during
each year of this Agreement. Up to 4 weeks of unused vacation time may be
carried over to the following calendar year. Unused vacation time in excess of
4 weeks will be forfeited at the conclusion of each calendar year.
4.2 Health and hospitalization insurance established and maintained by
the Company for its employees. Company shall either secure and maintain health
and hospitalization insurance for Executive and his dependents on the Company
health and hospitalization insurance program, or reimburse Executive for
coverage comparable to the health and hospitalization insurance coverage
afforded to other comparable Company executives and their immediate family.
4.3 Such other employee benefits maintained by the Company for its
senior executives and key management employees, including all 401k, pension,
profit sharing, retirement, stock bonus and stock option plans, to the extent
Executive is eligible to participate pursuant to the terms and conditions of
such plans.
5. Stock Options.
5.1 As part of Executive's compensation for services to be rendered
hereunder, Executive shall have the right and option to purchase from Company
voting common stock in the Company ("Option"). The total number of shares
available to Executive under this Option is Two Hundred and Ten Thousand Shares
(210,000) at a purchase price equal to $2.4375 per share for the Company common
stock. The Option Shares are available for purchase in installments as listed
in Column A below and each installment shall become vested on the corresponding
date listed in Column B, as follows:
Column A Column B
Number of Shares Date Option Shares
Available for Purchase Become Vested
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i) 70,000 February 10, 2001
ii) 70,000 February 10, 2002
iii) 70,000 February 10, 2003
In order for the Option Shares to become vested as provided for above,
Executive must be employed by the Company under the terms of this Agreement as
of the vesting date set forth in Column B above.
5.2 Except as otherwise provided for below, the term of the Option
granted shall remain in effect for ten (10) years from the Start Date. If the
Executive's employment with the Company is terminated by the Company for Cause,
or if Executive resigns without Good Reason, (as defined in this Agreement),
the Executive's right to exercise vested Option Shares shall cease and become
null and void thirty (30) days after the date employment is terminated.
Further, the Executive's rights to exercise the Options granted herein or
vesting of such Options are reflected on an Option form attached hereto as
Exhibit "A". All unvested Option Shares will terminate immediately as of the
date of such termination of employment.
5.3 In the event the Company receives, accepts and consummates a tender
offer for all of its outstanding common stock or a significant portion so as to
materially change control of the Company prior to the vesting of the Option
Shares, the vesting rights shall be accelerated so as to allow Executive to
exercise the Option to purchase all of the Option Shares immediately prior to
the consummation of such tender offer.
5.4 The purchase price of the Option Shares shall be paid in full upon
the exercise of the Option, and Company shall not be required to deliver
certificates for such Option Shares until payment has been made. In addition,
at the time of payment of the purchase price for such Option Shares, Executive
shall be responsible for all applicable federal and state withholding or other
employment taxes, and any other fees resulting from the exercise of the
Executive.
5.5 Each share of Option Stock purchased pursuant to the terms hereof
shall carry all appropriate registration and/or restrictions on sale and
notices as determined from time to time by Company's securities counsel.
Executive shall cooperate with Company and Company's counsel in complying with
all applicable securities laws. Company agrees to register the common stock
issuable upon exercise of the Stock Options at the same time as other Company
Executives' options, which will be as soon as reasonably practicable.
5.6 The exercise price and the number of shares of Common Stock issuable
upon the exercise of Options are subject to equitable adjustment to take into
account stock dividends, stock splits, recapitalizations and other dilutive
events, all as reasonably determined in good faith by the Board of Directors.
6. Termination of Employment. The employment of Executive and Company's
liability and obligations hereunder shall terminate as follows:
6.1 This Agreement shall terminate immediately upon the death of
Executive. In such event, Company shall pay to such person as Executive may
designate in a written notice filed with the Company, or if no such person
shall be designated, to Executive's estate, a lump sum death benefit pursuant
to the Company's benefit plan.
6.2 This Agreement shall terminate immediately upon the Executive meeting
the requirements for coverage of long term disability under the Company
disability program. Executive will participate in the Company's Group
disability insurance program ("Disability").
6.3 The Company may discharge the Executive for Cause and thereby
immediately terminate his employment under this Agreement. For purposes of
this Agreement, Company shall have "Cause" to terminate the Executive's
employment if the Executive, in the reasonable and prudent judgement of the
Company:
6.3.1 Willfully fails to perform any reasonable directive of the
Company's Board of Directors, Chief Executive Officer, or President.
6.3.2 Materially breaches any of the agreements, duties,
responsibilities or obligations under this Agreement.
6.3.3 Embezzles or converts to his own use any funds or property of
the Company or any client or customer of the Company.
6.3.4 Is convicted of a felony or any crime involving larceny,
embezzlement or moral turpitude.
6.4 In the event that Executive's employment is terminated by the Company
without Cause, as defined in Section 6.3, above, for a reason other than death
or Disability, then, in such event:
6.4.1 Executive's Base Salary shall continue to be paid for a period
of up to six (6) months ("Payment Period"):
6.4.2 Company shall maintain in effect during the Payment Period, for
the continued benefit of the Executive, all of the employee benefit plans and
programs in which the Executive was entitled to participate immediately prior
to the Executive's termination as long as continued eligibility is possible
under the general terms and provisions of such benefit plans and programs.
6.5 Executive may voluntarily terminate his employment under this
Agreement without Good Reason by giving the Company ninety (90) days prior
written notice. Upon the expiration of such ninety (90) day period,
Executive's employment under this Agreement shall terminate, and Company shall
have no further obligation or liabilities under this Agreement except to pay
the Executive the portion, if any, that remains unpaid of the Base Salary and
unpaid accrued prorated vacation for the period up to the date of termination.
Resignation as defined herein must be in written form to the President, signed
by the Executive.
For purposes of this Section 6.5, "Good Reason" shall mean failure by the
Company to comply with the provisions of this Agreement.
7. Proprietary Information.
7.1 Executive acknowledges that all lists, books, records, literature,
products and any other materials owned by Company or its subsidiaries and/or
affiliates or used by them in connection with the conduct of their businesses,
shall at all times remain the property of Company and its subsidiaries and/or
affiliates. Upon termination of employment hereunder, irrespective of the
time, manner or cause of termination, Executive will surrender to Company all
such lists, books, records, literature, products and other materials in his
possession and/or control.
7.2 Executive acknowledges that Company and its subsidiaries own a
variety of proprietary information, which is confidential, valuable, and
essential to the ongoing conduct of the Company and its subsidiaries
businesses. The Executive further recognizes that this proprietary information
may include, but is not limited to, product plans, source codes, identities of
new products, planned product enhancements, profits, profit margins, research
and development projects, pricing, technical specifications, manufacturing
techniques, test procedures, bid strategies, business strategies, and
information concerning current, former, or prospective customers, business
plans, merger and acquisition targets and strategies, business and financial
software, financial and business contacts or relationships and the Executive
recognizes that Company and its subsidiaries proprietary information may appear
in written form or in other tangible media which are not labeled or otherwise
identified as being "confidential" or "proprietary" (the above proprietary
information is hereinafter referred to as "Confidential Property").
Confidential Property, however, shall not include any information that is
approved for release by written authorization of the Company. With respect to
Confidential Property, Executive, during the course of his employment and
following the termination of his employment for any reason, shall:
7.2.1 Retain such information in confidence and refrain from
publishing, making available or otherwise disclosing such information to any
third party except with the prior written consent of the Chairman, CEO or
President of the Company. This obligation will survive Executive's employment
with the Company.
Will use all reasonable precautions to assure that Company's proprietary
information is properly protected and disclosed only to other authorized
personnel within the Company for proper use thereby. Executive understands
that the Company and its subsidiary operations are required to adhere to
federal securities laws as they relate to disclosure of Company information to
the public and agrees to abide by the requirements related thereto.
Refrain from making any copies of written material or tangible objects
embodying such information, except as (and only to the extent that) such copies
are required in the performance of Executive's duties for the Company.
7.3 During the term of this Agreement, Company has an ownership right to
all of Executive's patents, ideas, inventions, discoveries, and enhancements
which relate to the Business of the Company (defined below) or which are
derived from the Company's property or proprietary information.
7.3.1 The "Business of the Company" referred to in this Agreement
shall mean all businesses of Company and its subsidiaries and/or its
affiliates, whether presently conducted or hereafter engaged in or reasonably
contemplated or envisioned by Company. The Business of the Company includes,
but is not limited to, the business of developing and marketing communication
products and services.
Executive further acknowledges that all such Confidential Property is owned
solely by Company, shall remain the exclusive property of Company and that the
unauthorized disclosure or use of such Confidential Property by Executive will
cause irreparable harm to Company. Executive agrees to use or cause such
Confidential Property to be used only in a manner consistent with the terms and
conditions of this Agreement, and not otherwise for the use or advantage of
Executive or others. Executive shall not communicate or disclose any
Confidential Property to any third persons, except to the extent required by
law, to enforce the terms of this Agreement.
8. Miscellaneous.
8.1 Any notice, demand or communication required or permitted under this
Agreement shall be in writing and shall be sufficient when delivered
personally, or three (3) days after mailing by registered or certified mail,
return receipt requested, or the next day if sent by nationally recognized
overnight courier with proof of delivery, in each case postage prepaid,
addressed as follows:
If to the Company:
Clariti Telecommunications International, Ltd.
1735 Market Street, Suite 1300
Mellon Bank Center
Philadelphia, PA 19103
Attn.: Peter S. Pelullo, Chairman/President
If to the Executive:
James M. Boyd, Jr.
7 Lone Beech Lane
Glen Mills, PA 19342
The foregoing addressees may be changed at any time so long as notice is
provided.
8.2 This Agreement constitutes the entire understanding and agreement
between Company and Executive regarding its subject matter and supersedes all
prior negotiations and agreements, whether oral or written, between them with
respect to its subject matter. This Agreement may not be modified except by a
written agreement signed by the Executive and the Company.
8.3 This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, executors, successors and assigns, except
that the Executive may not assign this Agreement.
8.4 No waiver by either party of any condition or of the breach by the
other of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances shall be deemed or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition, or the breach of any other term or covenant set forth in this
Agreement. Moreover, the failure of either party to exercise any right
hereunder shall not bar the later exercise thereof.
8.5 This Agreement shall be governed by the statutes and common laws of
the Commonwealth of Pennsylvania, excluding its choice of law statutes or
common law.
8.6 The headings of the various sections and paragraphs have been
included herein for convenience only and shall not be construed in interpreting
this Agreement.
8.7 If any provision of this Agreement shall be held invalid or
unenforceable, the remainder of this Agreement shall, nevertheless, remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall, nevertheless, remain in full
force and effect in all other circumstances.
8.8 This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive and
on behalf of the Company by its duly authorized officer on the date first above
written.
ATTEST:
By: s/ Ernest Cimadamore Date: Feb. 10, 2000
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Ernest Cimadamore
Secretary, Clariti Telecommunications
CLARITI TELECOMMUNICATIONS INTERNATIONAL, LTD.:
By: s/ Peter S. Pelullo Date: Feb. 10, 2000
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Peter S. Pelullo
Chairman/President, Clariti Telecommunications
EXECUTIVE:
By: s/ James M. Boyd, Jr. Date: Feb. 10, 2000
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James M. Boyd, Jr.