Employment Agreement - Executive TeleCard Ltd. and Ronald A. Fried
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as
of February 20, 1998, between EXECUTIVE TELECARD, LTD., a Colorado corporation
with principal offices located in Denver, Colorado (the "Company"), and RONALD
A. FRIED (the "Executive").
WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions for the employment relationship of the Executive
with the Company.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Executive is employed as the Vice President
of Development of the Company for a period commencing on the date hereof and
ending December 31, 2000. As the Vice President of Development of the Company,
the Executive shall render executive, policy, and other management services to
the Company of the type customarily performed by persons serving in such
capacities. The Executive shall be responsible for the identification,
development, pursuit and implementation of significant business opportunities
for the Company such as acquisitions, joint ventures, large asset purchases or
divestitures, restructurings and similar matters. The Executive shall report
directly to the Company's Chairman and Chief Executive Officer, and shall also
perform such duties as the Chairman and Chief Executive Officer of the Company
may from time to time reasonably direct. During the term of this Agreement,
there shall be no material increase or decrease in the duties and
responsibilities of the Executive otherwise than as provided herein, unless the
parties otherwise agree in writing.
2. Location of Services. During the term of this agreement, the
Executive shall perform services at the Company's various offices (particularly
either at its principal office in Denver, Colorado or at its office in
Washington, D.C., as determined by the Executive).
3. Salary. The Company shall pay the Executive an annual salary
equal to $150,000, with such increases as may be determined by the Board of
Directors in its discretion (the "Base Salary"). The Base Salary of the
Executive shall not be decreased at any time during the term of this Agreement
from the amount then in effect, unless the Executive otherwise agrees in
writing. Participation in deferred compensation, discretionary bonus retirement,
and other employee benefit plans and in fringe benefits shall not reduce the
Base Salary. The Base Salary shall be payable to the Executive not less
frequently than monthly.
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4. Bonuses. The Executive shall be eligible to earn annual
bonuses during each fiscal year (a "Bonus Period") that he remains an executive
employee of the Company. For each Bonus Period the Executive and the Chairman
and Chief Executive of the Company shall adopt written performance goals within
the Bonus Period. If such goals are met or exceeded for such Bonus Period, the
Executive shall be eligible to earn a bonus of up to 50% of the Base Salary.
(For the avoidance of doubt, a delay by any person in the adoption of written
performance goals shall not entitle the Executive to any bonus or, upon the
adoption and achievement of such goals, delay in any way the payment thereof.)
If only certain of such goals are met, or goals are met only in part, for such
Bonus Period, the Executive shall earn a bonus equal to an amount to be
determined by the Board of Directors, in its sole discretion. Bonuses shall be
payable to the Executive by February 1st of each year (or within 30 days of when
it is determined whether the applicable goals are met, whichever is later). The
Board of Directors may, in its sole discretion, award additional or greater
bonuses to the Executive based upon achievement of other Company objectives
during the Bonus Period.
5. Participation in Employee Benefit Plans. In addition to the
benefits noted below, the Executive shall be entitled to participate, on the
same basis as other executive employees of the Company, in any stock option,
stock purchase, pension, thrift, profit-sharing, group life insurance, medical
coverage, education, or other retirement or employee pension or welfare plan or
benefits that the Company has adopted or may adopt for the benefit of its
employees. The Executive shall be entitled to participate in any fringe benefits
which are now or may be or become applicable to the Company's executive
employees generally.
Such employee benefits presently include the following: Medical
coverage, including health, dental and vision insurance, commences at the
beginning of the month following 30 days from the date on which the Executive
commences service with the Company, and the Executive is responsible for 25% of
the expense of the Executive's medical coverage, with the Company responsible
for the remaining 75%. The Executive is eligible to participate in the Company's
125 Flexible Spending Plan at the beginning of the month following 30 days of
service. The Executive's life insurance is equal to two (2) times the Base
Salary. The Executive is eligible to contribute to the Company's 401k Plan. Upon
commencing service with the Company, the Executive is eligible to immediately
roll over any of Executive's pre-existing 401k Plan holdings.
The Executive shall promptly be reimbursed for any expenses
which he may incur in connection with his services hereunder in accordance with
the Company's normal reimbursement policies as established from time to time.
6. Stock Options. As approved by the Company's Board of
Directors, in consideration of the Executive's acceptance of employment
hereunder, the
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Executive shall be granted options to purchase an aggregate of 100,000 shares of
the Company's common stock, at an exercise price to be equal to the closing
price of the Company's common stock as listed on The Nasdaq National Market on
the date the Executive commences employment hereunder, and on terms to be set
forth in one of the Company's standard forms of stock option agreement to be
entered into between the Company and the Executive. The vesting of such options
shall be as follows:
(i) options to purchase 33,333 shares shall vest six months
after the date hereof, subject to continued employment as of such date and
achievement of certain objectives to be agreed to in writing between the
Executive and the Company's Chairman and Chief Executive Officer.
(ii) options to purchase 33,333 shares shall vest 18 months
after the date hereof, subject to continued employment as of such date and
achievement of certain objectives to be agreed to in writing between the
Executive and the Company's Chairman and Chief Executive Officer
(iii) options to purchase 33,334 shares shall vest 30
months after the date hereof, subject to continued employment as of such date
and achievement of certain objectives to be agreed to in writing between the
Executive and the Company's Chairman and Chief Executive Officer.
Each of the options will have a term of five years from the date
the Executive commences employment hereunder. To the extent eligible, the
options will be issued as incentive stock options within the meaning and subject
to the limitations of Section 422 of the Internal Revenue Code.
7. Standards. The Executive shall perform the Executive's duties
and responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Company's Chairman and
Chief Executive Officer. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the
Company's industry.
8. Voluntary Absences; Vacations. The Executive shall be
entitled to annual paid vacation of at least three weeks (fifteen days) per year
or such longer period as the Board of Directors of the Company may approve. The
timing of paid vacations shall be scheduled in a reasonable manner by the
Executive.
9. Disability. If the Executive shall become disabled or
incapacitated to the extent that the Executive is unable to perform the
Executive's duties and responsibilities hereunder, the Executive shall be
entitled to receive disability benefits of the type provided for other executive
employees of the Company.
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10. Termination of Employment.
(a) The Board of Directors may terminate the Executive's
employment at any time, subject to payment of the compensation described below.
(b) In the case of any termination by the Board of
Directors other than "termination for cause" as defined below, or in the case of
any termination by the Executive after a material breach of this Agreement by
the Company, including without limitation by a demotion of the Executive below
the rank of Vice President, a reduction in Base Salary (or a failure to consider
the Executive for a bonus in good faith as required hereunder) or a requirement
to relocate ("termination with good reason"), the Executive shall continue to
receive, for one year commencing on the date of such termination (the "Severance
Period"), full Base Salary, any bonus that has been earned before termination of
employment or is earned after the termination of employment (where the Executive
met the applicable personal performance goals prior to termination and the
Company meets the applicable Company performance goals after termination), and
all other benefits and compensation that the Executive would have been entitled
to under this Agreement in the absence of termination of employment
(collectively, the "Severance Amount"). The Severance Amount shall not be
reduced by any compensation which the Executive may receive for other employment
with another employer after termination of employment with the Company. If
during the term of this Agreement there is a "change in control" of the Company,
and in connection with or within two years after such change of control the
Company terminates the Executive's employment other than termination for cause
or the Executive terminates with good reason, the Company shall be obligated,
concurrently with such termination, to pay the Severance Amount in a single lump
sum cash payment to the Executive. If the Company fails to make timely payment
of any portion of the Severance Amount, the Executive shall be entitled to
reimbursement for all reasonable costs, including attorneys' fees, incurred by
the Executive in taking action to collect such amount or otherwise enforce this
Agreement. In addition, the Executive shall be entitled to interest on the
amounts owed to him under this Agreement at the rate of 5% above the prime rate
(defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by the Wall Street Journal), compounded monthly,
for the period from the date of employment termination until payment is made to
the Executive.
(c) The Executive shall have no right to receive
compensation or other benefits from the Company for any period after termination
for cause by the Company or termination by the Executive other than termination
with good reason, except for any vested retirement benefits to which the
Executive may be entitled under any qualified employee pension plan maintained
by the Company and any deferred compensation to which the Executive may be
entitled.
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(d) The term "termination for cause" shall mean termination
by the Company because of the Executive's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, persistent
refusal or willful failure materially to perform his duties and responsibilities
to the Company which continues after the Executive receives notice of such
refusal or failure; willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses), or material breach of any
provision of this Agreement.
(e) A "change in control," for purposes of this Agreement,
shall be deemed to have taken place if any person becomes the beneficial owner
of 35% or more of the total number of voting shares of the Company. For purposes
of this paragraph, a "person" includes an individual, corporation, partnership,
trust or group acting in concert, and a "beneficial owner" shall have the
meaning used in Rule 13d-3 under the Securities Exchange Act of 1934.
11. Restrictive Covenants.
(a) During the employment of the Executive under this
Agreement and for a period of one year after termination of such employment
other than a termination by the Company without cause, the Executive shall not
at any time (i) compete on his own behalf or on behalf of any other person or
entity, with the Company or any of its affiliates within all territories in
which the Company does business with respect to the business of the Company or
any of its affiliates as such business shall be conducted on the date hereof or
during the employment of the Executive under this Agreement; (ii) solicit or
induce, on his own behalf or on behalf of any other person or entity, any
employee of the Company or any of its affiliates to leave the employ of the
Company or any of its affiliates; or (iii) solicit or induce, on his own behalf
or on behalf of any other person or entity, any customer of the Company or any
of its affiliates to reduce its business with the Company or any of its
affiliates.
(b) The Executive shall not at any time during or
subsequent to his employment by the Company, on his own behalf or on behalf of
any other person or entity, disclose any proprietary information of the Company
or any of its affiliates to any other person or entity other than on behalf of
the Company or in conducting its business, and the Executive shall not use any
such proprietary information for his own personal advantage or make such
proprietary information available to others for use, unless such information
shall have come into the public domain other than through unauthorized
disclosure.
(c) The ownership by the Executive of not more than 5% of a
corporation, partnership or other enterprise shall not constitute a violation
hereof.
(d) If any portion of this Section 11 is found by a court
of competent jurisdiction to be invalid or unenforceable, but would be valid and
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enforceable if modified, this Section 11 shall apply with such modifications
necessary to make this Section 11 valid and enforceable. Any portion of this
Section 11 not required to be so modified shall remain in full force and effect
and not be affected thereby. The Executive agrees that the Company shall have
the right of specific performance in the event of a breach by the Executive of
this Section 11.
12. No Assignments. This Agreement is personal to each of the
parties hereto. No party may assign or delegate any rights or obligations
hereunder without first obtaining the written consent of the other party hereto.
However, in the event of the death of the Executive all rights to receive
payments hereunder shall become rights of the Executive's estate.
13. Other Contracts. The Executive shall not, during the term of
this Agreement, have any other paid employment other than with a subsidiary of
the Company, except with the prior approval of the Board of Directors.
14. Amendments or Additions; Action by Board of Directors. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by all parties hereto. The prior approval by a majority vote of the Board
of Directors shall be required in order for the Company to authorize any
amendments or additions to this Agreement, to give any consents or waivers of
provisions of this Agreement, or to take any other action under this Agreement
including any termination of employment with or without cause.
15. Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
17. Governing Law. This Agreement shall be governed by the laws
of the State of Colorado (other than the choice of law rules thereof).
EXECUTIVE TELECARD, LTD.
By:-----------------------
RONALD A. FRIED