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EMPLOYMENT AGREEMENT
AGREEMENT, dated this 1st day of June, 2000, between 9278 COMMUNICATIONS,
INC., a Delaware corporation having its executive office at 1942 Williamsbridge
Road , Bronx New York 10461 (the "Company"), and PAUL SARCINELLA, whose
principal residence is __________________________ ("Employee").
The Company desires to employ the Employee as its Chief Financial Officer
on the terms and conditions set forth herein, and the Employee desires to accept
such employment.
In consideration of the undertakings set forth in this Agreement, and
intending to be legally bound, the parties agree as follows:
1. General Agreement for Services. The Company employs the Employee and the
Employee accepts employment as Chief Financial Officer of the Company upon
the terms and conditions of this Agreement.
2. Employment Period. The Employee shall commence employment on June 5, 2000.
Subject to any provisions of this Agreement governing extension or early
termination of this Agreement, the term of employment shall be three years
(the "Initial Term"). After the Initial Term, this Agreement may be renewed
by the Company for an additional term of two years by giving notice of its
intention to so renew this Agreement at least 90 days prior to the end of
the Initial Term.
3. Duties.
(a) The Employee shall devote his business time, attention, and energies to
the business of the Company on a full-time basis, as designated by the
Company, and shall not, during the term of this Agreement, be engaged
in any other business activity, whether or not such business activity
is pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee from investing his
assets in such manner as will not require him to expend any significant
time or effort in regard thereto or to perform any services in the
operation of the affairs of the entity in which such investments are
made which will, in any way, impair his ability to meet properly his
obligations hereunder.
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(b) The Employee shall serve the Company faithfully, diligently and in good
faith.
(c) The Employee shall perform such services as are typically performed by
chief financial officers, along with such other services as may be
required of him by the Company, specifically, assisting with strategic
decisions within the Company and assisting with the Company's public
presentation. The Employee shall be the senior management person in
charge of ensuring the Company's compliance with all SEC filings,
managing all financial, banking and operational matters within the
Company, creating and managing cash flow statements, and preparing for
the audit of the Company's financial statements for pending
acquisitions, subject only to the direction and supervision of the
Company's Board of Directors.
4. Compensation. As and for full and complete compensation to the Employee for
the services he agrees to render pursuant hereto, the Company agrees to pay
to him and he agrees to accept the following:
(a) The Company shall pay the Employee a base annual salary of $150,000
during the first year of the Initial Term, $157,500 for the second year
of the Initial Term, and $165,000 for the third year of the Initial
Term (the "Base Salary"). Base Salary shall be payable not less often
than bi-weekly.
(b) Upon the completion of Employee's first year of employment with the
Company, the Company shall award Employee an annual bonus of $12,000.
Upon the completion of the Employee's second and third years of
employment with the Company, the Company shall award the Employee an
annual bonus, the amount of which shall be determined by the Company's
management and Board of Directors in its discretion.
(c) All compensation paid to the Employee shall be subject to withholding
and deductions to the extent required by applicable law.
(d) In addition to the Base Salary and any annual bonuses, the Company
shall, upon the execution of this Agreement, grant the Employee options
pursuant to a separate option agreement to purchase up to 10,000 shares
of the Company's common stock at a
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purchase price of $4.00 per share, exercisable for a period of three
year from the signing of a separate option agreement. Any stock options
granted in the second or third year of Employee's term of employment
will be determined by the Board of Directors. All options granted
pursuant to this paragraph shall be subject to the terms and conditions
of the Company's Option Plan and the Option Agreement to be entered
into between the Company and Employee evidencing the grant(s) described
herein. The Employee shall also be eligible to otherwise participate in
the Company's Stock Option Plan at the discretion of the Board of
Directors.
(e) In addition to the options, Base Salary, and any annual bonuses payable
to the Employee hereunder, the Employee will be entitled to the
following benefits during the Initial Term unless otherwise altered by
the Board of Directors with respect to all executives of the Company:
i. hospitalization, disability, life and health insurance, each to
the extent offered by the Company and in amounts consistent with
Company policy, for all key management employees, as reasonably
determined by the Board of Directors;
ii. the Employee shall be entitled to three weeks paid vacation in
each of the first two years of the term of the Employees'
employment hereunder and four weeks paid vacation during each
subsequent year, consistent with the Company policy for all
executive employees and provided that unused vacation time shall
not be carried over to subsequent years. The Employee shall also
be entitled to all paid holidays given by the Company to its
employees, which shall include, at a minimum, Christmas Day, New
Years Day, Labor Day, Memorial Day, and July 4th; and
iii. all expenses related to the renewal of Employee's Certified
Public Accountant (CPA) license as well as CPE classes required
for Employee to maintain the CPA license.
5. Confidentiality.
(a) The Employee shall treat as confidential any proprietary, confidential
or non-public information relating to the business or interests of the
Company, including, without limitation, business
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plans or customer lists ("Confidential Information"). The Employee
shall not disclose, utilize or make accessible in any manner or in any
form any Confidential Information other than in connection with
performing the services required of him under this Agreement, without
the prior consent of the Company. Notwithstanding the foregoing, the
provisions of this Section 5(a) shall not apply to any Confidential
Information which is, or at some later date becomes, publicly known
under circumstances involving no breach of this Agreement or which is
required to be disclosed pursuant to order or requirement of a court,
administrative agency or other governmental body or other authorized
tribunal, provided that the Company has been given appropriate notice
of such proceeding and an opportunity to contest such disclosure.
(b) All business and technical records, information relating to the
business of the Company and its affiliates, papers, documents,
correspondence, or studies containing information relating to the
Company and its affiliates, in all cases irrespective of the manner in
which such information is kept or stored ("business records"), made or
kept by the Employee or under his possession or control shall be and
remain the property of the Company, and shall be surrendered to the
Company upon the termination of the Employee's employment. Upon such
termination, the Employee shall not take with him, publish, or
disclose, or otherwise use, without the consent of the Company, any
business records.
(c) The Employee agrees that during the period of his employment hereunder
and for a period of two years following the date upon which such
employment shall terminate, he will not, in any capacity, (1) operate
or be employed by, as an employee, consultant or otherwise, a
telecommunications business that distributes prepaid phone cards or (2)
solicit or accept, or attempt to solicit business from customers of the
Company; and the Employee acknowledges that a portion of the payments
being made to him hereunder are being made, in part, as consideration
for such agreement. The Employee represents and agrees that the
covenants contained in this Section 5(c) are necessary for the
protection of the Company's legitimate business interests and are
reasonable in scope and content.
(d) The provisions of this Section 5 on the part of the Employee shall be
construed as an agreement independent of any other provision
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contained in this Agreement and shall be enforceable in both law and
equity, including by temporary or permanent restraining order,
notwithstanding the existence of any claim or cause of action of the
Employee against the Company or any affiliate of the Company, whether
predicated on this Section 5 or otherwise.
6. Termination.
(a) Death. In the event that the Employee shall die during the term of this
Agreement, then, notwithstanding any other provisions hereof, the
Employee's employment hereunder shall terminate forthwith.
(b) Disability. If the Employee shall become incapacitated during the term
of this Agreement to such an extent that he shall be unable to perform
the essential functions of his duties hereunder, and such incapacity
shall continue for at least six consecutive weeks or for at least 60
days in any twelve month period, the Company may, at or at any time
thereafter, and during the continuance of such incapacity, give notice
to the Employee of the termination of his employment hereunder on a
date stated in such notice, and, in such event, the Employee's
employment hereunder shall terminate on such date. Irrespective of the
foregoing, the Employee also may be terminated by the Company at such
time as the Employee becomes unable to perform the essential functions
of his duties hereunder by reason of disability, as defined in the
Employer's disability insurance coverage, if any, if he is then
entitled to disability payments under such coverage.
(c) For Cause. If, during the term of this Agreement, the employment of the
Employee by the Company should terminate by reason of the Employee's
voluntary action, or by the Company for "Cause", then the Company's
obligations for payment or delivery of compensation and other
entitlements under this Agreement with respect to any future period
shall thereupon terminate. Written notice of termination for Cause
shall be given by the Company to the Employee and shall be effective
upon receipt. For purposes of this Agreement, Cause means (i) the
Employee's (A) willful refusal to carry out specific lawful directions
of the Board of Directors or of the chief executive officer of the
Company, which directions shall be consistent with the provisions of
this Agreement, or (B) refusal or failure to perform a material part of
his duties hereunder, which refusal or failure in either case under
clause (A) or (B) is not remedied promptly, but in no event later than,
fifteen days after
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receipt of written notice thereof to the Employee, (ii) the Employee's
commission of an act of fraud, misappropriation or dishonesty to the
Company or any of its affiliates or falsification of a written document
delivered to the Company or any of its affiliates or on the Company's
or such affiliate's behalf, and (iii) the Employee's commission of a
crime with respect to which, in the reasonable judgment of the Company,
the Employee is likely to be incarcerated or as result of which the
Company, in its reasonable judgement, determines it would be
inappropriate for the Employee to continue as an employee of the
Company.
7. Compensation after Termination.
(a) If the Initial Term is terminated (i) by the Company for cause pursuant
to Section 6(c) or due to the incapacity or health of Employee pursuant
to Sections 6(b) and 6(c), (ii) by Employee or (iii) by expiration of
the Initial Term, then the Company shall have no further obligations
hereunder or otherwise with respect to Employee's employment from and
after the termination or expiration date (except payment of Employee's
Base Salary accrued through the date of termination or expiration) and
the Company shall continue to have all other rights available
hereunder.
(b) If the Initial Term is terminated by the Company without Cause,
Employee shall be entitled to receive as severance pay (in addition to
the payment of Base Salary through the date of termination) an amount
equal to the lesser of (i) Employee's Base Salary for a period equal to
six (6) months or (ii) Employee's Base Salary for the remainder of the
Initial Term, such amount to be payable in regular installments in
accordance with the Company's general payroll practices for salaried
employees. The Company shall have no other obligations hereunder or
otherwise with respect to Employee's employment from and after the
termination or expiration date, and the Company shall continue to have
all other rights available hereunder.
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8. Representations of the Employee. The Employee represents and warrants to
the Company that neither the execution and delivery of this Agreement by
the Employee, the employment by the Company of the Employee nor the
performance of the activities to be conducted by the Employee as
contemplated hereby will be in violation or contradict with the provisions
of any agreement or other instrument or restriction, or any judgment, order
or decree to which the Employee is a party or which is binding upon the
Employee.
9. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties with respect to the employment of the
Employee by the Company and supersedes all prior agreements,
arrangements and understandings between the parties with respect
thereto.
(b) Modification. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof may be
waived, only by an instrument executed by the party to be charged, or
in the case of a waiver, by the party waiving compliance.
(c) Waiver. The failure of either party at any time or times to require
performance of any provision of this Agreement in no manner shall
affect the right at a later time to enforce the same. No waiver by
either party of a breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach, or a waiver of any other term or
covenant contained in this Agreement.
(d) Notices. All notices, demands, consents, waivers and other
communications ("Communications") required to be given under this
Agreement shall be in writing and shall be given (and shall be deemed
to have been duly given) upon the earlier of actual receipt, one
business day after being sent by telegram or telecopier (with
confirmation of delivery) or three business days after being sent by
registered or certified mail to the parties at the addresses set forth
above or to such other address as either party may hereafter specify by
notice to the other party. Irrespective of the foregoing, notice of
change of address shall be effective only upon receipt.
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(e) Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York applicable to contracts
made and to be performed wholly within such state.
(f) Attorneys' Fees and Disbursements. In the event that either party takes
legal action to enforce any of the provisions of this Agreement, the
prevailing party shall be entitled to recover all reasonable expenses
incurred in connection therewith.
(g) Assignability. This Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee. The Company
may assign its rights, together with its obligations hereunder, to a
successor by merger or to a purchaser of substantially all of its
assets, and such rights and obligations shall inure to, and be binding
upon, any such successor.
(h) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives,
heirs, successors and permitted assigns.
(i) Invalidity. The invalidity of any part of this Agreement is not
intended to render invalid the remainder of this Agreement. If any
provision of this Agreement is so broad as to be unenforceable, such
provision is intended to be interpreted to be only so broad as is
enforceable.
10. Arbitration. In the event of any difference of opinion or dispute between
the Employee and the Company with respect to the construction or
interpretation of this Agreement or the alleged breach thereof, which
cannot be settled amicably by agreement of the parties, then such dispute
shall be submitted to and determined by arbitration by a single arbitrator
in the City of New York, New York, in accordance with the rules then in
effect of the Commercial Arbitration Panel of the American Arbitration
Association (the "AAA"), and judgment upon the award shall be final,
binding and conclusive upon the parties and may be entered by the highest
court, state or federal, having jurisdiction. The costs of the arbitration
shall be borne as determined by the arbitrator. The provisions of this
paragraph shall not be construed to limit the Company's right to seek
injunctive relief pursuant to paragraph 5 (d) of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
9278 COMMUNICATIONS, INC.
By: /s/ Sajid Kapadia /s/ Paul Sarcinella
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SAJID KAPADIA, PAUL SARCINELLA
Chief Executive Officer
