Document:

exv10w60

 

Exhibit 10.60 – Employment Agreement with David Silverman

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 19th
day of April, 2004 (the “Effective Date”) by and between Acceris
Communications Inc., a Florida corporation (the “Company”), and David B.
Silverman (“Executive”).

     Executive is skilled in legal, business and financial matters, especially
as they relate to the telecommunications business. The parties hereto believe
that it is in their respective interests to enter into an employment agreement
whereby, for the consideration specified herein, Executive shall provide the
services specified herein. Certain definitions are set forth in Section
7 of this Agreement.

     The parties hereto agree as follows:

     Section 1. Employment.

     (a) Employment Period. The Company agrees to employ Executive and
Executive accepts such employment for the period (the “Employment
Period”) beginning as of the Effective Date and ending upon (a) December
31, 2005 or (b) such earlier date upon which the employment of Executive shall
terminate in accordance with Section 2 herein (the date of termination
being hereinafter called the “Termination Date”). The Employment Period
may be extended by written agreement of the parties hereto. Any employment of
Executive by the Company following the expiration of the Employment Period
shall be “at will” and may be terminated by the Company at any time without any
liability other than the payment of any base salary and earned bonus through
the effective date of termination.

     (b) Position and Duties.

               (i) During the Employment Period, Executive shall serve as the Senior Vice
President and General Counsel of the Company and Executive shall report to the
President and/or Chief Executive Officer of the Company. Executive shall
perform all duties and shall have all powers which are commonly incident to his
office as well as all powers that are delegated to Executive by the President
and/or chief Executive Officer.

               (ii) Executive shall devote his best efforts and his full business time
and attention to the business and affairs of the Company, except for permitted
vacation periods in accordance with the Company’s policy, periods of illness or
other incapacity, and reasonable time spent with respect to civic and
charitable activities, provided that none of such activities shall materially
interfere with Executive’s duties to the Company or its Subsidiaries.

     (c) Salary. Bonus and Benefits.

               (i) During the Employment Period, the Company will pay Executive a base
salary at the rate of $190,000 per annum (the “Annual Base Salary”). The
Annual Base Salary shall be paid in such installments as is the policy of the
Company with respect to executive officers of the Company.

               (ii) Commencing with the Effective Date, Executive shall be eligible for a
discretionary annual bonus of up to sixty percent (60%) of Executive’s Annual
Base Salary (the “Bonus”), pro-rated for any periods that do not commence on
January 1 or end on December 31 in any given year. The amount of any Bonus to
be awarded shall be determined pursuant to the Acceris Management System, based
on performance criteria established at the beginning of each fiscal year or at
the Effective Date, whichever is later, and the timing of such award and the
payment of any such Bonus shall be consistent with the past practice of the
Company.

               (iii) Executive shall be entitled to participate in all employee stock
option, pension and welfare benefit plans, programs and practices maintained by
the Company for its employees generally in accordance with the terms of such
plans, programs and practices as in effect from time to time, and in any other
insurance, pension, retirement or welfare benefit plans, programs and practices
which the Company generally provides to its executives from

 

 

time to time. For
greater certainty, on the Effective Date Executive shall be granted options to
purchase 75,000 common shares of the Company in accordance with the terms of
the Company’s Employee Stock Option Plan.

     (d) Expenses. The Company shall pay, or reimburse Executive (at the
Company’s option), in accordance with policies established by the Company, for
all reasonable and necessary expenses and other disbursements incurred by
Executive for or on behalf of the Company in the performance of his duties
hereunder, including, without limitation, travel on behalf of or in connection
with his services for the Company in a manner customary for the Company’s
senior executives, including food and lodging expenses while Executive is away
from home performing services for the Company.

     (e) Workplace and Work Schedule. Executive’s workplace shall be
Executive’s home office in Bethesda, Maryland. Executive shall be entitled to
such holidays as are established by the policies of the Company. Executive
shall be entitled to four (4) weeks of vacation per year of employment, which
may be taken in various periods, subject to the Company’s needs.

     Section 2. Termination Of Employment.

     (a) Death or Disability. The Company may terminate Executive’s
employment hereunder due to Executive’s death or Disability. If Executive dies
during the Employment Period, the Termination Date shall be deemed to be the
date of Executive’s death.

     (b) Cause. The Company may terminate the employment of Executive
hereunder at any time for Cause (such termination being referred to herein as a
“Termination for Cause”) by giving the Executive written notice of such
termination, with such termination to take effect as of the date of such
notice.

     (c) Without Cause. The Company may terminate the employment of the
Executive at any time during the Employment Period without Cause by giving
Executive written notice of such termination, with such termination to take
effect as of the date of delivery of such notice.

     (d) Good Reason, Executive may terminate his employment hereunder
for Good Reason by providing written notice to the Company within 45 days of
his knowledge of the event constituting Good Reason. Notwithstanding the
foregoing provisions to the contrary, in no event shall the Executive terminate
his employment hereunder for Good Reason without providing the Company with at
least fifteen (15) days’ prior written Notice of Termination given by Executive
to the Company and an opportunity for the Company to cure within that fifteen
(15) day period the Good Reason which Executive believes provides him with
grounds to terminate his employment.

     (e) Notice of Termination. Any termination pursuant to this
Section 2 shall be communicated to Executive or the President and/or
Chief Executive Officer, as applicable, by Notice of Termination.

     Section 3. Effect Of Termination Of Employment.

     (a) Death or Disability. Upon the termination of Executive’s
employment hereunder due to death or Disability pursuant to Section
2(a), neither Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except the
right to receive (i) the unpaid portion, if any, of the Annual Base Salary
provided for in Section 1, computed on a pro rata basis to the
Termination Date (based on the actual number of days elapsed over a year of 365
or 366 days, as applicable), (ii) the unpaid portion, if any, of the Bonus and
(iii) reimbursement for any expenses for which Executive shall not have been
reimbursed as provided for in Section 1 (such amounts being collectively
referred to as “Accrued Compensation”).

     (b) Cause. Upon a termination of Executive’s employment hereunder
by the Company for Cause pursuant to Section 2(b), neither Executive nor
his beneficiary or estate shall have any further rights or claims against the
Company under this Agreement, except the right to receive (i) the unpaid
portion, if any, of the Annual Base Salary provided for in Section 1,
computed on a pro rata basis to the Termination Date (based on the actual
number of days elapsed over a year of 365 or 366 days, as applicable) and (ii)
reimbursement for any expenses for which Executive shall

 

 

not have been
reimbursed as provided for in Section 1.

     (c) Without Cause. Upon a termination of Executive’s employment
hereunder by the Company without Cause pursuant to Section 2(c), neither
Executive nor his beneficiary or estate shall have any further rights or claims
against the Company under this Agreement, except the right to receive:

               (i) any Accrued Compensation;

               (ii) off payroll, an amount equal to the amount of the Annual Base Salary,
payable in accordance with Section 1 (c)(i), Executive would have
received for the period commencing on the Termination Date and ending on the
later of (x) six months after the Termination Date and (y) the first
anniversary of the Effective Date;

               (iii) provided that Executive has met, as of the Termination Date, the
performance criteria established with respect to the Bonus for the fiscal year
in which the Termination Date occurs, the pro rata portion of the Bonus for
such fiscal year (based on the actual number of days elapsed from the beginning
of the fiscal year to the Termination Date), the timing of the payment of any
such Bonus to be consistent with the past practice of the Company.

     (d) Upon a termination of Executive’s employment hereunder by Executive
for Good Reason pursuant to Section 2(d), neither Executive nor his
beneficiary or estate shall have any further rights or claims against the
Company under this Agreement, except the right to receive:

               (i) any Accrued Compensation;

               (ii) off payroll, an amount equal to the amount of the Annual Base Salary,
payable in accordance with Section 1(c)(i), Executive would have
received for the period commencing on the Termination Date and ending on the
later of (x) six months after the Termination Date and (y) the first
anniversary of the Effective Date.

     (e) Release. Executive acknowledges and agrees that the payments
provided for in Sections 3(c)(ii) and 3(d)(ii) constitute liquidated
damages for any claim of breach of contract under this Agreement as it relates
to termination of his employment during the Employment Period without Cause
pursuant to Section 2(c) or with Good Reason pursuant to Section
2(d). Notwithstanding the foregoing, if Executive is entitled to the
payments set forth in Section 3(c)(ii) or Section 3(d)(ii) of
this Agreement, Executive shall execute and agree to be bound by an agreement,
in form and substance satisfactory to the Company (the “Release”), relating to
the waiver and general release of any and all claims arising out of or relating
to Executive’s employment and termination of employment, and the Company shall
have no obligation to make the payments contemplated under Section
3(c)(ii) or Section 3(d)(ii), as the case may be if Executive fails
to execute such Release or seeks to revoke such Release. In addition, if
Executive should violate or threaten to violate the terms of Section 4
of this Agreement, the continuing obligations of the Company to make the
payments contemplated under Section 3(c)(ii) or Section 3(d)(ii),
as the case may be, shall immediately terminate.

     (f) Mitigation. Notwithstanding the foregoing and subject to the
limitations on competition hereunder, the amount of any payment by the Company
provided for in Section 3(c)(ii) or Section 3(d)(ii), as the case
may be, shall be reduced by the amount of any compensation earned by Executive
from a competitor of the Company or any Subsidiary during the period such
payment is to be made by the Company.

     Section 4. Confidentiality.

     (a) Executive agrees that at all times, both during and for two years
after Executive’s employment by the Company, Executive will hold in a fiduciary
capacity for the benefit of the Company and not use or disclose to any third
party any trade secret, or other information, knowledge or data not generally
known to the public which Executive may have learned, discovered, developed,
conceived, originated, prepared or received during or as a result of
Executive’s employment by the Company or any Subsidiary or Affiliate with
respect to the operations, businesses, affairs, products, services, technology,
intellectual properties, Agents, customers, clients, pricing of products or
services, policies, procedures, accounts, personnel, concepts, format, style,
techniques or software of the Company or any Subsidiary or Affiliate of the
Company (“Proprietary Information”). Executive agrees that Company’s
Proprietary

 

 

Information includes, without limitation, the business or other
needs, requirements, preferences or other information relating to Agents and
customers of the Company or any Subsidiary or Affiliate of the Company,
acquisition targets of the Company or any Subsidiary or Affiliate of the
Company and all information or data collected by the Company with reference
thereto. Executive agrees to comply with any and all procedures which the
Company may adopt from time to time to preserve the confidentiality of any
trade secret or other non-public proprietary, information, knowledge or data;
that the absence of any legend indicating the confidentiality of any materials
will not give rise to an inference that the contents thereof or information
derived there from are not confidential; that immediately following the
termination of Executive’s employment by the Company, Executive will return to
Company all materials, except for Executive’s personal items, provided to
Executive by the Company during the term hereof, all works created by Executive
or others during the term of Executive’s employment hereunder and all copies
thereof; and that the Company may, in its sole discretion, upon or after
termination of Executive’s employment by the Company, notify Executive’s new
employer, clients or other parties that Executive has had access to certain
trade secrets, information, knowledge or data which Executive is under a
continuing obligation not to use or disclose. Notwithstanding the foregoing,
the limitations imposed on Executive pursuant to this Section 4(a) shall
not apply to Executive’s (i) compliance with legal process or subpoena or (ii)
statements in response to inquiry from a court or regulatory body; provided,
that Executive gives the Company reasonable prior written notice of such
process, subpoena or request.

     (b) In order to protect the Proprietary Information, Executive agrees that
for a period of twelve (12) months following the expiration or termination of
Executive’s employment hereunder, Executive will not, directly or indirectly,
for Executive’s own account or as a partner, joint venturer, employee, agent,
or consultant: (a) employ as an employee, engage as an independent contractor
or agent or otherwise retain or solicit or seek to so employ, engage, retain or
solicit any person who, during any portion of the two (2) years prior to the
date of expiration or termination of Executive’s employment was, directly or
indirectly, employed as an employee, engaged as an independent contractor or
Agent or otherwise retained by the Company or any Subsidiary or Affiliate of
the Company; or (b) induce any person or entity (except for individuals
considered to be clerical or secretarial staff) to leave his or her employment
with the Company, terminate an independent contractor or Agent relationship
with the Company or terminate or reduce any contractual relationship with
Company or any Subsidiary or Affiliate of the Company or (c) directly or
indirectly induce or influence any Agent, customer, supplier, or other person
that has a business relationship with the Company or any Subsidiary or
Affiliate of the Company to discontinue or reduce the extent of such
relationship. Notwithstanding the foregoing, the parties agree that Executive
shall not be deemed to have violated the provisions of this Section 4(b)
in the event that any Person of which Executive is a partner, joint venturer,
employee, agent or consultant takes any action that would otherwise violate the
terms of this Section 4(b), so long as such action is not with respect
to any Person identified by Executive to the Person taking such action.

     (c) All processes, improvements, formulations, ideas, inventions, designs
and discoveries, whether patentable or not (collectively “Discoveries”)
and all patents, copyrights, trademarks, and other intangible rights
(collectively “Intellectual Property Rights”) that may be conceived or
developed by Executive either alone or with others, during the Employment
Period or any extension or renewal thereof, whether or not conceived or
developed during working hours, and with respect to which any equipment,
supplies, facilities, or trade secret information of the Company or any
Subsidiary or Affiliate of the Company was used, or that related to the
business of the Company or any Subsidiary or Affiliate of the Company or to the
Company’s or any Subsidiary’s or Affiliate’s actual or demonstrably anticipated
research and development, or that result from any work performed by Executive
for the Company, shall be the sole property of the Company. As provided in
Section 2870 of the California Labor Code, the requirement to assign inventions
hereunder shall not apply to an invention that Executive develops entirely on
his own time without using the Company’s or any Subsidiary’s or Affiliate’s
equipment, supplies, facilities, or trade secret information, except for those
inventions that either (a) relate, at the time of conception or reduction to
practice of the invention to the Company’s or any Subsidiary’s or Affiliate’s
business, or actual or demonstrably anticipated research or development of the
Company or any Subsidiary or Affiliate of the Company; or (b) result from any
work performed by Executive for the Company or any Subsidiary or Affiliate of
the Company. Executive shall take all action and execute and deliver all
agreements, assignments and other documents, including, without limitation, all
patent applications and assignments, reasonably requested by the Company or any
Subsidiary or Affiliate of the Company to establish the rights of the Company
or any Subsidiary or Affiliate of the Company under this Section 4(c)
and to vest in the Company or any Subsidiary or Affiliate of the Company title
to all Discoveries and Intellectual Property Rights which are the property of
the Company or any Subsidiary or Affiliate of the Company under this Section
4(c). Executive shall disclose to the Company all Discoveries and
Intellectual Property Rights conceived during the Employment Period, or any
extension or renewal thereof, which Executive believes meet the criteria set
forth in California Labor Code Section 2870, whether or not the property of the
Company or any Subsidiary or Affiliate of the

 

 

Company under the terms of the
preceding sentence, provided that such disclosure shall be received by the
Company in confidence to the extent it pertains to Discoveries and Intellectual
Property Rights which are not the property of the Company under this Section
4(c).

     (d) Because the breach or attempted or threatened breach of this
Section 4 may result in immediate and irreparable injury to the Company
for which the Company may not have an adequate remedy at law, the Company shall
be entitled, in addition to all other remedies, to a decree of specific
performance thereof and to a temporary and permanent injunction enjoining such
breach, without posting bond or furnishing similar security. The parties’
obligations under this Section 4 shall survive any termination of
Executive’s employment or this Agreement.

     Section 5.Acknowledgments By Executive.

     Executive understands that the restrictions contained in Section 4
herein may limit the ability of Executive to earn a livelihood in a competing
business, but Executive nevertheless believes that Executive has received and
will receive sufficient consideration and other benefits as an employee of the
Company and as otherwise provided hereunder to clearly justify such
restrictions which, in any event (given the education, skills and ability of
Executive), Executive does not believe would prevent him from earning a
livelihood.

     Section 6. Tax Withholding.

     The Company may withhold from any compensation or severance payable under
this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.

     Section 7. Definitions.

     “Affiliate” of any particular Person means (i) any other Person
controlling, controlled by, or under common control with such particular
Person, where “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the
ownership of voting securities, by contract, or otherwise, and (ii) if such
Person is a partnership, any partner thereof.

     “Agent” means any Person which has received or is entitled to
receive a commission from the Company related to the sale or marketing of the
Company’s products or services.

     “Board” means the Board of Directors of the Company.

     “Cause” means (i) Executive’s conviction of, or plea of guilty or
nolo contendere to, a crime constituting a felony, (ii) gross misconduct by
Executive that is materially inconsistent with the terms hereof, (iii) material
failure by Executive to perform his duties, which nonperformance continues
after written notice thereof and a fifteen (15) day chance to cure, (iv)
Executive’s material breach of this Agreement, which, if curable, shall not
have been cured within fifteen (15) days after receipt of written notice
thereof, (v) habitual drug or alcohol use which impairs the ability of
Executive to perform his duties hereunder, (vi) unauthorized breach of the
Company’s Code of Conduct, (vii) Executive’s engaging in fraud, embezzlement or
any other illegal conduct with respect to the Company which acts are harmful
to, either financially, or to the business reputation of, the Company or (viii)
breach of the fiduciary duty owed by Executive to the Company or of any of its
Subsidiaries or Affiliates, which, if curable, shall not have been cured
within fifteen (15) days after receipt of written notice thereof.

     “Disability” means a physical or mental infirmity which impairs
Executive’s ability to perform substantially his duties for a total period
exceeding six (6) months during the Employment Period or for a period of four
(4) consecutive months. Disability shall be determined by a physician
acceptable to both the Company and Executive, or, if the Company and Executive
cannot agree upon a physician within 15 days after the Company claims that
Executive is suffering from a Disability, by a physician selected by two
physicians, one designated by each of the Company and Executive. Executive’s
failure to submit to any physical examination by any such physician after such
physician has given reasonable notice of time and place of such examination
shall be conclusive evidence of Executive’s inability to

 

 

perform his duties
hereunder.

     “Good Reason” means, during the Employment Period and without
Executive’s consent:

     (i) a material diminution of Executive’s title, reporting structure,
position or responsibilities or

     (ii) a reduction in, or failure to pay, Executive’s Annual Base Salary or
any reduction in the benefits being required to be provided herein or any other
material breach of this Agreement , or

     (iii) a relocation or threatened relocation of Executive’s workplace or
principal office from Bethesda, Maryland.

     “Notice of Termination” means a written notice that indicates the
Termination Date, the specific termination provision in this Agreement relied
upon, and the facts and circumstances, if any, claimed to provide a basis for
such termination.

     “Person” means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

     “Subsidiary” means any corporation or other entity of which the
securities having a majority of the ordinary voting power in electing the board
of directors are, at the time as of which any determination is being made,
owned by the Company either directly or through one or more Subsidiaries.

     Section 8. Notices.

     Any notice provided for in this Agreement must be in writing and must be
either personally delivered, mailed by first class mail (postage prepaid and.
return receipt requested) or sent by reputable overnight courier service’
(charges prepaid) to the recipient at the address below indicated:

     If to Company:

	 	 	 	Acceris Communications Inc.

9775 Business Park Avenue

San Diego, California 92131

Attention: Chief Executive Officer

     If to Executive:

	 	 	 	8813 Bethesda Road

Bethesda, Maryland 20817-3235

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.

     Section 9. General Provisions.

     (a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

 

     (b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.

     (c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

     (d) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns;
provided that the rights and obligations of Executive under this
Agreement shall not be assignable.

     (e) Choice of Law. This Agreement will be governed by and construed
in accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

     (f) Remedies. Except as provided in Section 4(d) hereof, if
any contest or dispute arises between the parties with respect to this
Agreement, such contest or dispute shall be submitted to binding arbitration
for resolution in Washington, D.C., in accordance with the rules and procedures
of the American Arbitration Association then in effect. The decision of the
arbitrator shall be final and binding on both parties, and any court of
competent jurisdiction may enter judgment upon the award. Each party shall pay
its own legal fees and expenses incurred in connection therewith.

     (g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.

     (h) Insurance. The Company, at its discretion, may apply for and
procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered available. Executive
agrees to cooperate in any medical or other examination, supply any
information, and to execute and deliver any applications or other instruments
in writing as may be reasonably necessary to obtain and constitute such
insurance. Executive hereby represents that he has no reason to believe that
his life is not insurable at rates now prevailing for healthy men of his age.

     IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
on the date first written above.

ACCERIS COMMUNICATIONS INC.

	 	 	 
	By:
	 	 
	

	 	 
	Name:
	 	 
	Its:
	 	 

	 
	

	David B. Silvermanexv10w61

 

Exhibit 10.61 – Employment Agreement with Kenneth Hilton, as amended

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 1st
day of January, 2003 (the “Effective Date”) by and between Acceris
Communications Inc., a Florida corporation (the “Company”), and Kenneth
L. Hilton (“Executive”).

     The Executive is skilled in business and financial matters and possesses
knowledge of the business, products and operations of the Company. The parties
hereto believe that it is in their respective interests to enter into an
employment agreement whereby, for the consideration specified herein, Executive
shall provide the services specified herein. Certain definitions are set forth
in Section 7 of this Agreement.

     The parties hereto agree as follows:

     Section 1. Employment.

     (a) Employment Period. The Company agrees to employ Executive and
Executive accepts such employment for the period (the ‘Employment
Period”) beginning as of the Effective Date and ending upon (a) April 30,
2006 or (b) such earlier date upon which the employment of the Executive shall
terminate in accordance with Section 2 herein (the date of termination
being hereinafter called the “Termination Date”). The Employment Period
may be extended by written agreement of the parties hereto. Any employment of
Executive by the Company following the expiration of the Employment Period
shall be “at will” and may be terminated by the Company at any time without any
liability other than the payment of any base salary through the effective date
of termination.

     (b) Position and Duties.

               (i) During the Employment Period, Executive shall serve as the Executive
Vice President, Sales and Marketing of the Company and the Executive and shall
report to the President and/or Chief Executive Officer of the Company.
Executive shall perform all duties and shall have all powers which are commonly
incident to his office as well as all powers that are delegated to Executive by
the President and/or Chief Executive Officer.

               (ii) Executive shall devote his best efforts and his full business time
and attention to the business and affairs of the Company, except for permitted
vacation periods in accordance with the Company’s policy, periods of illness or
other incapacity, and reasonable time spent with respect to civic and
charitable activities, provided that none of such activities shall materially
interfere with Executive’s duties to the Company or its Subsidiaries.

     (c) Salary. Bonus and Benefits.

               (i) During the Employment Period, the Company will pay Executive a base
salary at the rate of $275,000 per annum (the “Annual Base Salary”). The
Annual Base Salary shall be paid in such installments as is the policy of the
Company with respect to executive officers of the Company.

               (ii) Executive shall be eligible for a discretionary annual bonus of up to
one hundred percent (100%) of Executive’s Annual Base Salary (the “Bonus”). The
amount of any Bonus to be awarded shall be determined pursuant to the Acceris
Management System, based on performance criteria established at the beginning
of each fiscal year, and the timing of such award and, subject to Section
1(c)(iii), the payment of any such Bonus shall be consistent with the
practice of the Company.

               (iii) Executive acknowledges that as of the Effective Date he was indebted
to the Company in

 

 

the amount of $100,000, which is due and payable no later
than August 1, 2005. Interest on the amount of this indebtedness that is
outstanding at any given time shall accrue and be calculated from the 1st day
of September, 2004 at the Prime Rate of interest as published from time to time
in The Wall Street Journal, and be payable monthly on the first day of every
calendar month commencing October 1, 2004. Default in payment of principal or
interest on this indebtedness when due shall constitute Cause pursuant to this
Agreement. Executive acknowledges and agrees that he will make good faith
commercial efforts to sell the house he owns in Austin, Texas and will, as soon
as practicable after completion of a sale, repay this indebtedness out of the
proceeds of the sale of the house, after payment of closing costs and related
fees and any mortgages thereon. Executive further acknowledges and agrees that
no amount in respect of the Executive’s Bonus or any termination or severance
payment pursuant to Section 3, shall be paid to him while any of his
indebtedness remains outstanding. Executive hereby authorizes the Company to
apply any Bonus, termination or severance payment to which he is entitled (net
of applicable payroll deductions), to reduce the amount of his indebtedness to
the Company.

               (iv) Executive shall be entitled to participate in all employee stock
option, pension and welfare benefit plans, programs and practices maintained by
the Company for its employees generally in accordance with the terms of such
plans, programs and practices as in effect from time to time, and in any other
insurance, pension, retirement or welfare benefit plans, programs and practices
which the Company generally provides to its executives from time to time.

     (d) Expenses. The Company shall pay, or reimburse the Executive, in
accordance with policies established by the Company, for all reasonable and
necessary expenses and other disbursements incurred by the Executive for or on
behalf of the Company in the performance of his duties hereunder, including,
without limitation, travel on behalf of or in connection with his services for
the Company in a manner customary for the Company’s senior executives,
including food and lodging expenses while the Executive is away from home
performing services for the Company.

     (e) Workplace and Work Schedule. Executive’s workplace shall be the
Company’s office in San Diego, California. Executive shall be entitled to such
holidays as are established by the policies of the Company. Executive shall be
entitled to four (4) weeks of vacation per year, which may be taken in various
periods, subject to the Company’s needs.

     Section 2. Termination Of Employment.

     (a) Death or Disability. The Company may terminate the Executive’s
employment hereunder due to the Executive’s death or Disability. If the
Executive dies during the Employment Period, the Termination Date shall be
deemed to be the date of the Executive’s death.

     (b) Cause. The Company may terminate the employment of Executive
hereunder at any time for Cause (such termination being referred to herein as a
“Termination for Cause”) by giving the Executive written notice of such
termination, with such termination to take effect as of the date of such
notice.

     (c) Without Cause. The Company may terminate the employment of the
Executive at any time during the Employment Period without Cause by giving the
Executive written notice of such termination, with such termination to take
effect as of the date of such notice. Any stock options, awarded to the
Executive pursuant to the Company’s stock option plan, which would have vested
during the 12-month period immediately following the date of notice of
termination without Cause, shall be deemed to have vested effective as of the
date of notice of termination.

     (d) Good Reason, Executive may terminate his employment hereunder
for Good Reason by providing written notice to the Company within 45 days of
his knowledge of the event constituting Good Reason. Notwithstanding the
foregoing provisions to the contrary, in no event shall the Executive terminate
his employment hereunder for Good Reason without providing the Company with at
least fifteen (15) days’ prior written Notice of Termination given by the
Executive to the Company and an opportunity for the Company to cure within that
fifteen (15) day period the Good Reason which the Executive believes provides
him with grounds to terminate his employment. Any stock options, awarded to the
Executive pursuant to the Company’s stock option plan, which would have vested
during the 12-month period immediately following the date of notice of
termination for Good Reason, shall be deemed to have

 

 

vested effective as of the
date of notice of termination.

     (e) Notice of Termination. Any termination pursuant to this
Section 2 shall be communicated to Executive or the President and/or
Chief Executive Officer, as applicable, by Notice of Termination.

     Section 3. Effect Of Termination Of Employment.

     (a) Death or Disability. Upon the termination of Executive’s
employment hereunder due to death or Disability pursuant to Section
2(a), neither Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except the
right to receive (i) the unpaid portion, if any, of the Annual Base Salary
provided for in Section 1, computed on a pro rata basis to the
Termination Date (based on the actual number of days elapsed over a year of 365
or 366 days, as applicable), (ii) the unpaid portion, if any, of the Bonus and
(iii) reimbursement for any expenses for which Executive shall not have been
reimbursed as provided for in Section 1 (such amounts being collectively
referred to as “Accrued Compensation”). Provided, however, that any
stock options, awarded to the Executive pursuant to the Company’s stock option
plan, that would have vested during the 12-month period immediately following
the death or Disability of the Executive shall be deemed to have vested
effective as of the date of death or Disability.

     (b) Cause. Upon a termination of Executive’s employment hereunder
by the Company for Cause pursuant to Section 2(b), neither Executive nor
his beneficiary or estate shall have any further rights or claims against the
Company under this Agreement, except the right to receive (i) the unpaid
portion, if any, of the Annual Base Salary provided for in Section 1,
computed on a pro rata basis to the Termination Date (based on the actual
number of days elapsed over a year of 365 or 366 days, as applicable) and (ii)
reimbursement for any expenses for which the Executive shall not have been
reimbursed as provided for in Section 1.

     (c) Without Cause. Upon a termination of Executive’s employment
hereunder by the Company without Cause pursuant to Section 2(c), neither
Executive nor his beneficiary or estate shall have any further rights or claims
against the Company under this Agreement, except the right to receive, subject
to Section 1(c)(iii):

               (i) any Accrued Compensation;

               (ii) off payroll, an amount equal to the amount of the Annual Base Salary,
payable in accordance with Section 1 (c)(i), Executive would have
received for the period commencing on the Termination Date and ending on the
first anniversary of the Termination Date; and

               (iii) provided that Executive has met, as of the Termination Date, the
performance criteria established with respect to the Bonus for the fiscal year
in which the Termination Date occurs, the pro rata portion of the Bonus for
such fiscal year (based on the actual number of days elapsed from the beginning
of the fiscal year to the Termination Date), the timing of the payment of any
such Bonus to be consistent with the past practice of the Company.

     (d) Upon a termination of the Executive’s employment hereunder by the
Executive for Good Reason pursuant to Section 2(d), neither the
Executive nor his beneficiary or estate shall have any further rights or claims
against the Company under this Agreement, except the right to receive, subject
to Section 1(c)(iii):

               (i) any Accrued Compensation; and

               (ii) off payroll, an amount equal to the amount of the Annual Base Salary,
payable in accordance with Section 1(c)(i), Executive would have
received for the period commencing on the Termination Date and ending on the
earlier of (x) the first anniversary of the Termination Date and (y) April 30,
2006.

     (e) Release. Executive acknowledges and agrees that the payments
provided for in Sections 3(c)(ii) and 3(d)(ii) constitute liquidated
damages for any claim of breach of contract under this Agreement as it relates
to termination of his employment during the Employment Period without Cause
pursuant to Section 2(c) or with Good

 

 

Reason pursuant to Section
2(d). Notwithstanding the foregoing, if Executive is entitled to the
payments set forth in Section 3(c)(ii) or Section 3(d)(ii) of
this Agreement, Executive shall execute and agree to be bound by an agreement,
in form and substance satisfactory to the Company (the “Release”), relating to
the waiver and general release of any and all claims arising out of or relating
to Executive’s employment and termination of employment, and the Company shall
have no obligation to make the payments contemplated under Section
3(c)(ii) or Section 3(d)(ii), as the case may be if Executive fails
to execute such Release or seeks to revoke such Release. In addition, if
Executive should violate or threaten to violate the terms of Section 4
of this Agreement, the continuing obligations of the Company to make the
payments contemplated under Section 3(c)(ii) or Section 3(d)(ii),
as the case may be, shall immediately terminate.

     (f) Mitigation. Notwithstanding the foregoing and subject to the
limitations on competition hereunder, the amount of any payment by the Company
provided for in Section 3(c)(ii) or Section 3(d)(ii), as the case
may be, shall be reduced by the amount of any compensation earned by the
Executive from a competitor of the Company or any Subsidiary during the period
such payment is to be made by the Company.

     Section 4. Confidentiality.

     (a) Executive agrees that at all times, both during and after Executive’s
employment by the Company, Executive will hold in a fiduciary capacity for the
benefit of the Company and not use or disclose to any third party any trade
secret, or other information, knowledge or data not generally known to the
public which Executive may have learned, discovered, developed, conceived,
originated, prepared or received during or as a result of Executive’s
employment by the Company or any Subsidiary or Affiliate with respect to the
operations, businesses, affairs, products, services, technology, intellectual
properties, Agents, customers, clients, pricing of products or services,
policies, procedures, accounts, personnel, concepts, format, style, techniques
or software of the Company or any Subsidiary or Affiliate of the Company
(“Proprietary Information”). Executive agrees that Company’s Proprietary
Information includes, without limitation, the business or other needs,
requirements, preferences or other information relating to Agents and customers
of the Company or any Subsidiary or Affiliate of the Company, acquisition
targets of the Company or any Subsidiary or Affiliate of the Company and all
information or data collected by the Company with reference thereto. Executive
agrees to comply with any and all procedures which the Company may adopt from
time to time to preserve the confidentiality of any trade secret or other
non-public proprietary, information, knowledge or data; that the absence of any
legend indicating the confidentiality of any materials will not give rise to an
inference that the contents thereof or information derived there from are not
confidential; that immediately following the termination of Executive’s
employment by the Company, Executive will return to Company all materials,
except for Executive’s personal items, provided to Executive by the Company
during the term hereof, all works created by Executive or others during the
term of Executive’s employment hereunder and all copies thereof; and that the
Company may, in its sole discretion, upon or after termination of Executive’s
employment by the Company, notify Executive’s new employer, clients or other
parties that Executive has had access to certain trade secrets, information,
knowledge or data which Executive is under a continuing obligation not to use
or disclose. Notwithstanding the foregoing, the limitations imposed on
Executive pursuant to this Section 4(a) shall not apply to Executive’s
(i) compliance with legal process or subpoena or (ii) statements in response to
inquiry from a court or regulatory body; provided, that Executive gives the
Company reasonable prior written notice of such process, subpoena or request.

     (b) In order to protect the Proprietary Information, Executive agrees that
for a period of twelve (12) months following the expiration or termination of
Executive’s employment hereunder, Executive will not, directly or indirectly,
for Executive’s own account or as a partner, joint venturer, employee, agent,
or consultant: (a) employ as an employee, engage as an independent contractor
or agent or otherwise retain or solicit or seek to so employ, engage, retain or
solicit any person who, during any portion of the two (2) years prior to the
date of expiration or termination of Executive’s employment was, directly or
indirectly, employed as an employee, engaged as an independent contractor or
Agent or otherwise retained by the Company or any Subsidiary or Affiliate of
the Company; or (b) induce any person or entity (except for individuals
considered to be clerical or secretarial staff) to leave his or her employment
with the Company, terminate an independent contractor or Agent relationship
with the Company or terminate or reduce any contractual relationship with
Company or any Subsidiary or Affiliate of the Company or (c) directly or
indirectly induce or influence any Agent, customer, supplier, or other person
that has a business relationship with the Company or any Subsidiary or
Affiliate of the Company to discontinue or reduce the extent of such
relationship. Notwithstanding the foregoing, the parties agree that Executive
shall not be deemed to have violated the provisions of this Section 4(b)
in the

 

 

event that any Person of which Executive is a partner, joint venturer,
employee, agent or consultant takes any action that would otherwise violate the
terms of this Section 4(b), so long as such action is taken without the
knowledge of Executive and not with respect to any Person identified by
Executive to the Person taking such action.

     (c) All processes, improvements, formulations, ideas, inventions, designs
and discoveries, whether patentable or not (collectively “Discoveries”)
and all patents, copyrights, trademarks, and other intangible rights
(collectively “Intellectual Property Rights”) that may be conceived or
developed by Executive either alone or with others, during the term of
employment, whether or not conceived or developed during working hours, and
with respect to which any equipment, supplies, facilities, or trade secret
information of the Company or any Subsidiary or Affiliate of the Company was
used, or that related to the business of the Company or any Subsidiary or
Affiliate of the Company or to the Company’s or any Subsidiary’s or Affiliate’s
actual or demonstrably anticipated research and development, or that result
from any work performed by Executive for the Company, shall be the sole
property of the Company. As provided in Section 2870 of the California Labor
Code, the requirement to assign inventions hereunder shall not apply to an
invention that Executive develops entirely on his own time without using the
Company’s or any Subsidiary’s or Affiliate’s equipment, supplies, facilities,
or trade secret information, except for those inventions that either (a)
relate, at the time of conception or reduction to practice of the invention to
the Company’s or any Subsidiary’s or Affiliate’s business, or actual or
demonstrably anticipated research or development of the Company or any
Subsidiary or Affiliate of the Company; or (b) result from any work performed
by Executive for the Company or any Subsidiary or Affiliate of the Company.
Executive shall take all action and execute and deliver all agreements,
assignments and other documents, including, without limitation, all patent
applications and assignments, requested by the Company or any Subsidiary or
Affiliate of the Company to establish the rights of the Company or any
Subsidiary or Affiliate of the Company under this Section 4(c) and to
vest in the Company or any Subsidiary or Affiliate of the Company title to all
Discoveries and Intellectual Property Rights which are the property of the
Company or any Subsidiary or Affiliate of the Company under this Section
4(c). Executive shall disclose to the Company all Discoveries and
Intellectual Property Rights conceived during the term of employment which
Executive believes meet the criteria set forth in California Labor Code Section
2870, whether or not the property of the Company or any Subsidiary or Affiliate
of the Company under the terms of the preceding sentence, provided that such
disclosure shall be received by the Company in confidence to the extent it
pertains to Discoveries and Intellectual Property Rights which are not the
property of the Company under this Section 4(c).

     (d) Because the breach or attempted or threatened breach of this
Section 4 may result in immediate and irreparable injury to the Company
for which the Company may not have an adequate remedy at law, the Company shall
be entitled, in addition to all other remedies, to a decree of specific
performance thereof and to a temporary and permanent injunction enjoining such
breach, without posting bond or furnishing similar security. The parties’
obligations under this Section 4 shall survive any termination of
Executive’s employment or this Agreement.

     Section 5. Acknowledgments By Executive.

     Executive understands that the restrictions contained in Section 4
herein may limit the ability of Executive to earn a livelihood in a competing
business, but Executive nevertheless believes that Executive has received and
will receive sufficient consideration and other benefits as an employee of the
Company and as otherwise provided hereunder to clearly justify such
restrictions which, in any event (given the education, skills and ability of
Executive), Executive does not believe would prevent him from earning a
livelihood

     Section 6. Tax Withholding.

     The Company may withhold from any compensation or severance payable under
this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.

     Section 7. Definitions.

     “Affiliate” of any particular Person means (i) any other Person
controlling, controlled by, or under common control with such particular
Person, where “control” means the possession, directly or indirectly, of the
power

 

 

to direct the management and policies of a Person whether through the
ownership of voting securities, by contract, or otherwise, and (ii) if such
Person is a partnership, any partner thereof

     “Agent” means any Person which has received or is entitled to
receive a commission from the Company related to the sale or marketing of the
Company’s products or services.

     “Board” means the Board of Directors of the Company.

     “Cause” means (i) Executive’s conviction of, or plea of guilty or
nolo contendere to, a crime constituting a felony, (ii) gross misconduct by the
Executive that is materially inconsistent with the terms hereof, (iii) material
failure by the Executive to perform his duties, which nonperformance continues
after written notice thereof and a fifteen (15) day chance to cure, (iv) the
Executive’s material breach of this Agreement, (v) habitual drug or alcohol use
which impairs the ability of Executive to perform his duties hereunder, or (vi)
Executive’s engaging in fraud, embezzlement or any other illegal conduct with
respect to the Company which acts are harmful to, either financially, or to the
business reputation of, the Company or (vii) breach of the fiduciary duty owed
by Executive to the Company or of any of its Subsidiaries or Affiliates.

     “Disability” means a physical or mental infirmity which impairs
Executive’s ability to perform substantially his duties for a total period
exceeding six (6) months during the Employment Period or for a period of four
(4) consecutive months. Disability shall be determined by a physician
acceptable to both the Company and Executive, or, if the Company and Executive
cannot agree upon a physician within 15 days after the Company claims that
Executive is suffering from a Disability, by a physician selected by two
physicians, one designated by each of the Company and Executive. Executive’s
failure to submit to any physical examination by any such physician after such
physician has given reasonable notice of time and place of such examination
shall be conclusive evidence of Executive’s inability to perform his duties
hereunder.

     “Good Reason” means, during the Employment Period and without
Executive’s consent:

     (i) a material diminution of Executive’s title, reporting structure,
position or responsibilities or

     (ii) a reduction in, or failure to pay, Executive’s Annual Base Salary or
any reduction in the benefits being required to be provided herein or any other
material breach of this Agreement.

     “Notice of Termination” means a written notice which indicates the
Termination Date, the specific termination provision in this Agreement relied
upon, and the facts and circumstances, if any, claimed to provide a basis for
such termination.

     “Person” means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof

     “Subsidiary” means any corporation or other entity of which the
securities having a majority of the ordinary voting power in electing the board
of directors are, at the time as of which any determination is being made,
owned by the Company either directly or through one or more Subsidiaries.

     Section 8. Notices.

     Any notice provided for in this Agreement must be in writing and must be
either personally delivered, mailed by first class mail (postage prepaid and.
return receipt requested) or sent by reputable overnight courier service’
(charges prepaid) to the recipient at the address below indicated:

     If to Company:

	 	 	 	Acceris Communications Inc.

9775 Businesspark Avenue

 

 

	 	 	 	San Diego, California 92131

Attention: Chief Executive Officer

     If to Executive:

	 	14185	 	Arbolitos Drive

Poway, California 92064

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.

     Section 9. General Provisions.

     (a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

     (b) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way. In particular, and without limiting the generality of the previous
sentence, this Agreement supercedes and preempts the Employment Agreement made
as of the 1st day of May, 2002 by and between WorldxChange Corp. and the
Executive, and the Agreement made as of the 1st day of May, 2002 by and among
the Counsel Springwell Communications LLC, Counsel Corporation and the
Executive.

     (c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

     (d) Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns;
provided that the rights and obligations of Executive under this
Agreement shall not be assignable.

     (e) Choice of Law. This Agreement will be governed by and construed
in accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

     (f) Remedies. Except as provided in Section 4(d) hereof, if
any contest or dispute arises between the parties with respect to this
Agreement, such contest or dispute shall be submitted to binding arbitration
for resolution in New York City in accordance with the rules and procedures of
the American Arbitration Association then in effect. The decision of the
arbitrator shall be final and binding on both parties, and any court of
competent jurisdiction may enter judgment upon the award. Each party shall pay
its own legal fees and expenses incurred in connection therewith.

     (g) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and
Executive.

     (h) Insurance. The Company, at its discretion, may apply for and
procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered available. Executive
agrees to cooperate in any medical or other examination, supply any
information, and to execute and deliver any

 

 

applications or other instruments
in writing as may be reasonably necessary to obtain and constitute such
insurance. Executive hereby represents that he has no reason to believe that
his life is not insurable at rates now prevailing for healthy men of his age.

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
on the date first written above.

ACCERIS COMMUNICATIONS INC.

	 	 	 
	By:
	 	 
	

	 	 
	Name:
	 	 
	Its:
	 	 

	 
	

	Kenneth L. Hilton

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