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EXHIBIT
10.68
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made and
entered February 15, 2008, effective as of March 10, 2008 (the
“ Effective Date ”), between ELANDIA
INTERNATIONAL INC. , a Delaware corporation (the “
Company ”), with a principal place of business at 1500
Cordova Road, Suite 312, Fort Lauderdale, Florida 33316, and
PEDRO R. PIZARRO , an individual (the “
Executive ”).
RECITALS:
A. The Company provides
wireless telecommunications services and information solutions and
services (the “ Business ”).
B. The Executive has
extensive experience in the industry and has extensive experience
as a chief executive officer.
C. The Company wishes to
employ Executive.
D. The Company has in effect
a policy of director and officer liability insurance.
NOW, THEREFORE, in
consideration of the mutual agreements herein made, the Company and
the Executive hereby agree as follows:
AGREEMENT
1. EMPLOYMENT . The
Company hereby agrees to employ Executive and Executive hereby
accepts such employment in the capacity of President. As President,
the Executive shall report to the Company’s acting principal
executive officer. The Company further agrees to promote the
Executive to the position of its CEO and principal executive
officer, promptly after the filing of the Company’s Annual
Report on Form 10-K for 2007, and the Executive agrees to accept
this promotion and serve thereafter, under the terms and conditions
of this Agreement, in such capacity. The Company acknowledges that
between the Effective Date and April 10, 2008, Executive will
continue to also serve in his current position with his current
employer as part of a transition arrangement. The Executive shall
diligently perform all services as may be assigned to him by the
Board of Directors of the Company (the “ Board
”) and shall exercise such power and authority as may from
time to time be delegated to him by the Board. The Company shall
use its best efforts to arrange for the election of the Executive
as a member of the Board of the Company and the Executive agrees to
serve on the Board of the Company beginning on the date that he
becomes the CEO and principal executive officer of the Company. The
Company will consult with the Executive with regard to the
selection and nomination of new directors. The Company may also
direct Executive to render services to other entities which are now
or may in the future be affiliated with the Company (the “
Affiliates ”), subject to the limitation that
Executive’s overall time commitment is comparable to
similarly situated executives. Executive shall
serve the Company and the Affiliates
faithfully, diligently and to the best of his ability. Executive
agrees during the Term (as hereinafter defined) of this Agreement
to devote all of his full-time business efforts, attention, energy
and skill to the performance of his duties under this Agreement and
to furthering the interests of the Company and its Affiliates. The
Executive shall render such services at the Company’s offices
at 1500 Cordova Road, Suite 312, Fort Lauderdale, Florida 33316, or
at other suitable location(s) selected by the Company. During the
Term, Executive shall not engage in any other employment,
occupation or consulting activity for any direct or indirect
remuneration without the prior written consent of the Board;
provided, however, that Executive shall be entitled to serve on up
to two outside boards of directors, and on the boards of two
civic/community organizations or charitable institutions, as long
as that service does not conflict with the Executive’s
full-time commitment to the Company.
2.
COMPENSATION/BENEFITS .
(a) Salary . The
Company shall pay Executive a base salary (the “ Base
Salary ”) of at least $375,000 per year. This Base Salary
shall be paid consistent with the Company’s payroll policies
and procedures for all employees. The Base Salary shall be reviewed
for potential increases, at least annually, and the
Executive’s Base Salary shall be increased by the Board, as a
result of such reviews, to at least reflect increases in the cost
of living.
(b) Performance Bonus
. During the Term, and each Renewal Term, Executive shall be
eligible to receive an annual bonus (“ Bonus ”)
of up to 100% of the Executive’s Base Salary, based upon a
written bonus plan (the “ Senior Management Incentive
Compensation Plan ”), which shall be drafted at the
direction of the Board, and approved by the Board in final form by
no later than June 30, 2008. Bonus criteria for the Executive
under the Senior Management Incentive Compensation Plan shall be
reasonable and consistent with the Company’s annual business
plan approved by the Board of Directors. Executive’s
potential bonus opportunity for 2008 will be prorated based on the
number of days of the full year that Executive is employed by the
Company (e.g., if Executive begins employment on March 1, his
potential bonus opportunity would be $312,500 or 83.33% of
$375,000). Further, for 2008, the Company guarantees that Executive
will receive at least one third of his potential bonus opportunity
(in the foregoing example, at least $104,165). The Senior
Management Incentive Compensation Plan shall provide for bonuses to
be paid on or before the next payroll to occur after filing of the
Company’s Annual Report on Form 10-K for the applicable year,
but not later than March 31 of the ensuing year. Bonuses under
the Senior Management Incentive Compensation Plan shall be awarded
at the reasonable discretion of the Board consistent with the
Company’s annual business plan approved by the Board of
Directors.
(c) Employee Benefits.
Executive shall be entitled to participate in all benefit plans or
programs of the Company currently existing or hereafter made
available to executives and/or other employees, subject to the
eligibility requirements, restrictions and limitations of any such
plans or programs, including, but not limited to, the
Company’s group health insurance plan, any Company group
dental insurance plan, the Company’s 401(k) plan and any
other Company retirement plan. In addition, the Executive will be
reimbursed up to $10,000 annually to fund expenses of a personal
$1,000,000 life insurance policy and a personal disability
insurance policy. The Executive shall also be provided, at Company
expense, with a laptop computer. In addition, the Company agrees to
pay all legal fees and expenses incurred by the Executive in
connection with the negotiation of this Agreement and related
transactions.
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(d) Vacation and
Holidays. Executive shall be entitled to four weeks of vacation
each calendar year during the Term and Each Renewal Term, to be
taken at such times as the Executive and the Company shall mutually
determine; provided, that no vacation time shall interfere with the
duties required to be rendered by the Executive hereunder. Any
vacation time not taken by Executive during any calendar year may
not be carried forward into any succeeding calendar year and is not
cumulative; provided, that Executive shall be entitled to carry
forward into the next year up to (10) unused vacation days for
such year. In addition, the Executive shall enjoy paid holidays on
the same basis as other employees.
(e) Business Expense
Reimbursement; Telephone Expenses. Upon the submission of
proper substantiation by Executive, and subject to such rules and
guidelines as the Company may from time to time adopt, the Company
shall reimburse Executive for all reasonable expenses actually paid
or incurred by the Executive during the Term or any Renewal Term in
the course of and pursuant to the business of the Company,
including business travel, meal, and customer entertainment
expenses, etc. The Executive shall account to the Company in
writing for all expenses for which reimbursement is sought and
shall supply to the Company copies of all relevant invoices,
receipts or other evidence reasonably requested by the Company.
This reimbursement shall cover, among other things, the cost of
Executive’s cellular telephone use in connection with his
employment hereunder.
(f) Reimbursement of
Automobile and Country Club Expenses . The Executive may incur,
and the Company agrees to reimburse, up to $2,000 per month of the
Executive’s automobile and country club expenses.
(g) Signing Bonus .
The Company agrees to pay the Executive a signing bonus the earlier
of (i) within one week following his promotion and acceptance
of that promotion to the position of CEO and principal executive
officer of the Company; or (ii) May 31, 2008, in the
amount of $450,000, less all payroll taxes required to be withheld
by law.
(h) Tax Gross-Up . The
Company agrees to provide a tax gross-up benefit to the Executive
as set forth on Exhibit “A” to this
Agreement.
(i) Reimbursement and
In-Kind Benefits . To the extent this Agreement provides for
reimbursements of expenses incurred by the Executive or in-kind
benefits the provision of which are not exempt from the
requirements of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), the following terms
apply with respect to such reimbursements or benefits; (i) the
reimbursement of expenses or provision of in-kind benefits will be
made or provided only during the Term or Renewal Term, as
applicable, or other period of time specifically provided herein;
(ii) the amount of expenses eligible for reimbursement, or
in-kind benefits provided, during a calendar year will not affect
the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year; (iii) all reimbursements
will be made promptly upon Executive’s request and no later
than the last day of the calendar year immediately following the
calendar year in which the expense was incurred; and (iv) the
right to reimbursement or the in-kind benefit will not be subject
to liquidation or exchange for another benefit.
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3. ELANDIA EQUITY
COMMITMENTS . The Company has a stock option plan (this plan,
as amended from time to time, is referred to hereinafter as the
“ Stock Option Plan ”). The Company has secured
commitment from Stanford International Bank Ltd. (“
Stanford ”) for up to $60,000,000 of investments in
convertible preferred stock of the Company. The Company agrees to
increase the authorized shares under the Stock Option Plan to 15%
of fully diluted shares (after the $60,000,000 investment and any
anti-dilution adjustments), thereby creating a total option pool of
7,744,000 shares. A pro forma capitalization schedule reflecting
the existing issued stock, anticipated new investments, and new
stock option plan is attached as Exhibit B. Effective on the date
of execution of this Agreement, the Executive shall be granted 50%
of the shares in the pool (covering 3,872,000 shares). It is
further agreed that 750,000 of the shares covered by grants to the
Executive shall be in the form of restricted shares (vesting
monthly over a three-year period), and the remaining 3,122,000
shares shall be stock options (vesting monthly over a four-year
period) with an exercise price of $3.07 per share. None of the
restricted shares, however, will be valued for tax purposes at a
price higher than the current trading price of the Company’s
common stock on the date of execution of this Agreement. The
Company and the Executive acknowledge and agree that on execution
of this Agreement the exercise price for the stock options
determined in accordance with this Section 3 exceeds the
current trading price of the Company’s common stock, and
intend for the stock options and restricted shares to be exempt
from Section 409A of the Code. If at the time the Executive
exercises his stock options, (a) the Company’s common
stock is publicly traded, the parties agree that the fair market
value of the Company’s common stock for federal, state and
local tax purposes will not be higher than the closing price of the
Company’s common stock as of the date of exercise, or, if the
date of exercise is not a trading day, the trading day before such
date or (b) the Company’s common stock is not publicly
traded, the parties will mutually agree to the fair market value of
the Company’s common stock as of the exercise date for
federal, state and local tax purposes. In the event that the
Executive’s employment and this Agreement is terminated
without Cause or for Good Reason prior to completion of the
36-month vesting period for the 750,000 restricted shares, then a
sufficient number of unvested remaining restricted shares will vest
on an accelerated basis so that the Executive is vested in at least
375,000 restricted shares. The Executive will have at least 90 days
from the termination date of his employment to exercise his vested
stock options. Also, if there is a Change of Control, as defined
below by this Agreement, then all shares and options granted to the
Executive shall fully vest on an accelerated basis. The
Executive’s stock option rights and restricted shares shall
be described more fully in one or more separate stock option and
restricted stock agreements, and shall also be subject to the terms
of the Stock Option Plan, except to the extent that those terms are
inconsistent with this Agreement, the grant agreement, and all
rules and regulations of the Securities and Exchange Commission
applicable to stock option plans then in effect. Finally, the
parties anticipate that Executive shall hire certain individuals
for various positions at the Company, and that approximately
2,000,000 options under the Stock Option Plan shall be issued to
those individuals. All stock option grants to such individuals
employed by the Company prior to and including June 30, 2008,
shall have an exercise price of $2.96 per share, and their options
shall vest in accordance with the terms of the Stock Option Plan.
All stock option grants to such individuals employed by the Company
on or after July 1, 2008, shall have an exercise price equal
to the fair market value of the
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Common Stock on the date of the grant,
as determined by the Board (or the Compensation Committee thereof),
consistent with Section 409A of the Code in order for such
options to be exempt therefrom and their options shall vest in
accordance with the terms of the Stock Option Plan. In addition,
except as set forth in this Section, the Stock Option Plan, or
stock option and restricted stock agreements, no right to any
Company stock shall be earned or accrued until such time that
vesting occurs, nor does any grant confer any right to continued
vesting or continued employment.
4. TERM . The Term of
employment hereunder will commence on the Effective Date, and end
four years thereafter (the “ Term ”), unless
terminated earlier pursuant to Section 6 of this Agreement.
The Term shall automatically renew (“ Renewal Term
”) for successive one year terms, unless written notification
of non-renewal is provided by either party no less than six months
prior to the expiration of the Term or the then current Renewal
Term.
5. REPRESENTATIONS AND
WARRANTIES OF EXECUTIVE . The Executive represents and warrants
to the Company as follows:
(a) Executive has provided
the Company with copies of the agreements evidencing his employment
relationship with his present employer (“ Telefonica
Employment Agreements ”);
(b) With respect to
agreements with his employers other than Telefonica, the Executive
makes the following representations: (i) Executive has made no
contract or other commitment in contravention of the terms hereof
(including, without limitation, contracts or obligations respecting
trade secrets or proprietary information or otherwise restricting
competition), (ii) Executive has the full right to enter into
this Agreement, and there is nothing which would prevent him from
using his best efforts in the performance of his duties under this
Agreement, (iii) Executive has fulfilled all of his
obligations under all prior employment or consulting agreements (or
similar arrangements), and there is not, under any of the
foregoing, any existing default or breach by Executive with respect
thereto, and (iv) Executive’s performance hereunder
shall not constitute a default under any contract or other
commitment to which the Executive is bound.
(c) The Executive has not
disclosed any trade secrets, customer lists, confidential
information, or proprietary information of any of his prior
employers to the Company, and has been instructed by the Company
not to make any such disclosure in the future, and not to use such
information in any way in carrying out his duties and
responsibilities as a Company executive.
(d) All information furnished
by Executive to the Company is to the best of Executive’s
knowledge, true and complete (including, without limitation,
documentary evidence of Executive’s identity and eligibility
for employment in the United States), and Executive will promptly
advise the Company with respect to any change in the information of
record.
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(e) Executive is not subject
to any order, decree or decision precluding him from performing his
duties as described herein.
(f) Executive declares that
he has read and understands all the terms of this Agreement; that
he has had ample opportunity to review it with his attorney before
signing it; that no promise, inducement, or agreement has been made
except as expressly provided in this Agreement; that it contains
the entire Agreement between the parties; and that he enters into
this Agreement fully, voluntarily, knowingly and without
coercion.
(g) Executive acknowledges
that the Company reserves the right to conduct background
investigations and/or reference checks on all of its potential
employees. By executing this Agreement, Executive authorizes the
Company to conduct such an investigation.
6. DEATH, DISABILITY AND
TERMINATION .
(a) Death. In the
event of the death of the Executive during the Term or a Renewal
Term, the Company shall pay promptly, but not later than 30 days
following the Executive’s death, all Accrued Obligations, as
that term is defined below in Section 6(d)(i), to the
Executive’s designated beneficiary, or, in the absence of
such designation, to the estate or other legal representative of
the Executive. The Executive’s designated beneficiary, or, in
the absence of such designation, his estate or other legal
representative of the Executive, shall also be entitled to payment
of any Final Bonus, as that term is defined in
Section 6(d)(i), which shall be determined as provided by
Section 2(b) of this Agreement. Any such Final Bonus payment
shall be made promptly but not later than as provided by
Section 2(b). Other death benefits will be determined in
accordance with the terms of the Company’s benefit programs
and plans.
(b) Disability
.
(i) In the event of a
termination of the Executive’s employment on account of the
Executive’s Disability, as hereinafter defined, the Executive
shall be entitled to receive the Executive’s Base Salary, at
the annual rate in effect immediately prior to the termination of
the Executive’s employment, for a period of three months from
the date on which the Disability has deemed to occur as hereinafter
provided below, which amount will be paid in a lump sum within 30
days following the termination of the Executive’s employment.
Any amounts provided for in this Section 6(b) shall be offset
by other long-term disability benefits obtained by Executive
hereunder. The Executive will also be entitled to payment of all
Accrued Obligations, as that term is defined below in
Section 6(d)(i), which will be paid promptly (but not later
than 30 days) following the date on which the Executive’s
employment is terminated pursuant to this Section 6(b). The
Executive shall also be entitled to payment of any Final Bonus, as
that term is defined in Section 6(d)(i), which shall be
determined as provided by Section 2(b) of this Agreement. Any
such Final Bonus payment shall be made promptly but not later than
as provided by Section 2(b).
(ii) “
Disability ” for purposes of this Agreement, shall be
deemed to have occurred in the event (A) the Executive is
unable by reason of sickness or accident to perform the
Executive’s duties under this Agreement for a cumulative
total of 20 weeks within any one calendar year; (B) the
Executive is unable to perform Executive’s duties for 120
consecutive days; or (C) the
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Executive has a guardian of the person
or estate appointed by a court of competent jurisdiction.
Termination due to Disability shall be deemed to have occurred upon
the first day of the month following the determination of
Disability as defined in the preceding sentence.
(c) Termination by the
Company for Cause.
(i) Nothing herein shall
prevent the Company from terminating Executive for Cause as
hereinafter defined. In that event, the Executive will be entitled
to payment of all Accrued Obligations, as that term is defined
below in Section 6(d)(i), which will be paid promptly (but not
later than 30 days) following the date on which the
Executive’s employment is terminated, but the Executive will
not be entitled to Severance Pay or any Final Bonus. Any rights and
benefits the Executive may have in respect of any other
compensation shall be determined in accordance with the terms of
such other compensation arrangements or such plans or
programs.
(ii) “ Cause
” shall mean any of the following: (A) commission or
participation by Executive in an injurious act of personal
dishonesty, fraud, gross neglect, or intentional misrepresentation
against the Company or any Affiliate, in each case that causes
material injury to the Company or any Affiliate, or the
Executive’s embezzlement from the Company or any Affiliate;
(B) Executive’s conviction of or plea of nolo contendere
to a felony; (C) commission or participation by Executive in
any other injurious act or omission wantonly, willfully, recklessly
or in a manner which was grossly negligent against the Company, in
each case that causes material injury to the Company or its
Affiliates; or (D) continued willful violations by Executive
of his obligations to the Company (provided that, the Company shall
have delivered to the Executive a notice of termination stating
that the Executive committed one of the types of conduct set forth
in this Section 6(c)(ii)(D) and specifying the particulars
thereof and the Executive shall be given a 15-day period to cure
such conduct).
(d) Termination by the
Company other than for Cause; Termination by the Company through
Non-Renewal; Termination by the Executive for Good Reason
.
(i) The foregoing
notwithstanding, the Company shall have the right, at any time, to
terminate the Executive’s employment for whatever reason it
deems appropriate. In the event such termination is not based on
Cause, as provided in Section 6(c) above, or if
Executive’s employment is terminated under Section 6(f)
of this Agreement, the Company shall pay the Executive, promptly
(but not later than 30 days) following termination of employment, a
lump sum equal to two years of Severance Pay. “ Severance
Pay ” under this Agreement includes all of the following
forms of salary and fringe benefit compensation: (A) Base
Salary, using the Executive’s average Base Salary during the
year prior to his termination in making Severance Pay calculations;
and (B) fringe benefit compensation, calculated by the Company
exercising its discretion reasonably, equivalent to the cost to the
Company of providing the Executive, during the period by which the
amount of severance is being measured (i.e., two years or some
shorter period specified in the relevant provision), with
(1) his group medical and dental insurance (less any
deductions for employee contributions), (2) his personal life
insurance and disability insurance (but not more than the $10,000
maximum annual allowance);
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(3) his automobile/country club
allowance (but not more than the $2,000 maximum monthly allowance),
and (4) Company contributions to any 401(k) plan or other
Company retirement plan on the Executive’s behalf, using the
Company’s contributions during the year prior to his
termination in making this calculation (Severance Pay for any
severance period shall be calculated using this methodology; in
addition, all Severance Pay due and owing under this Agreement
shall be subject to payment of payroll taxes required to be
withheld by law). The following forms of compensation shall also be
paid by the Company to the Executive: (i) all Base Salary due
through the date of termination of employment; (ii) such
additional salary as may be due to compensate the Executive for
accrued but unused vacation days as of the date of termination of
employment, as provided by Section 2(d) of this Agreement,
(iii) compensation for any business or telephone expenses
under Section 2(e) of this Agreement, not yet reimbursed, as
provided by the Company’s business expense reimbursement
policies, and (iv) all compensation due the Employee as
employee benefits under Sections
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