EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") made and entered into this 10th day of May,
1997, by and between APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation
("Company") and XXXXXXX X. XXXXXXXX ("Employee").
BACKGROUND
Employee has been and presently is employed by Company as its chairman of
the board and chief executive officer. The parties desire to enter into a formal
agreement covering and confirming the terms and conditions of such employment.
TERMS AND CONDITIONS
1. Employment. Company hereby employs Employee, and Employee hereby accepts
such employment by Company, on the terms and conditions set forth below.
2. Capacity. Employee shall serve as Company's chairman of the board and
chief executive officer. Employee shall perform such services for company and
its subsidiaries and affiliates as Company's board of directors shall direct
from time to time.
3. Term. Company's employment of Employee under this Agreement shall be for
an initial term of five years commencing on June 1, 1997 and ending on May 31,
2002. The term of Employee's employment under this Agreement shall automatically
be renewed for successive additional one year terms on each anniversary of the
commencement of Employee's employment under this Agreement, beginning with the
June 1, 1998 anniversary date, each of which terms shall be added at the end of
the then existing term, unless either party notifies the other at least 30 days
prior to an anniversary date of this Agreement. For example, unless either party
notifies the other to the contrary on or before May 2, 1998, the term of this
Agreement shall be extended from June 1, 2002 to May 31, 2003. For further
example, and assuming the term of this Agreement has been extended to May 31,
2003, if one party notifies the other that it does not desire to extend the term
of this Agreement for an additional year and such notice is given on or before
May 2, 1999, the term of this Agreement shall not be extended from May 31, 2003
to May 31, 2004. Notwithstanding the foregoing, the term of this Agreement may
end prior to the termination date determined under this paragraph 3 as provided
in paragraphs 9, 10, 11 and 12.
4. Service While Employed. Employee agrees to devote his best efforts, his
full diligence and at least 60% his business time to his duties hereunder and
shall not engage, either directly or indirectly, in any business or other
activity which is competitive with or adverse to the interests or the business
of Company.
5. Items Furnished and Relocation. Company shall furnish Employee with such
private office, secretarial assistance, and such other facilities, equipment and
services suitable to his position and adequate to perform his duties hereunder.
Employee shall not be relocated by Company without his consent.
6. Compensation, Vacations and Reimbursement. As partial compensation for
his services to Company, Company agrees to pay Employee an annual salary in
regular monthly or other agreed upon installments of not less than $200,000. In
addition, Employee shall be entitled to receive such bonuses, incentive
compensation, and other compensation, if any, as Company's board of directors,
executive committee, compensation committee, or other designated committee shall
award Employee from time to time whether in cash, Company stock, stock options,
other stock based compensation, other form of remuneration, or any combination
of the foregoing. All such compensation shall be subject to legally required
income and employment tax withholding. Employee shall be entitled to paid
vacations and reimbursement for all reasonable business expenses in accordance
with Company's policies for executive officers.
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7. Other Benefits. In addition to his compensation described in paragraph 6
above, Employee shall be entitled to participate in such bonus, profit sharing,
deferred compensation and pension plans of Company for which he is eligible.
8. Welfare and Fringe Benefits. In addition to his compensation described
in paragraph 6 and the benefits described in paragraph 7 above, Employee shall
be entitled to participate in such welfare and fringe benefits plans and
programs of the Company for which he is eligible.
9. Death and Disability. If Employee dies during the term of this
Agreement, his employment shall be deemed to have been terminated as of the last
day of the month in which his death occurs, and Company will pay to Employee's
personal representative all salary and other compensation due Employee through
the end of such month. If Employee becomes permanently disabled so that he
cannot perform his duties hereunder, as determined by a physician selected by or
acceptable to Company, his employment shall be deemed to have been terminated as
of the last day of the month in which such determination is made, and he will
receive his salary and other compensation through the end of such month.
10. Retirement. From and after the time Employee attains age 65, he may
retire at any time by notifying Company at least 120 days prior to his
retirement date or be retired by Company upon at least two years notice.
11. Default. In the event that either party fails to perform material
provision of this Agreement and such failure continues for 15 days after
notification from the nonbreaching party, the nonbreaching party may terminate
this Agreement by notice to the breaching party. Such termination shall be
without prejudice to any rights or remedies which the nonbreaching party may
have.
12. Change in Control. Notwithstanding any other provision of this
Agreement, should a "change of control" occur, Employee, at his sole option and
discretion, may terminate his employment under this Agreement at any time within
one year after such change of control upon 15 days notice. In the event of such
termination, Company shall pay to Employee a severance payment equal the maximum
amount which would not result in such payment being an excess parachute payment
as defined in Section 280G of the Internal Revenue Code of 1986, as amended
("Code"). Such amount shall be paid no later than one month after the effective
date of such termination of employment. In determining the amount which would
not result in an excess parachute payment, all amounts which may be payable by
Company to Employee other than under this paragraph 12 which could be subject to
Code Section 280G or which, when added to the payment under this paragraph 12,
could cause all or any part of the amount payable under this paragraph 12 (or
such other amounts), to be an excess parachute payment under Code Section 280G,
shall be disregarded. A change in control means: the acquisition, without the
approval of the Company's board of directors, by any person or entity, other
than the Company or a "related entity," of more than 20% of the outstanding
shares of the Company's voting common stock through a tender offer, exchange
offer or otherwise; the liquidation or dissolution of the Company following a
sale or other disposition of all or substantially all of its assets; a merger of
consolidation involving the Company which results in the Company not being the
surviving parent corporation; or any time during any two-year period in which
individuals who constituted the board of directors of the Company at the start
of such period (or whose election was approved by at least two-third of the then
members of the board of directors of the Company who were members at the start
of the two-year period) do not constitute at least 50% of the board of directors
for any reason. A related entity is the parent, a subsidiary or any employee
benefit plan (including a trust forming a part of such a plan) maintained by the
Company, its parent or a subsidiary.
13. Nondisclosure; Return of Records. Employee will not, except as
authorized by Company, publish or disclose to others, or use for his own
benefit, or authorize anyone else to publish or disclose or use, or copy or make
notes of any secret, proprietary, or confidential information or knowledge of
data or trade secrets of or relating to the business activities of Company which
may come to Employee's knowledge during his employment with the Company. Upon
termination of Employee's employment for any reason, Employee will deliver to
Company, without retaining any copies, notes or excerpts, all records, notes,
data, memoranda, and all other documents or materials made or compiled by
Employee, or made available to him by Company during his employment, which are
in Employee's possession and/or control and which are the property of Company
and/or which relate to Employee's employment or the business activities of
Company.
10-K Page 58
14. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Company and any successors or assigns of Company, and Employee, his
heirs, personal representatives and assigns, except that Employee's obligations
to perform services and rights to receive payment therefore shall be
nonassignable and nontransferable.
15. Entire Agreement: Modification. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter and supersedes
all prior or contemporaneous agreements not set forth in this agreement. This
Agreement may not be modified other than by an agreement in writing signed by
each of the parties.
16. Waiver. Any failure by either party to enforce any provision of this
Agreement shall not operate as a waiver of such provision or any other
provision. Any waiver by either party of any breach of any provision of this
Agreement shall not operate as a waiver of any other breach of such provision or
any other provision of this agreement.
17. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other provisions of this
Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
18. Paragraph Headings. Paragraph headings throughout this Agreement are
solely for the convenience of the parties and shall not be construed as a part
of any section or as modifying the contents of any section.
19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri.
20. Notices. All notices under this Agreement shall be personally
delivered, sent certified mail, postage prepaid, to Company at its corporate
office and to Employee at his principal residence, or sent by telecopy.
21. Supplemental Compensation. Upon the termination of Employee's
employment with Company for any reason, other than due to his breach of a
material provision of his employment as described in paragraph 11, Employee
shall be entitled to receive from Company 60 equal monthly payments, with the
first such payment due on the second first day of each month after termination
of employment, of $16,666.67 each. If Employee should die before all or any part
of the above described monthly payments have been made, all payments or all
remaining payments shall be made to his designated beneficiary, if any,
otherwise to his estate. Notwithstanding the foregoing, the aggregate amount
payable under this paragraph 21 shall be reduced by the amount, if any, payable
under paragraph 12.
22. Non-Competition. During the period that Employee is entitled to receive
payments under paragraph 21, Employee shall not engage, directly or indirectly,
either on his own behalf or on behalf of any other person, firm, corporation or
other entity, in any business competitive with the business of Company, in the
geographic area in which Company is conducting business at the time of
termination of Employee's employment, or own more than 5% of any such firm,
corporation or other entity. In addition, Employee must furnish Company with
such information as Company shall from time to time request in order to
determine that Employee is in compliance with the requirements of the preceding
provisions of this paragraph 22. The payments to be made under paragraph 21 are
conditioned upon Employee's complying with the provisions of this paragraph 22,
and, in the event that such provisions are not complied with, Company may
suspend such payments for any period of time in which Employee is not in
compliance with the preceding provisions of this paragraph 22.
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23. Company. For purposes of paragraphs 4, 13, and 22 of this Agreement,
the Company shall mean Applied Cellular Technology, Inc. and all subsidiaries
and affiliates of it.
24. Salary in Stock or Cash. At least 10 days prior to each June 1 that
this Agreement is in effect, Employee shall elect the amount or percentage, if
any, of his salary for the 12 month period beginning on that date which he
desires to be payable in company common stock ("Stock"). To the extent Employee
elects to have all or part of his salary paid in Stock, the per share value of
the Stock, which shall be used to determine the number of shares payable for the
employment year, shall be the average closing price for the last five business
days prior to the applicable June 1. Any election shall be irrevocable. If
Employee fails to make a timely election, his entire salary for the employment
year shall be paid in cash. Any shares of Stock payable to Employee shall be
subject to such transfer restrictions as are required by applicable securities
law and a legend to such effect shall be placed on the certificates. Employee
represents and warrants that any Stock which will be paid to him pursuant to
this paragraph 24 shall be acquired for investment purposes and not for resale
or distribution. Company shall include such Stock in any subsequent registration
to the extent practical. If any portion of Employee's salary is paid in Stock,
Employee shall tender to Company the amount required for income and employment
tax withholding on any such payment. If, and to the extent such amount is not so
tendered, Company may withhold the number of shares of Stock equal to the amount
such required withholding from the shares of Stock issued to Employee.
IN WITNESS WHEREOF, the parties have duly executed this agreement as of the
day and year first above written.
APPLIED CELLULAR TECHNOLOGY, INC.
By: /S/ XXXXXXX X. XXXXXXXX
-----------------------
Title: President
"Company"
/S/ XXXXXXX X. XXXXXXXX
-----------------------
Xxxxxxx X. Xxxxxxxx
"Employee"
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