EMPLOYMENT AGREEMENT
EXHIBIT
10.1
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of
January 31, 2008 by and between GigaBeam Corp. a Delaware company with its
principal office at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000 (the
“Company), and S. Xxx Xxxxxxxx (“Employee”).
Statement
of Purpose
The
Company wishes to obtain the services of Employee on the terms and conditions
and with the benefits set forth in this Agreement. Employee desires to be
employed by the Company on such terms and conditions and to receive such
additional consideration as set out herein.
Therefore,
in consideration of the mutual covenants contained in this Agreement, the grant
of certain options to purchase common stock of the Company and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:
1.
Employment.
The
Company hereby agrees to employ Employee, and Employee hereby accepts such
employment, on the terms and conditions set forth in this Agreement.
2.
Term
of Employment.
The
term of Employee’s employment under this Agreement shall commence as of the date
of this Agreement and shall continue for one year. Termination of employment
shall be governed by Paragraph 7 of this Agreement, and unless terminated by
either party as provided in Paragraph 7, this Agreement shall automatically,
at
the expiration of each then existing term, renew for successive additional
one
year terms (such annual period being hereinafter referred to as the “Term”).
3.
Position
and Duties.
The
Employee shall serve as President and Chief Executive Officer. Employee will,
under the direction of the Board of Directors of the Company, faithfully and
to
the best of his ability perform the duties as required by these positions and
such additional duties as may be reasonably assigned by the Board of Directors.
Employee agrees to devote his entire working time, energy and skills to the
Company while so employed.
4.
Compensation
and Benefits.
Employee shall receive compensation and benefits for the services performed
for
the Company under this Agreement as follows:
(a)
Base
Salary.
Employee shall receive a base salary of $200,000 per annum, payable in regular
and equal semi-monthly installments (“Base Salary”).
(b)
Employee
Benefits.
Employee shall receive such benefits as are made available to the other
employees of the Company, including, but not limited to, life, medical and
disability insurance, retirement benefits, vacation in the amount of four
(4) weeks annually (earned on an accrual basis), one (1) week of sick
leave, three (3) personal days and such other benefits as may be provided
to all the other executive employees of the Company (the “Employee Benefits”).
Employer reserves the right to reduce, eliminate or change such Employee
Benefits, in its sole discretion, subject to any applicable legal and regulatory
requirements.
(c)
Incentive
Compensation.
Employee may participate in such incentive plans as may be approved by the
Board
of Directors from time-to-time. The specific incentive compensation plans for
Employee are as set out on Exhibit A hereto.
5.
Reimbursement
of Expenses.
The
Company shall reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee specifically and directly related to the performance by
Employee of the services under this Agreement.
6.
Withholding.
The
Company may withhold from any payments or benefits under this Agreement all
federal, state or local taxes or other amounts as may be required pursuant
to
applicable law, government regulation or ruling.
7.
Termination
of Employment.
(a)
Death
of Employee.
If the
Employee shall die during the Term, this Agreement and the employment
relationship hereunder will automatically terminate on the date of death.
(b)
Termination
by the Company for Just Cause.
The
Company shall have the right to terminate the Employee’s employment under this
Agreement at any time for Just Cause, which termination shall be effective
immediately. Termination for “Just Cause” shall include termination for the
Employee’s personal dishonesty, gross incompetence, willful misconduct, breach
of a fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses), written Company policy or final
cease-and-desist order, conviction of a felony or of a misdemeanor involving
moral turpitude, unethical business practices in connection with the Company’s
business, misappropriation of the Company’s assets (determined on a reasonable
basis), disability or material breach of any other provision of this Agreement.
The determination of whether “Just Cause” exists for termination shall be made
by the Board of Directors of the Company in its sole discretion. For purposes
of
this subsection, the term “disability” means the inability of Employee, due to
the condition of his physical, mental or emotional health, to satisfactorily
perform the duties of his employment hereunder for a continuous three month
period; provided further that if the Company furnishes long term disability
insurance for the Employee, the term “disability” shall mean that continuous
period sufficient to allow for the long term disability payments to commence
pursuant to the Company’s long term disability insurance policy. In the event
the Employee’s employment under this Agreement is terminated for Just Cause, the
Employee shall have no right to receive compensation or other benefits under
this Agreement for any period after such termination.
(c)
Termination
by the Company Without Cause.
The
Company may terminate the Employee’s employment other than for “Just Cause,” as
described in Subsection (b) above, at any time upon written notice to the
Employee, which termination shall be effective immediately. In the event the
Company terminates Employee pursuant to this Subsection (c) at any time,
(i) the Employee will continue to receive Base Salary for a one (1) year
period from such termination (the “Termination Compensation”) and (ii) the
Company shall take such action as may be required to vest any unvested benefits
of the Employee under any employee stock-based or other benefit plan or
arrangement. Such amounts shall be payable at the times such amounts would
have
been paid in accordance with Section 4. In addition, Employee shall
continue to participate in the same group hospitalization plan, health care
plan, dental care plan, life or other insurance or death benefit plan, and
any
other present or future similar group employee benefit plan or program for
which
officers of the Company generally are eligible, on the same terms as were in
effect prior to Employee’s termination, either under the Company’s plans or
comparable coverage, for all periods Employee receives Termination Compensation.
Notwithstanding anything in this Agreement to the contrary, if Employee breaches
Sections 8, 9 or 10 of this Agreement, the Employee will not be entitled to
receive any further compensation or benefits pursuant to this Section 7(c).
(d)
Termination
by the Employee for Cause.
Employee may terminate his employment immediately under this Agreement for
“Cause”. “Cause” shall mean the Company: (i) knowingly breaching any
material provision of this Agreement, which breach is not cured within seven
(7) business days after Employee provides notice of the alleged breach to
the Company; (ii) reducing the Employee’s Base Salary or substantially
diminishing the Employee’s job position and duties as set out in this Agreement;
(iii) permanently assigning Employee to work outside the State of North
Carolina; or (iv) knowingly instructing Employee to violate any applicable
law in carrying out Employee’s duties under this Agreement. In the event
Employee terminates his employment for “Cause”, such termination shall be
treated as a termination by the Company “Without Cause” pursuant to
Section 7(c) above.
(e)
Change of Control Situations. In the event of a Change of Control of the Company
at any time after the date hereof, Employee may voluntarily terminate employment
with Company up until one (1) year after the Change of Control for “Good
Reason” (as defined below) and, subject to Section 7(g), (y) be
entitled to receive in a lump sum (i) any compensation due but not yet paid
through the date of termination and (ii) in lieu of any further salary
payments from the date of termination to the end of the then existing term,
an
amount equal to the Termination Compensation times 2.99 within two
(2) months of the consummation of the Change of Control, and (z) shall
continue to participate in the same group hospitalization plan, health care
plan, dental care plan, life or other insurance or death benefit plan, and
any
other present or future similar group employee benefit plan or program for
which
officers of the Company generally are eligible, or comparable plans or coverage,
for a period of two years following termination of employment by the Employee,
on the same terms as were in effect either (A) at the date of such
termination, or (B) if such plans and programs in effect prior to the
Change of Control of Company are, considered together as a whole, materially
more generous to the officers of Company, then at the date of the Change of
Control. Any equity based incentive compensation (including but not limited
to
stock options, SARs, etc.) shall fully vest and be immediately exercisable
in
full upon a Change in Control, not withstanding any provision in any applicable
plan. Any such benefits shall be paid by the Company to the same extent as
they
were so paid prior to the termination or the Change of Control of Company.
“Good
Reason” shall mean the occurrence of any of the following events without the
Employee’s express written consent:
(i)
the
assignment to the Employee of duties materially inconsistent with the position
and status of the Employee with the Company immediately prior to the Change
of
Control;
(ii)
a
material reduction by the Company in the Employee’s pay grade or base salary as
then in effect, or the exclusion of Employee from participation in Company’s
benefit plans in which he previously participated as in effect at the date
hereof or as the same may be increased from time to time during the Term;
(iii)
an
involuntary relocation of the Employee more than 50 miles from the location
where the Employee worked immediately prior to the Change in Control or the
breach by the Company of any material provision of this Agreement; or
(iv)
any
purported termination of the employment of Employee by Company which is not
effected in accordance with this Agreement.
A
“Change
of Control” shall be deemed to have occurred if (i) any person or group of
persons (as defined in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934) together with its affiliates, excluding employee benefit plans
of
Company, becomes, directly or indirectly, the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of securities
of Company representing 20% or more of the combined voting power of Company’s
then outstanding securities; or (ii) during the then existing term of the
Agreement, as a result of a tender offer or exchange offer for the purchase
of
securities of Company (other than such an offer by the Company for its own
securities), or as a result of a proxy contest, merger, consolidation or sale
of
assets, or as a result of any combination of the foregoing, individuals who
at
the beginning of any year period during such term constitute the Company’s Board
of Directors, plus new directors whose election by Company’s shareholders is
approved by a vote of at least two-thirds of the outstanding voting shares
of
the Company, cease for any reason during such year period to constitute at
least
two-thirds of the members of such Board of Directors; or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation or entity regardless of which entity is the survivor,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities
of
the surviving entity) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after
such merger or consolidation; or (iv) the shareholders of the Company
approve a plan of complete liquidation or winding-up of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all
of the Company’s assets; or (v) any event which the Company’s Board of
Directors determines should constitute a Change of Control.
(f)
Employee’s
Right to Payments.
In
receiving any payments pursuant to this Section 7, Employee shall not be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Employee hereunder, and such amounts shall not
be
reduced or terminated whether or not the Employee obtains other employment.
(g)
Reduction
in Agreement Payments.
Notwithstanding anything in this Agreement to the contrary, if any of the
payments provided for under this Agreement (the “Agreement Payments”), together
with any other payments that the Employee has the right to receive (such other
payments together with the Agreement Payments are referred to as the “Total
Payments”), would constitute a “parachute payment” as defined in
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”) (a “Parachute Payment”), the Agreement Payments shall be reduced by the
smallest amount necessary so that no portion of such Total Payments would be
Parachute Payments. In the event the Company shall make an Agreement Payment
to
the Employee that would constitute a Parachute Payment, the Employee shall
return such payment to the Company (together with interest at the rate set
forth
in Section 1274(b)(2)(B) of the Code). For purposes of determining whether
and the extent to which the Total Payments constitute Parachute Payments, no
portion of the Total Payments the receipt of which Employee has effectively
waived in writing shall be taken into account.
8.
Covenant
Not to Compete.
Employee agrees that during his employment with the Company and for a period
of
one (1) year following the termination of his employment with the Company,
for whatever reason:
(a)
Employee shall not, directly or indirectly, own any interest in, manage,
operate, control, be employed by, render advisory services to, or participate
in
the management or control of any business that operates in the same business
as
the Company, which Employee and the Company specifically agree as the business
of manufacturing, marketing, deploying, distributing and/or selling point to
point wireless data transmission products (the “Business”), unless Employee’s
duties, responsibilities and activities for and on behalf of such other business
are not related in any way to such other business’s products which are in
competition with the Company’s products. For purposes of this section,
“competition with the Company” shall mean competition for customers in the
United States and in any country in which the Company is selling the Company’s
products at the time of termination. Employee’s ownership of less than one
percent of the issued and outstanding stock of a corporation engaged in the
Business shall not by itself be deemed to be a violation of this Agreement.
Employee recognizes that the possible restriction on his activities which may
occur as a result of his performance of his obligations under Paragraph 8(a)
are
substantial, but that such restriction is required for the reasonable protection
of the Company.
(b)
Employee shall not, directly or indirectly, influence or attempt to influence
any customer of the Company to discontinue its purchase of any product of the
Company which is manufactured or sold by the Company at the time of termination
of Employee’s employment or to divert such purchases to any other person, firm
or employer.
(c)
Employee shall not, directly or indirectly, interfere with, disrupt or attempt
to disrupt the relationship, contractual or otherwise, between the Company
and
any of its suppliers.
(d)
Employee shall not, directly or indirectly, solicit any employee of the Company
to work for any other person, firm or employer.
9.
Confidentiality.
In the
course of his employment with the Company, Employee will have access to
confidential information, records, data, customer lists, lists of product
sources, specifications, trade secrets and other information which is not
generally available to the public and which the Company and Employee hereby
agree is proprietary information of the Company (“Confidential Information”).
During and after his employment by the Company, Employee shall not, directly
or
indirectly, disclose the Confidential Information to any person or use any
Confidential Information, except as is required in the course of his employment
under this Agreement. All Confidential Information as well as records, files,
memoranda, reports, plans, drawings, documents, models, equipment and the like,
including copies thereof, relating to the Company’s business, which Employee
shall prepare or use or come into contact with during the course of his
employment, shall be and remain the Company’s sole property, and upon
termination of Employee’s employment with the Company, Employee shall return all
such materials to the Company.
10.
Proprietary
Information.
Employee shall assign to the Company, its successors or assigns, all of
Employee’s rights to copyrightable works and inventions which, during the period
of Employee’s employment by the Company or its successors in business, Employee
makes or conceives, either solely or jointly with others, relating to any
subject matter with which Employee’s work for the Company is or may be concerned
(“Proprietary Information”). Employee shall promptly disclose in writing to the
Company such copyrightable works and inventions and, without charge to the
Company, to execute, acknowledge and deliver all such further papers, including
applications for copyrights and patents for such copyrightable works and
inventions, if any, in all countries and to vest title thereto in the Company,
its successors, assigns or nominees. Upon termination of Employee’s employment
hereunder, Employee shall return to the Company or its successors or assigns,
as
the case may be, any Proprietary Information. The obligation of Employee to
assign the rights to such copyrightable works and inventions shall survive
the
discontinuance or termination of this Agreement for any reason.
11.
Entire
Agreement.
This
Agreement contains the entire agreement of the parties with respect to
Employee’s employment by the Company and supersedes any prior agreements between
them, whether written or oral.
12.
Waiver.
The
failure of either party to insist in any one or more instance, upon performance
of the terms and conditions of this Agreement, shall not be construed as a
waiver or a relinquishment of any right granted hereunder or of the future
performance of any such term or condition.
13.
Notices.
Any
notice to be given under this Agreement shall be deemed sufficient if addressed
in writing and delivered personally, by telefax with receipt acknowledged,
or by
registered or certified U.S. mail to the address first above appearing, or
to
such other address as a party may designate by notice from time to time.
14.
Severability.
In the
event that any provision of any paragraph of this Agreement shall be deemed
to
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of such
paragraph or of this Agreement, and the remaining terms, covenants, restrictions
or provisions in such paragraph and in this Agreement shall remain in full
force
and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
15.
Amendment.
This
Agreement may be amended only by an agreement in writing signed by each of
the
parties hereto.
16.
Arbitration.
Any
controversy or claim arising out of or relating to this Agreement, or breach
thereof, shall be settled by arbitration in Raleigh, North Carolina in
accordance with the expedited procedures of the Rules of the American
Arbitration Association, and judgment upon the award may be rendered by the
arbitrator and may be entered in any court having jurisdiction thereof.
17.
Governing
Law.
This
Agreement shall be governed and construed in accordance with the laws of the
State of North Carolina. Each of the parties hereto irrevocably submits to
the
exclusive jurisdiction of the courts located in North Carolina for the purposes
of any suit, action or other proceeding contemplated hereby or any transaction
contemplated hereby.
18.
Benefit.
This
Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against the Company, its successors and assigns, and
Employee, his heirs, beneficiaries and legal representatives. It is agreed
that
the rights and obligations of Employee may not be delegated or assigned except
as may be specifically agreed to by the parties hereto.
19.
Compliance
with Section 409A.
The
parties hereto intend that this Agreement comply with Section 409A of the
Internal Revenue Code of 1986, as amended (including any applicable regulations,
proposed regulations, guidance or other interpretive authority thereunder (for
purposes of this section, collectively, “Section 409A”), to the extent
applicable. The parties hereby agree that this Agreement shall be construed
in a
manner to comply with Section 409A and that should any provision be found
not in compliance with Section 409A, the parties are hereby contractually
obligated to execute any and all amendments to this Agreement deemed necessary
and recommended by legal counsel for the Company to achieve compliance with
Section 409A. By execution and delivery of this Agreement, the Company and
the Employee each irrevocably waive any objections it or he may have to the
amendments required or necessitated, in the reasonable opinion of the Company,
by Section 409A.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
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By:
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/s/
Xxxx X. Xxxx
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Xxxx
X. Xxxx, VP & CFO
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EMPLOYEE
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By:
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/s/
S. Xxx Xxxxxxxx
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S.
Xxx Xxxxxxxx
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Exhibit
A
Bonus
Plan:
Based
upon performance measurements a cash bonus equal to 5% of “adjusted net
operating income” annually.
Short-term
stock option grant:
Employee
shall be awarded 1,250,000 nonqualified stock options under the Company’s Stock
Incentive Plan at the closing price of the common stock on the date hereof,
vesting quarterly in equal amounts over a one-year period.
Long-term
stock option grant:
Employee
shall be awarded 1,250,000 nonqualified stock options under the Company’s Stock
Incentive Plan at the closing price of the common stock on the date hereof,
vesting quarterly in equal amounts over a three-year period, with the vesting
start date retroactive to Employee’s first date of employment.
