EXHIBIT 10.3
EMPLOYMENT AGREEMENT BETWEEN
TELECOMMUNICATION PRODUCTS, INC.
AND
XXXXXXX XXXXXX
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
September 6, 2002 by and between Telecommunication Products Inc., a Colorado
corporation or its successors or assigns (the "Company"), and Xxxxxxx Xxxxxx, an
individual (the "Executive"), and is made with reference to the following facts:
A. Company is engaged in the telecommunications business;
B. Company desires to retain the services of Executive, and Executive
is willing to provide such services to the Company;
C. Company and Executive desire to enter into this Agreement to provide
for Executive's employment by the Company upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing facts and mutual
agreements set forth below, the parties, intending to be legally bound, agree as
follows:
1. EMPLOYMENT. The Company hereby agrees to employ Executive, and Executive
hereby accepts such employment and agrees to perform Executive's duties and
responsibilities in accordance with the terms and conditions hereinafter set
forth.
1.1 EMPLOYMENT TERM. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and shall
continue for three (3) years, subject to the Company receiving at least $100,000
of funding in September 2002, unless terminated in accordance with Section 5
hereof. The period commencing as of the Effective Date, and ending three (3)
years thereafter or such later date to which the term of Executive's employment
under the Agreement shall have been extended by written mutual agreement is
hereinafter referred to as the "Employment Term."
1.2 DUTIES AND RESPONSIBILITIES. During the Employment Term, Executive
shall serve as Chairman of the Board of Directors, of the Company and perform
all duties and accept all responsibilities incident to such position or other
appropriate duties as may be reasonably assigned to Executive by the Company's
Board of Directors (the "Board") from time to time consistent with Executive's
status as a senior executive.
1.3 BASE SALARY. For all the services rendered by Executive hereunder
for the Company, the Company shall pay Executive a base salary (the "Base
Salary") at the minimum annual rate of $125,000 per annum (payable in accordance
with the Company's then applicable payroll policies) as compensation for all
services rendered by Executive hereunder. The Base Salary shall be subject to
all state, federal, and local payroll tax withholding and any other withholdings
required by law. Following each year after the Effective Date, Executive shall
be reviewed by the Company's Board to determine whether a raise in the Base
Salary and other additional compensation and benefits is appropriate, in the
sole and absolute discretion of the Board; provided, however, that at no time
shall Executive's Base Salary be less than $125,000 per annum.
1.4 BENEFIT COVERAGES. During the Employment Term, Executive shall be
entitled to participate in all employee pension and welfare benefit plans and
programs made available to the Company's senior level executives as a group or
to its employees generally, as such plans or programs may be in effect from time
to time (the "Benefit Coverages"), including, without limitation, pension,
profit sharing, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection and travel accident insurance.
1.5 PERFORMANCE BONUSES. Within ninety (90) days after the end of each
fiscal year of the Company, which is currently December 31st, during the
Employment Term, the Executive will be eligible to receive a bonus (the
"Performance Bonus") in an amount as determined at the discretion of the Board
of the Company. To the extent that, for any given year of the Employment Term,
Executive has been employed for less than the full year, the Performance Bonus
shall be reduced on a pro rata basis for the amount of time actually worked
during such year. All bonus payments shall be subject to customary withholdings
required by law. The Performance Bonus will be based upon Company achieving at
least 70% of the EBITDA projections relating to its new innovation division.
Performance Bonus can be a combination of Preferred Stock and Cash.
1.6 EXPENSES. During the Employment Term, Executive shall be reimbursed
for all reasonable business expenses incurred and paid by Executive in providing
services on behalf of the Company. An expense report detailing such expenses
with such supporting documentation as the Company may reasonably require (the
"Expense Report") must be submitted to the Company prior to the Company's
reimbursement of such expense.
1.7 VACATIONS AND HOLIDAYS. Each year, the Executive shall be entitled
a paid vacation plus holidays in accordance with the Company's policies, as
amended from time to time, for senior executive officers.
2. CONFIDENTIAL INFORMATION.
2.1 Executive recognizes and acknowledges that by reason of Executive's
employment by and service to the Company before, during and, if applicable,
after the Employment Term, Executive will have access to certain confidential
and proprietary information relating to the Company's business, as well as the
businesses, which may include, but is not limited to, trade secrets, trade
"know-how," product development techniques and plans, formulas, customer lists
and addresses, cost and pricing information, marketing and sales techniques,
strategy and programs, computer programs and software and financial information
(collectively referred to as "Confidential Information"). Executive acknowledges
that such Confidential Information is a valuable and unique asset of the
Company, and Executive covenants that he will not, unless expressly authorized
in writing by the Company, as the case may be, at any time during the course of
Executive's employment use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation except in
connection with the performance of Executive's duties for the Company and in a
manner consistent with the Company's policies regarding Confidential
Information. Executive also covenants that at any time after the termination of
such employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any person,
firm or corporation, unless such information is in the public domain through no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order Executive to divulge, disclose or
make accessible such information. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company as the case may be. Except
as required in the performance of Executive's duties for the Company, or unless
expressly authorized in writing by the Company, Executive shall not remove any
written Confidential Information from the Company's premises, or the premises of
the other, as the case may be, except in connection with the performance of
Executive's duties for the Company, as the case may be, and in a manner
consistent with the Company's policies regarding Confidential Information. Upon
termination of Executive's employment, the Executive agrees to return
immediately to the Company, as the case may be, all written Confidential
Information (including, without limitation, in any computer or other electronic
format) in Executive's possession.
3. NON-COMPETITION; NON-SOLICITATION.
3.1 During Executive's employment by the Company, Executive will not,
except with the prior written consent of the Board, directly or indirectly, own,
manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an officer,
director, Executive, partner, principal, agent, representative, consultant or
otherwise.
3.2 The foregoing restrictions shall not be construed to prohibit the
ownership by Executive of less than five percent (5%) of any class of securities
of any corporation which is a Competitor having a class of securities registered
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), provided that such ownership represents a passive investment and that
neither Executive nor any group of persons including Executive in any way,
either directly or indirectly, manages or exercises control of any such
corporation, guarantees any of its financial obligations, otherwise takes any
part in its business, other than exercising Executive's rights as a shareholder,
or seeks to do any of the foregoing.
3.3 Executive further covenants and agrees that during Executive's
employment by the Company and for the period of twenty-four (24) months
thereafter, Executive will not, directly or indirectly, (i) solicit, divert,
take away, or attempt to solicit, divert or take away, any of the Company's
customers or (ii) encourage any customer to reduce its patronage of the Company.
3.4 Without limiting the generality of the foregoing, Executive agrees
that during Executive's employment by the Company and for the period of
twenty-four (24) months thereafter, he will not, directly or indirectly, solicit
any customer to retain from any other person, firm or entity any services of a
type generally similar to or competitive with the product and/or services of the
Company during the period of Executive's employment by the Company.
3.5 Executive further covenants and agrees that during Executive's
employment by the Company and for the period of twenty-four (24) months
thereafter, Executive will not, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring of any person who was an Executive of the
Company at any time during the term of Executive's employment by the Company by
any employer other than the Company for any position as an Executive,
independent contractor, consultant or otherwise. The foregoing covenant of
Executive shall not apply to (i) any person whom Executive employed prior to the
formation of the Company, or (ii) any person after a period of twelve (12)
months has elapsed subsequent to the date on which such person's employment by
the Company has terminated.
4. EQUITABLE RELIEF.
4.1. Executive acknowledges and agrees that the restrictions contained
in Sections 2 and 3 are reasonable and necessary to protect and preserve the
legitimate interests, properties, goodwill and business of the Company and its
affiliates, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the
Company should Executive breach any of the provisions of those sections.
Executive represents and acknowledges that (i) he has been advised by the
Company to consult Executive's own legal counsel in respect to this Agreement
and (ii) that he has had full opportunity, prior to execution of this Agreement,
to review this Agreement thoroughly with Executive's counsel.
4.2. Executive further acknowledges and agrees that a breach of any of
the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 2 or 3 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 2 and 3 hereof should ever be adjudicated to exceed the time,
geographic, service or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provisions shall be
amended to the extent of the maximum time, geographic, service or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision be enforced to the maximum extent permitted by law.
4.3 Executive irrevocably and unconditionally (i) agrees that any suit,
action or other legal proceeding arising out of Sections 2 or 3 hereof,
including, without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in the United States District Court for the Central District of
California, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Los Angeles County,
California; (ii) consents to the non-exclusive jurisdiction of any such court in
any such suit, action or proceeding(iii) or in arbritation city where the
coporate headquarters are; and (iiii) waives any objection which Executive may
have to the laying of venue of any such suit, action or proceeding in any such
court. Executive also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 7 hereof.
4.4 Executive agrees that for a period of five (5) years following the
termination of Executive's employment by the Company, Executive will provide,
and that at all times after the date hereof the Company may similarly provide, a
copy of Sections 2 and 3 hereof to any business or enterprise (i) which
Executive may directly or indirectly own, manage, operate, finance, join,
control or participate in the ownership, management, operation, financing or
control of, or (ii) with which Executive may be connected as an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise, or in connection with which Executive may use or permit Executive's
name to be used; provided, however, that this provision shall not apply in
respect of Section 3 hereof after expiration of the time period set forth
therein.
5. TERMINATION. The Employment Term shall terminate upon the occurrence
of any one of the following events:
5.1 DISABILITY. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Board by reason of
illness, injury or incapacity (a "Disability") for three (3) consecutive months,
or for more than six (6) months in the aggregate during any period of twelve
(12) calendar months. provided, In addition. Executive shall be entitled to the
following: (i) a pro rata bonus, if any, for the year of termination; (ii) any
other amounts earned, accrued or owing but not yet paid under Section 1 above;
(iii) the continued right to exercise any vested stock option, if any, for a
period of one (1) year following the date of Executive's termination; (iv)
continued participation for the Remaining Employment Term in those Benefit
Coverages in which Executive was participating on the date of termination which,
by their terms, permit a former employee to participate; and (v) any other
benefits in accordance with applicable plans and programs of the Company. In
such event, the Company shall have no further liability or obligation to
Executive for compensation under this Agreement except as otherwise specifically
provided in this Agreement. Executive agrees, in the event of a dispute under
this Section 5.1, to submit to a physical examination by a licensed physician
selected by the Board, provided that Executive's own physician may be present at
Executive's request and sole expense.
5.2 DEATH. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set forth in Section 1.3
hereof for the month in which Executive dies and a pro rata share of any annual
bonus to which Executive would otherwise be entitled for the year in which such
death occurs. In addition, Executive's estate shall be entitled to (i) any other
amounts earned, accrued or owing but not yet paid under Section 1 above; (ii)
the continued right to exercise any vested stock option for a period of one (1)
year following the date of death; and (iii) any other benefits in accordance
with applicable plans and programs of the Company. The Company shall have no
further liability or obligation under this Agreement to Executive's executors,
legal representatives, administrators, heirs or assigns or any other person
claiming under or through Executive except as otherwise specifically provided in
this Agreement.
5.3 CAUSE. The Company may terminate the Employment Term, at any time,
for "cause" upon thirty (30) days' written notice, in which event all payments
under this Agreement shall cease, except for Base Salary to the extent already
accrued. For purposes of this Agreement, Executive's employment may be
terminated for "cause" (i) if Executive is convicted of a felony; (ii) any
material neglect or breach of duty by Executive, or any failure by Executive to
perform such duties as may be delegated to Executive from time to time; (iii)
any willful breach of duty by Executive in the course of his employment; (iv)
any material breach of any provision of this Agreement; or (v) Executive commits
theft, larceny, embezzlement, or fraud, any acts of dishonesty, illegality,
moral turpitude or gross mismanagement as determined in good faith by the Board.
5.4 TERMINATION WITHOUT CAUSE. The Company may remove Executive, at any
time prior to the end of the Employment Term, without cause from the position in
which Executive is employed hereunder (in which case the Employment Term shall
be deemed to have ended) upon not less than sixty (60) days' prior written
notice to Executive; provided, however, that in the event that such notice is
given, Executive shall be under no obligation to render any additional services
to the Company and, subject to the provisions of Section 3 hereof, shall be
allowed to seek other employment. Upon any such removal, Executive shall be
entitled to receive as liquidated damages for the failure of the Company to
continue to employ Executive, only the amount due to Executive under the
Company's then-current severance pay plan for employees. No other payments or
benefits shall be due under this Agreement to Executive, except that Executive
shall be entitled to receive payments or benefits under the then-existing
Benefit Coverages in which Executive is participating in accordance with the
respective terms of such Benefit Coverages. Notwithstanding any provision in
this Agreement or the TCPD Stock Option Agreement to the contrary, if Executive
is terminated by the Company without cause after the first twelve (12) months,
an amount equal to the lesser of one-half (1/2) of the remaining options to be
vested under the then-remaining Employment Term or twelve (12) additional months
of vesting shall be vested and exercisable in accordance with the TCPD Stock
Option Agreements.
Notwithstanding the foregoing, upon such removal, without cause under
Section 5.4., in the event that Executive executes a written release of any and
all claims against the Company and all related parties with respect to all
matters arising out of Executive's employment by the Company (other than
Executive's entitlement under any stock options, employee benefit plan or
program sponsored by the Company in which Executive participated and under which
Executive has accrued a benefit), and the termination thereof, Executive shall
be entitled to receive, in lieu of the payment described in subsection 5.4.
hereof, which Executive agrees to waive, (i) in equal monthly installments, as
liquidated damages for the failure of the Company to continue to employ
Executive, an amount equal to the amount of Executive's Base Salary. for the
lesser of the Remaining Employment Term or twelve (12) months, provided that
Executive remains in compliance with the provisions of Sections 2 and 3 hereof;
(ii) continuation of those Benefit Coverages as in effect at the time of such
termination or removal, or to receive cash in lieu of such benefits or premiums,
as applicable, where such Benefit Coverages may not be continued (or where such
continuation would adversely affect the tax status of the plan pursuant to which
the Benefit Coverage is provided) under applicable law or regulation, for the
lesser of the Remaining Employment Term or twelve (12) months; (iii) any other
amounts earned, accrued or owing but not yet paid under Section 1 above; and
(iv) any other benefits in accordance with applicable plans and programs of the
Company.
6. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and obligations.
7. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally, by facsimile transmission, or when mailed, by United
States certified or registered mail, prepaid, to the parties or their assignees
at the following addresses or facsimile numbers (or at such other address as
shall be given in writing by any party):
If to the Company:
TCPD
Attn: Board of Directors
c/o Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx X
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Executive:
Xxxxxxx Xxxxxxx Xxxxxx
000 Xxxx 00
Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile:
or to such other names or addresses as the Company or Executive, as the
case may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this section.
8. ARBITRATION. In the event of any dispute under the provisions of
this Agreement other than a dispute in which the sole relief is an equitable
remedy such as an injunction, the parties shall be required to have the dispute,
controversy or claim settled by arbitration in the City of Los Angeles,
California in accordance with the commercial arbitration rules then in effect of
the American Arbitration Association, or in such other city and state where the
Company,s headquarters is located.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as if this Agreement was to
be performed entirely within the State of California by residents of such State,
and without reference to principles of conflicts of laws.
10. FURTHER ASSURANCES. Each of the parties agrees that from time to
time, at the request of any other party and without further consideration or
consent, they will execute and deliver such additional instruments as any other
party may reasonably request as are necessary to effectuate the purposes of this
Agreement.
11. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees and
covenants to full and completely indemnify and defend Executive in the
performance of Executive's duties to the fullest extent permitted by applicable
laws.
12. ATTORNEYS' FEES. In the event any litigation, arbitration,
mediation or other proceeding ("Proceeding") is initiated by any party(ies)
against any other party(ies) to enforce, interpret or otherwise obtain judicial
or quasi-judicial relief in connection with this Agreement, the prevailing
party(ies) in such Proceeding shall be entitled to recover from the unsuccessful
party(ies) (a) all costs, expenses, actual attorneys' and expert witness fees,
relating to or arising out of such Proceeding (whether or not such Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding,
including, without limitation, one to enforce any judgment or award resulting
from any such Proceeding. Any such judgment or award shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
actual attorneys' and expert witness fees. The arbitrator(s) or court shall
determine who is the prevailing party, whether or not the dispute or controversy
proceeds to final judgment. Company and Executive expressly acknowledge that
this section is not intended to in any way alter the parties' agreement that
arbitration shall be the exclusive method of resolving any dispute related to
this Agreement or Executive's employment with the Company as set forth in
Section 7. Company and Executive agree that the reference to litigation in this
section is included so that the prevailing party can recover its attorneys' fees
and costs if (a) either party files a lawsuit in violation of Section 7 (E.G.,
fees and costs incurred obtaining a court order compelling arbitration); or (b)
a court rules that the arbitration provision in Section 7 is unenforceable for
any reason.
13. ENTIRE AGREEMENT. All prior agreements, representations and
understandings between the parties are incorporated in this Agreement and
schedules and exhibit hereto, which together constitute the entire contract
between the parties. The terms of this Agreement are intended by the parties as
a final expression of their agreement with respect to such terms as are included
herein and may not be contradicted by evidence of any prior or contemporaneous
written or oral representations, agreements or understandings, whether express
or implied. The parties further intend that this Agreement constitutes the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial proceeding, if any, involving this
Agreement. No amendment or variation of the terms of this Agreement shall be
valid unless made in writing and signed by each of the parties.
14. VENUE AND JURISDICTION. For purposes of venue and jurisdiction,
this Agreement shall be deemed made and to be performed in the City of Los
Angeles, California.
15. COUNTERPARTS; FACSIMILE. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile (with originals to follow by United States mail), and such
facsimile shall be conclusive evidence of the consent and ratification of the
signatories hereto.
16. HEADINGS. The headings of the various Sections of this Agreement
have been inserted only for convenience and shall not be deemed in any manner to
modify or limit any of the provisions of this Agreement or be used in any manner
in the interpretation of this Agreement.
17. INTERPRETATION. Whenever the context so requires, all words used in
the singular shall be construed to have been used in the plural (and vice
versa), each gender shall be construed to include any other genders, and the
word "person" shall be construed to include a natural person, a corporation, a
firm, a partnership, a joint venture, a trust, an estate or other entity.
18. SEVERABILITY. If any provision of this Agreement shall be declared
invalid, illegal or unenforceable, such provision shall be severed and all
remaining provisions shall continue in full force and effect.
19. SUCCESSORS-IN-INTEREST AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the successors-in-interest and assigns of
each party to this Agreement, except that the duties and responsibilities of
Executive hereunder are of a personal nature and shall not be assignable or
delegable in whole or in part by Executive. Nothing in this Section shall create
any rights enforceable by any other persons not a party to this Agreement,
unless such rights are expressly granted in this Agreement to other specifically
identified persons.
20. AMENDMENT AND WAIVER. This Agreement may not be amended and the
observance of any term of this Agreement may not be waived (either generally or
in a particular instance and neither retroactively or prospectively), without
the written consent of the parties hereto.
21. BENEFICIARIES; REFERENCES. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death by giving the Company written notice thereof. In the event of
Executive's death or a judicial determination of Executive's incompetence,
reference in this Agreement to Executive shall be deemed, where appropriate, to
refer to Executive's beneficiary, estate or other legal representative.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
Telecommunication Products, Inc.
a Colorado corporation
By:__________________
Xxxxxxx Xxxxxxx Xxxxxx
Chairman of the Board
By:_________________
Xxxxxx Xxxxxxx
Director and Chief Executive Officer
