EMPLOYMENT AGREEMENT
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THIS AGREEMENT made and entered into on this 1st day of September, 1999
(the "Effective Date"), by and between STARTRONIX INTERNATIONAL INC., a Delaware
corporation (the "Company"), and Xxxx Xxxxxxx a resident of the State of
California ("Executive"). In consideration of the employment by the Company and
of the compensation and other remuneration paid, and to be paid, by the Company
and received by Executive for such employment, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
Executive, it is agreed by and between the parties hereto as follows:
1. EMPLOYMENT: The Company agrees to employ Executive as its
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President and Co-Chief Executive Officer and Executive agrees that he will
devote his full productive time, skill, energy, knowledge and best efforts
during the period of his employment to such duties as the President and Co-
Chief Executive Officer and the Board of Directors of the Company may reasonably
assign to him, and he will faithfully and diligently endeavor to the best of his
ability to further the best interest of the Company during the period of his
employment. Certain of such duties are summarized in Schedule A. However,
Executive is not prohibited from (a) making personal investments in any other
businesses, as long as those investments do not require Executive to participate
in the operation of the companies in which he invests and such other businesses
are not in competition with the Company or any of its subsidiaries or (b) from
participating as a Board member of a not for profit entity or of a non-competing
business enterprise, provided such activities do not impinge on the time
available to provide his services to Company.
2. TERMS OF EMPLOYMENT: Executive's employment will begin on
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the date hereof and will end on September 1st 2004 a term of five (5) years,
unless earlier terminated in accordance with Sections 4 or 5 hereof or extended
upon the mutual consent of both parties.
3. COMPENSATION: On the terms and subject to the conditions of this
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Agreement, (i) the Company will pay Executive a salary and a bonus determined in
accordance with Schedule B, (ii) the Company will provide Executive with three
weeks of vacation per year and other employee consistent with those provided by
the Company to similarly situated executives. Such additional benefits shall
include medical (including hospital) and dental insurance for Executive and his
dependence. However, the parties acknowledge that at present the company does
not have medical insurance for its key employees. Accordingly, until such time
as the Company obtains and makes available to Executive medical insurance for
Executive and his dependents comparable to that afforded to Executives, the
Company shall pay Executive $250 per month to allow him to pay for such
insurance. Executive will be entitled to reimbursement of all expenses incurred
by him in the performance of his duties, in accordance with the company's normal
policy, subject to presenting of appropriate vouchers.
4. ILLNESS OR INCAPACITY: Executive is entitled to absences because of
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illness or incapacity of no more than a total of ninety (90) days in each
calendar year. If Executive cannot perform his duties because of illness or
incapacity for more than a total of ninety (90) days in any year, the Company
may terminate this Agreement upon thirty (30) days' written notice to Executive.
Executive is not entitled to receive, and the Company shall not be required to
pay, Executive's compensation hereunder for absences because of illness or
incapacity other than the total of ninety (90) days in each year granted to
Executive under this Section 5. If Executive returns to work and is able to
discharge his duties in full, Executive shall be deemed reinstated and
thereafter shall be entitled to full compensation hereunder.
5. TERMINATION.
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a. This Agreement and the employment of Executive may be terminated
as follows:
(1) By the Company (i) pursuant to Xxxxxxxxx 0, 0 xx 0, (xx)
upon commission by the Executive of any felony or material misdemeanor under
federal, state or local laws or ordinances, except traffic violations or (iii)
upon the failure of Executive to diligently or competently discharge the duties
assigned to him pursuant to this Agreement; or
(2) (i) By Executive upon thirty (30) days' written notice to
the Company or (ii) by the Company upon thirty (30) days' written notice to
Executive, or
(3) By the Company upon material violation by Executive of
any of the terms and conditions of this Agreement or the breach by Executive of
any representation or warranty made to the Company herein or in any other
agreement, document or instrument executed by Executive and delivered to the
Company, or should any representation or warranty made by Executive hereunder or
thereunder prove to have been false or misleading in any material respect when
made or furnished; or
(4) By the Company upon the death of Executive.
b. In the event Executive is terminated by the Company for any
reason (including, without limitation, in accordance with Paragraph 8(a)(2)(ii))
other than pursuant to Paragraph 8(a)(1) or 8(a)(3), the Company shall (i) pay
Executive his then current salary (subject to decrease pursuant to Schedule A,
but without any increase thereafter pursuant to Schedule A) and provide
Executive with Group Health Insurance, but no other compensation or benefits,
for the Applicable Period beginning with the date of termination and (ii)
subject to the Executive's strict adherence to and performance of the covenants
set forth in Paragraph 7, not later than twenty-four (24) months after the date
of such termination, an amount equal to [the lesser of (x) $250,000 and (y) two
percent (2%) of the average Net Income Amount (as defined in Schedule A) of the
Company for the two full twelve (12) month periods following the date of such
termination]. If Executive is terminated pursuant to Paragraph 8(a)(1) or
8(a)(3) or Executive terminates his employment pursuant to Paragraph 8(a)(2)(i),
Executive shall be entitled only to compensation accrued through the date of
termination and all benefits accrued as of such date, and shall not be entitled
to any portion of the payment set forth in clause (ii) of this Paragraph (b).
c. For purposes of this Agreement, the term "Applicable Period"
means: (i) ninety (90) days, in the case of a notice given to Executive prior
to the first anniversary of the date on which Executive commenced his employment
with the Company or its affiliate (the "Employment Date"); (ii) one hundred
eighty (180) days, in the case of a notice given to Executive on or after the
first anniversary and prior to the second anniversary of his Employment Date,
and (iii) one (1) year, in the case of a notice given to Executive on or after
the second anniversary of his Employment Date.
6. TERMINATION OF AGREEMENT UPON SALE OR TERMINATION OF COMPANY'S BUSINESS:
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(a) Not--with-standing anything to the contrary contained
in this Agreement, the Company may terminate Executive employment (i) upon
thirty (30) days' written notice to Executive, without cause or reason or (ii)
without notice, with "cause" (as hereinafter defined). In addition, this
agreement will terminate automatically upon the death of the Executive. "Cause"
means any act or omission by Executive which, in reasonable judgment of the
Company, is inimical to the company's best interests. In the event of any
dispute between the Company and Executive as to whether the Company's basis for
such termination constituted "cause" Executive will have the burden of proving
that the company's determination was reasonable. In addition to the occurrence
of any of the following events:
(1) The acquisition, directly or indirectly, of any "person"
(excluding any "person" who on the date hereof owns or controls ten percent
(10%) or more of the voting power of the Company's common stock), as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, within any twelve (12) month period of securities of the Company
representing an aggregate of fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities; provided, that for purposes
of this Paragraph (a), "acquisition" shall not include shares which are received
by a person through gift, inheritance, under a will or otherwise through the
laws of descent and distribution;
(2) During any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of the
Company (the "Board"), cease for any reason to constitute at least a majority
thereof, unless the election of each new director was approved in advance by a
vote of at least a majority of the directors then still in office who were
directors at the beginning of such period; or
(3) The occurrence of any other event or circumstance which
is not covered by (1) or (2) above which the Board determines affects control of
the Company and, in order to implement the purposes of this Agreement, adopts a
resolution that such event or circumstance constitutes an "event" under this
Paragraph 6.
(b) If the Company terminates Executive's employment without cause
(including a resignation by Executive upon or following breach or constructive
termination by the Company under applicable law), the Company shall thereupon
pay Executive in a lump sum (in addition to base salary and bonus, as provided
in Schedule B, during the thirty (30) day notice period) severance pay in an
amount equal to:
(i) one month's base salary, if termination occurs to prior to October 1,
2000
(ii) three month's base salary, if termination occurs to prior to October 1,
2001
(iii) six month's base salary, if termination occurs to prior to October 1,
2002
(c) If termination of Executive's employment shall
occur by reason of the death or resignation of Executive (except for a
resignation upon or following breach or constructive termination by the Company
under applicable law), or because the Company terminates Executive's employment
for "cause" (as hereinafter defined), no severance pay or benefits will be
payable beyond the date of termination.
7. DISCLOSURE OF INFORMATION; NONSOLICITATION; NONCOMPETITION.
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a. DEFINITIONS. For purposes of this Paragraph 5, the following
terms shall have the meanings specified below:
"BUSINESS" - the development, marketing and distribution of
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products or services of the type offered by the Company or any of its
subsidiaries, including (i) the development, marketing and distribution of (1)
screen phones, touch screens and other receiving hardware to provide home
shopping, xxxx paying, banking, utility meter reading, swipe-card services,
access to video and audio programming (whether from low-orbiting satellites or
other sources), wireless communications and emergency response, and related
hardware or software, and (2) wireless communi-cations and/or pagers, including
without limitation hardware and services related to a telecom/pager wrist watch
with access to information, including winning lottery numbers, weather
conditions, sports scores and stock market and financial data, and related
hardware and software; (ii) the provision of international long distance,
domestic long distance or local telephone time or services in the United States,
including (1) the prepayment of telephone charges, (2) telephone debit cards,
(3) international or domestic long distance local telephone sales or resale's,
(4) international calling from non-U.S. locations to the United States, (5) "1
plus 1" residential telephone service, or (6 business telephone service and
(iii) the provision of environmental, surveying, engineering, mapping and
right-of-way acquisition consulting services;
"CONFIDENTIAL INFORMATION" - information relating to the
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operations, customers, or finances of the Company, or the Business, that derives
value from not being generally known to other Persons, including, but not
limited to, technical or non technical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data, and
lists of or identifying information about actual or potential customers or
suppliers, whether or not reduced to writing, certain unpatented information
relating to the research and development, manufacture or serving of the
Company's products, information concerning proposed new products, market
feasibility studies and proposed or existing marketing techniques or plans.
Confidential Information also includes the same types of information relating to
the operations, customers, finances, or Business of any affiliate of the
Company, if such information is learned by Executive during the term of this
Agreement or in connection with Executive's performance of Services.
Con-fidential Information also includes information disclosed to the Company by
third parties that the Company is obligated to maintain as confiden-tial.
Confidential Information may include information that is not a trade secret, but
Confiden-tial Information that is not also a trade secret shall constitute
Confidential Information only for three (3) years after the Termination Date;
"CUSTOMER" - any customer of the Company in the United States
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that Executive, during the one year period prior to the Termination Date, (i)
provided goods or services to or solicited on behalf of the Company; or (ii)
about whom Executive possesses Confidential Information;
"PERSON" - any individual, corporation, partnership,
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limited liability company, association, municipality, government agency,
government, unin-corporated organization or other entity;
"SERVICES" - the duties and functions that Executive
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shall provide in the United States as an Executive of the Company and that
Executive shall be prohibited from providing in the United States in competition
with the Company in accordance with the terms of this Agreement, including the
duties and functions expressly set forth on Schedule B attached hereto.
Executive acknowledges that Executive has been informed of and discussed with
the Company the specific activities that Executive will perform as Services and
that Executive understands the scope of the activities that constitute Services
under this Agreement;
"TERMINATION DATE" - the last day Executive is
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employed by the Com-pany, whether the termination is voluntary or involuntary
and whether with or without cause; and
b. CONFIDENTIAL INFORMATION. Executive shall protect Confidential
Information. Except as required in connection with work for the Company,
Executive will not use, disclose or give to others, during or after Executive's
employment, any Confidential Information.
c. RETURN OF MATERIALS. On the Termination Date or for any reason
or at any time at the Company's request, Executive will deliver promptly to the
Company all materials, documents, plans, records, notes, manuals, subcontracts,
procedures and other papers and any copies thereof in Executive's possession,
custody or control relating to the Company or the Business, all of which at all
times shall be the property of the Company.
d. SOLICITATION OF CUSTOMERS. During employment and for two (2)
years after the Termination Date, Executive will not solicit Customers within
the United States for the purpose of providing products or services comparable
to those provided by the Business, except on behalf of the Company.
e. SOLICITATION OF COMPANY EMPLOYEES. During employment and for
two (2) years after the Termination Date, Executive will not solicit for
employment with another Person anyone who is or was, at any time during the one
year period prior to the Termination Date, an employee of the Company.
f. SERVICES PROVIDED TO COMPETITORS. During employment and for
two (2) years after the Termination Date, Executive will not provide Services
within the United States to any Person that offers or provides products or
services of the types provided by the Company in the Business.
g. DISPARAGEMENT. Executive shall not at any time make false,
misleading or disparaging statements about the Company, including the Business,
management, employees and Customers.
h. PRIOR AGREEMENTS. Executive represents and warrants that
Executive is not under any obligation, contractual or otherwise, limiting,
impairing or affecting Executive's performance of Services. Upon execution of
this Agreement, Executive shall give the Company any agreement with a prior
employer or other Person purporting to limit or affect, in any way, Executive's
ability to work for the Company, to solicit customers or potential customers or
employees or to use any type of information.
i. FUTURE EMPLOYMENT OPPORTUNITIES. Prior to and for two (2)
years after the Termination Date, Executive shall (a) provide any prospective
employer with a copy of this Agreement, and (b) upon accepting any position,
provide the Company with the employer's name and a description of the services,
if any, Executive will provide for such employer.
j. WORK FOR HIRE ACKNOWLEDGMENT; ASSIGNMENT. All writings,
draw-ings, photographs, tapes, recordings, computer programs and other works in
any tangible medium of expression, regardless of the form of medium, which have
been or are prepared by Executive, or to which Executive contributes, in
connection with Executive's employ-ment by the Company (collectively the
"Works") and all copyrights and other rights in and to the Works, belong solely,
irrevocably and exclusively throughout the world to the Company as works made
for hire. However, to the extent any court or agency should conclude that the
Works (or any of them) do not constitute or qualify as a "work made for hire,"
Executive hereby assigns, grants and delivers, solely, irrevocably, exclusively
and throughout the world to the Company all copyrights and other rights to the
Works. Executive also agrees to cooperate with the Company and to execute such
other further grants and assignments of all rights as the Company from time to
time reasonably may request for the purpose of evidencing, enforcing,
registering or defending its ownership of the Works and the copyrights in them,
and Executive hereby irrevoca-xxx constitutes and appoints the Company as
Executive's agent and attorney-in-fact, with full power of substitu-tion, in
Executive's name, place and stead, to execute and deliver any and all such
assignments or other instruments which Executive shall fail or refuse promptly
to execute and deliver, this power and agency being coupled with an interest and
being irrevo-cable. Without limiting the preceding provisions of this Paragraph
8(j), Executive agrees that the Company may edit and otherwise modify, and use,
publish and otherwise exploit, the Works in all media and in such manner as the
Company, in its discretion, may determine.
k. INVENTIONS, IDEAS AND PATENTS. Executive shall disclose
promptly to the Company (which shall receive it in confidence), and only to the
Company, any invention or idea of Executive (developed alone or with others)
conceived or made during Executive's employment by the Company (or, if related
to the Business, during employment or within one year after the Termination
Date). Executive assigns to the Company any such invention or idea in any way
connected with Executive's employment or related to the Business, research or
development of the Company, or demonstrably anticipated research or development
of the Company, and will cooperate with the Company and sign all papers deemed
necessary by the Company to enable it to obtain, maintain, protect and defend
patents covering such inventions and ideas and to confirm the exclusive
ownership of the Company of all rights in such inventions, ideas and patents,
and irrevoca-xxx appoints the Company as its agent to execute and deliver any
assignments or documents Executive fails or refuses to execute and deliver
promptly, this power and agency being coupled with an interest and being
irrevocable.
This constitutes written notification to Executive that this assignment does not
apply to an invention for which no equipment, supplies, facility or trade secret
information of the Company or any Customer was used and which was developed
entirely on Executive's own time, unless (a) the invention relates (i) directly
to the Business or (ii) to the actual or demonstrably anticipated research or
develop-ment of the Company, or (b) the invention results from any work
performed by Executive for the Company.
l. INDEPENDENCE OF COVENANTS. The covenants contained herein shall be
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construed as agreements independent of each other and of any other provision of
this or any other contract between the parties hereto, and the existence of any
claim or cause of action by Executive against the Company, whether predicated
upon this or any other contract, shall not constitute a defense to the
enforcement by the Company of said covenants.
m. RIGHT TO INJUNCTIVE RELIEF. (a) Executive recognizes and agrees
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that the injury the Company will suffer in the event of the Executive's breach
of any covenant or agreement contained herein cannot be compensated by monetary
damages alone, and Executive therefore agrees that the Company, in addition and
without limiting any other remedies or rights that it may have, either under his
Agreement or otherwise, shall have the right to obtain an injunction against
Executive from any court of competent jurisdiction enjoining any such breach.
8. MISCELLANEOUS.
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a. This Agreement may be assigned by the Company to any successor in
interest to its business, which successor in interest shall be bound herein to
the same extent as the Company. Executive agrees to perform his duties for such
successor in interest to the same extent as he would for the Company.
b. This is a personal agreement on the part of Executive and may
not be sold, assigned, transferred or conveyed by Executive.
c. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by the other party.
d. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
e. This Agreement states the entire agreement and understanding
between the parties and supersedes all prior understandings and agreements.
f. No change or modification to this Agreement shall be valid unless in
writing and signed by both parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
STARTRONIX INTERNATIONAL INC.
/s/ Xxxxx Xxxxx
By: __________________________
Name: Xxxxx Xxxxx
Title: Chairman & Co-CEO
ATTEST: EXECUTIVE:
By: /s/ Xxxx Xxxxxxx
________________________
/s/ Xxxxxxx Xxxxxx Name: Xxxx Xxxxxxx
By: Xxxxxxx Xxxxxx, Secretary
SCHEDULE A - SALARY AND BONUS
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SALARY. Commencing on the first day of the second fiscal quarter, the
Company shall pay Executive for each of the next twelve months, a Monthly Salary
(as defined below) based on the Net Income Amount (as defined below) for the
previous full fiscal year, according to the following table:
ANNUAL NET INCOME AMOUNT CORRESPONDING MONTHLY SALARY
less than or equal to $1.2 million $ 10,000
greater than $1.2 million but less than or equal to $6 million $ 15,000
greater than $6 million but less than or equal to $12 million $ 20,000
greater than $12 million $ 25,000
For purposes of this Agreement, "Net Income Amount" means the Company's
annual net income before income taxes and "Monthly Salary" means Executive's
monthly salary, before deductions. The Company will deduct from payments of
Monthly Salary to Executive all federal, state and local income tax, FICA, FUTA,
and other withholdings as required by law. For purposes of this Agreement, the
Company's net income and gross sales shall be determined in accordance with
generally accepted accounting principles in the United States, applied as a
basis consistent with prior periods.
BONUS. On the last day of each of the second, third and fourth fiscal
quarters following the end of the previous full fiscal year of the Company, the
Company shall pay Executive a cash bonus equal to one-third of the Net Income
Amount for such full fiscal year multiplied by the Applicable Percentage;
provided that no cash bonus shall be payable to Executive on any date unless
Executive is employed by the Company on that date.
ANNUAL NET INCOME AMOUNT APPLICABLE PERCENTAGE
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less than or equal to $1.2 million 1%
greater than $1.2 million but less than or equal to $6 million 2%
greater than $6 million but less than or equal to $12 million 3%
greater than $12 million 4%
SCHEDULE B - SUMMARY OF EMPLOYEE STOCK OPTION PLAN
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To be determined by the Compensation Committee of the Board of Directors
