EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
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November 15, 1997 (the "Effective Date"), by and between Xxxxxx Holdings, Inc.,
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a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxx, a resident of
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the State of Texas (the "Executive").
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RECITALS
WHEREAS, the Company is the owner of the outstanding shares of capital
stock of (i) Xxxxxx Telecommunications Corporation, an Alabama corporation
("TTC"), (ii) AmeriTel Pay Phones, Inc., a Missouri corporation ("AmeriTel"),
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(iii) Xxxxxx STC, Inc., a Delaware corporation ("Xxxxxx STC"), and (iv) Xxxxxx
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Invision, Inc., a Delaware corporation ("Xxxxxx Invision") (the Company, TTC,
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AmeriTel, Xxxxxx STC and Xxxxxx Invision and their respective affiliates and
subsidiaries are sometimes referred to herein individually as a "Xxxxxx Entity"
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and collectively as the "Xxxxxx Entities");
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WHEREAS, the Company desires to employ the Executive and the Executive
desires to furnish services to the Company and/or the other Xxxxxx Entities on
the terms and conditions hereinafter set forth;
WHEREAS, the parties desire to enter into this Agreement in order to set
forth the terms and conditions of the employment relationship of the Executive
with the Xxxxxx Entities;
WHEREAS, the Executive and the Company each acknowledge and agree that the
terms and conditions of employment set forth below are reasonable and necessary
in order to protect the legitimate business interests of the Xxxxxx Entities and
to compensate the Executive for information, knowledge and experience brought to
or gained from the Xxxxxx Entities;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by the
Company hereunder (the "Employment Period") shall commence on the Effective Date
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and shall end on December 31, 1999, (unless earlier terminated in accordance
with Section
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5 of the Agreement). Commencing on January 1, 2000, the Employment Period shall
be extended for successive one-year periods (individually, a "Renewal Period"),
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unless a notice not to extend this Agreement shall have been given by either
party hereto to the other not later than 90 days immediately preceding the
commencement of the Renewal Period (or unless earlier terminated in accordance
with Section 5 of this Agreement). Unless the context otherwise requires, the
Employment Period hereunder shall for purposes of this Agreement be deemed to
include the current Renewal Period (if any).
3. POSITION AND DUTIES. The Executive shall, within reason, devote his
full time, attention, skills and energies during the Employment Period to the
business of the Xxxxxx Entities, performing such specific functions on behalf of
the Xxxxxx Entities and holding such executive positions as the Board of
Directors or senior management of the Company or any Xxxxxx Entity may direct,
all of which shall be substantially consistent with the functions of an
executive officer within the industry in which the Xxxxxx Entities are engaged.
Specifically, the Executive shall be appointed and shall serve as the chief
financial officer of the Company. The Company shall not, without the consent of
Executive, cause a substantial and/or material reduction in the nature or scope
of Executive's duties and/or responsibilities which results in Executive no
longer holding the position of chief financial officer of the Company.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Employment Period, the Company shall pay the
Executive a base salary at an annual rate specified in Exhibit A (the "Base
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Salary"), which Base Salary shall be paid in equal installments in accordance
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with the Company's payroll policy, subject to Section 5 below.
(b) BONUS. During the Employment Period, the Company shall pay the
Executive the bonus specified in Exhibit A.
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(c) OPTIONS. The Executive shall be eligible to be awarded options to
purchase the Company's common stock, as specified in Exhibit A.
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(d) OTHER BENEFITS. During the Employment Period, the Executive shall be
entitled to and eligible for group health insurance coverage and any other
fringe benefits in accordance with policies applicable generally to salaried
Executives of the Company. The Executive shall also be entitled to paid
vacation and other paid absences during the Employment Period in accordance with
policies applicable generally to salaried Executives of the Company.
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5. TERMINATION.
(a) TERMINATION FOR CAUSE. Prior to the end of the Employment Period, the
Company may terminate the Executive's employment under this Agreement for
"Cause". For purposes of this Agreement, the Company shall have Cause to
terminate the Executive's employment hereunder in the event the Executive: (i)
has committed any act of willful misconduct, embezzlement or wrongful conversion
of money or property belonging to any Xxxxxx Entity, or any act of fraud or
dishonesty that affects the business of or relates to any of the Xxxxxx
Entities; (ii) is convicted of a felony at any time hereafter; (iii) has failed
to comply with any material directive of the Board of Directors of the Company
related to his employment duties; or (iv) has willfully and continually failed
to substantially perform his duties hereunder (other than any such failure
resulting from the Executive's death or disability), and such failure continues
for more than 10 days after written notice thereof to the Executive. If the
Executive's employment is terminated by the Company for Cause, the Company shall
pay the Executive any Base Salary accrued or owing to the Executive hereunder
through the date of termination, less any amounts owed by the Executive to any
Xxxxxx Entity, and the Company shall have no further liability or obligation to
the Executive hereunder.
(b) TERMINATION WITHOUT CAUSE. Prior to the end of the Employment Period,
the Company may terminate the Executive's employment under this Agreement for a
reason other than Cause or no reason whatsoever (i.e., without Cause). If the
Company terminates the Executive's employment without Cause either prior to the
expiration of or at the end of the Employment Period, the Company's liability to
the Executive is limited to an amount equal to the Executive's annual Base
Salary (the "Severance Payment"). The Company may, at its option, pay the
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Severance Payment in a lump sum within 30 days after the date of termination of
employment, or pay the Severance Payment over a twelve month period (commencing
effective as of the date of termination of employment) in equal installments in
accordance with the Company's payroll policy. If the Company terminates
employment of the Executive because he has become disabled such that he is
unable to perform the essential functions of his job (with reasonable
accommodation), any such termination shall be deemed to be a termination without
Cause pursuant to this Agreement. Similarly, the Executive's employment shall
terminate upon his death, and shall be deemed a termination by the Company
without Cause, with payments of the Severance Payment hereunder to be made to
the Executive's estate.
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6. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS,
DEVELOPMENTS AND NON-COMPETITION, RELEASE.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company and the other Xxxxxx Entities all trade
secrets, confidential information, proprietary information, knowledge and data
relating to the Xxxxxx Entities and/or the businesses or investments of the
Xxxxxx Entities which may have been obtained by the Executive during the
Executive's employment by the Company or any other Xxxxxx Entity including such
information with respect to any products, improvements, formulas, designs or
styles, processes, services, customers, suppliers, marketing techniques,
methods, know-how, data, future plans or operating practices ("Confidential
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Information"). Except as may be required or appropriate in connection with his
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carrying out his duties under this Agreement, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to
anyone other than the Company and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings, letters,
memoranda, reports, computer data, computer disks, electronic storage media,
documents, models and the like relating to the business of the Company and/or
the business of any of the other Xxxxxx Entities, which the Executive prepares,
uses or comes into contact with and which contain Confidential Information shall
be the exclusive property of the Company to be used by the Executive only in the
performance of his duties for the Company and shall not be removed by the
Executive from the premises of any Xxxxxx Entity (without the written consent of
the Company) during or after the Employment Period unless such removal shall be
required or appropriate in connection with his carrying out his duties under
this Agreement, and, if so removed by the Executive, shall be returned to such
Xxxxxx Entities immediately upon termination of the Executive's employment
hereunder, or earlier request by the Company (with the Executive retaining no
copies thereof nor any notes or other records relating thereto).
(c) DEVELOPMENTS. The Executive will make full and prompt disclosure to
the Company of all inventions, improvements, discoveries, methods, developments,
software and/or works of authorship relating in any way to the business,
activities or affairs of any of the Xxxxxx Entities, whether patentable or not,
which are created, made, conceived or reduced to practice (in whole or in part)
by the Executive or under his direction or jointly with others prior to or
during the Employment Period, whether or not during normal working hours or on
the premises of the Company (collectively, "Developments"). The Executive
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agrees to assign and does hereby assign to the Company all of his right, title
and interest in and to all Developments and related patents, copyrights and
applications therefor. The Executive shall do all permissible things, and take
all permissible action, necessary or advisable, in the Company's sole discretion
and at the Company's expense, to cause any other person related to the Executive
or an entity controlled by the Executive having an interest in a Development to
assign to the Company all of such person's or entity's right, title and interest
in and to such Development and related patents, copyrights and applications
therefor. The Executive agrees to cooperate fully with the Company, both during
and after the termination of the Employment Period, with respect to the
procurements, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments.
(d) NON-COMPETITION. During (i) the Executive's employment with the
Company and (ii) the one-year period immediately following the expiration or
earlier termination of the Employment Period provided that said one-year period
shall be extended for an additional year in the event the Executive (as opposed
to the Company) terminates his employment during the Employment Period, the
Executive (A) shall not engage, anywhere within the geographical areas in which
any Xxxxxx Entity is then conducting its business operations, directly or
indirectly, alone, in association with or as a shareholder, principal, agent,
partner, officer, director, Executive or consultant of any other organization,
in any Competitive Business; (B) shall not solicit or encourage any officer,
Executive, independent contractor, vendor or consultant of any of the Xxxxxx
Entities to leave the employ of, or otherwise cease his relationship with, any
of the Xxxxxx Entities; and (C) shall not solicit, divert or take away, or
attempt to divert or to take away, the business or patronage of any of the
customers or accounts, or prospective customers or accounts, of any Xxxxxx
Entity, which were contacted, solicited or served by any Xxxxxx Entity during
the time the Executive was employed by any Xxxxxx Entity. If the Executive
violates any of the provisions of this Section 6(d), following his termination
of employment, the computation of the time period provided herein shall be
tolled from the first date of the breach until the earlier of (i) the date
judicial relief is obtained by the Company, (ii) the Company states in writing
that it will seek no judicial relief for said violation, or (iii) the Executive
provides satisfactory evidence to the Company that such breach has been
remedied. If, at any time, the provisions of this Section 6(d) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 6(d) shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope
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of activity as shall be determined to be reasonable and enforceable by the court
or other body having jurisdiction over the matter; and the Executive agrees that
this Section 6(d) as so amended shall be valid and binding as though any invalid
or unenforceable provision had not been included herein. For purposes of this
Section 6, Executive and the Company agree that Competitive Business shall mean
(i) the inmate telephone business, (ii) the pay telephone business, (iii) the
business of selling, leasing or otherwise providing law enforcement management
systems, jail management systems, victim notification systems and/or other
tracking or record systems to inmate, jail or correctional facilities, and/or
(iv) any significant business that the Xxxxxx Entities are engaged in on the
date of termination or expiration of the Employment Period.
(e) NON-COMPETITION IN EXPANSION MARKETS. Executive acknowledges that a
valuable asset of the Xxxxxx Entities is the plan of the Company and the other
Xxxxxx Entities to extend and expand their business, by acquisition or
otherwise, to areas of the United States of America which the Xxxxxx Entities do
not yet serve as of the Effective Date. Accordingly, during (i) the Executive's
employment with the Company and (ii) the one-year period immediately following
the expiration or earlier termination of the Employment Period provided that
said one-year period shall be extended for an additional year in the event the
Executive (as opposed to the Company) terminates his employment during the
Employment Period, the Executive shall not engage, anywhere in the United States
of America, directly or indirectly, alone, in association with or as a
shareholder, principal, agent, partner, officer, director, Executive or
consultant of any other organization, in any Competitive Business. If the
Executive violates any of the provisions of this Section 6(e), following his
termination of employment, the computation of the time period provided herein
shall be tolled from the first date of the breach until the earlier of (i) the
date judicial relief is obtained by the Company, (ii) the Company states in
writing that it will seek no judicial relief for said violation, or (iii) the
Executive provides satisfactory evidence to the Company that such breach has
been remedied. If, at any time, the provisions of this Section 6(e) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 6(e) shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Executive agrees that this Section 6(e) as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein.
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(f) CONTINUING OPERATION. Any termination of the Executive's employment or
of this Agreement shall have no effect on the continuing operation of this
Section 6.
(g) LEGITIMATE BUSINESS INTERESTS. The Executive has carefully read and
considered the provisions of this Section 6 and, having done so, agrees that the
restrictions set forth herein, including, without limitation, the time and
geographic restrictions set forth above, are fair and reasonable and are
reasonably required for the protection of the legitimate business interests and
goodwill of the Company.
(h) REMEDIES. The Executive acknowledges that any violation of any of the
covenants and agreements contained in this Section 6 would result in irreparable
and continuing harm and damage to the Company and the other Xxxxxx Entities
which would be extremely difficult to quantify and for which money damages alone
would not be adequate compensation. Consequently, the Executive agrees that, in
the event he violates or threatens to violate any of these covenants and
agreements, the Company shall be entitled to: (1) entry of an injunction
enjoining such violation and/or requiring the Executive to return all materials
or other proprietary information of the Company and (2) money damages insofar as
they can be determined. Nothing in this Agreement shall be construed to
prohibit the Company and the other Xxxxxx Entities from also pursuing any other
legal or equitable remedy, the parties having agreed that all remedies are
cumulative. The parties waive the right to a jury trial with respect to any
controversy or claim between or among the parties hereto, including any claim
arising out of or relating to this Agreement or based on or arising from an
alleged tort.
7. SEVERABILITY. Whenever possible, each provision and term of this
Agreement will be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement.
8. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement will operate as
a waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
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claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns, and
the Executive and his assigns, heirs and legal representatives. Each of the
Xxxxxx Entities (and their respective affiliates, successors and assigns) shall
be third party beneficiaries of this Agreement and may independently enforce and
benefit from the terms hereof.
10. OTHER AGREEMENTS; INDEMNIFICATION. The Executive hereby represents
that, except as he has disclosed in writing to the Company, the Executive is not
bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of the Executive's employment with the Company or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. The Executive further represents that his
performance of all of the terms of this Agreement does not and will not breach
any agreement to keep in confidence proprietary information, knowledge or data
acquired by the Executive in confidence or in trust prior to the date of this
Agreement, and the Executive will not disclose to the Company or any other
Xxxxxx Entity or induce the Company or any other Xxxxxx Entities to use any
confidential or proprietary information or material belonging to any previous
employer or others. The Executive hereby indemnifies and agrees to defend and
hold the Company and the other Xxxxxx Entities harmless from and against any and
all damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and the costs of investigation) resulting
or arising directly or indirectly from any breach of the foregoing
representations or from allegations, claims, proceedings or actions by third
parties relating to the confidential information belonging to them and disclosed
by the Executive to the Company or any other Xxxxxx Entity.
11. WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable withholding of taxes required under federal, state or
local law.
12. RECITALS; HEADINGS; CONSTRUCTION. The Recitals set forth in the
preamble of this Agreement shall be deemed to be included and form an integral
part of this Agreement. The
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headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms. All references herein to the word "or" shall mean "and/or." The
parties, in acknowledgment that all of them have been represented by counsel and
that this Agreement has been carefully negotiated, agree that the construction
and interpretation of this Agreement and other documents entered into in
connection herewith shall not be affected by the identity of the party or
parties under whose direction or at whose expense this Agreement and such
documents were prepared or drafted.
13. TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
14. GOVERNING LAW. This Agreement shall be governed by the substantive
laws of the State of Delaware, without regard to its conflicts of laws
principles. In particular, Delaware substantive law will govern any controversy
or claim between or among the parties hereto, including any claim arising out of
or relating to this Agreement or based on or arising from an alleged tort.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements and understandings between the
parties with respect to the subject matter of this Agreement. This Agreement
may not be amended except by a written agreement executed by both parties.
16. NOTICES. Any notice, demand or other communication which may or is
required to be given under this Agreement shall be in writing and shall be: (a)
personally delivered; (b) transmitted by United States postage prepaid mail,
registered or certified mail, return receipt requested; (c) transmitted by
reputable overnight courier service such as Federal Express; or (d) transmitted
by legible facsimile (with answer back confirmation) to the parties' respective
addresses as set forth opposite their signatures hereto). Except as otherwise
specified herein, all notices and other communications shall be deemed to have
been duly given on (i) the date of receipt if delivered personally, (ii) 2
calendar days after the date of posting if transmitted by registered or
certified mail, return
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receipt requested, (iii) the first (1st) business day after the date of deposit
if transmitted by reputable overnight courier service or (iv) the date of
transmission with confirmed answer back if transmitted by facsimile, whichever
shall first occur. A notice or other communication not given as herein provided
shall only be deemed given if and when such notice or communication is actually
received in writing by the party to whom it is required or permitted to be
given. The parties may change their address for purposes hereof by notice given
to the other parties in accordance with the provisions of this Section, but such
notice shall not be deemed to have been duly given unless and until it is
actually received by the other party.
17. COMMON LAW OR OTHER DUTIES. The Executive's duties obligations, and
agreements hereunder are in addition to (and not in limitation of) any duties or
obligations under common law or statute owed to the Company or the other Xxxxxx
Entities by the Executive by reason of his position as officer, director or
Executive, as applicable, of the Company or the other Xxxxxx Entities.
18. ATTORNEYS' FEES. In the event of any litigation or proceeding brought
with respect to this Agreement in which the parties to this Agreement (or any
other Xxxxxx Entity or Entities) is a party, the prevailing party(ies) shall be
entitled to recover from non-prevailing party(ies) any reasonable attorneys'
fees and expenses incurred therein.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
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XXXXXX HOLDINGS, INC.,
a Delaware corporation
By: /s/ XXXX X. XXXXXX, XX.
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Name: Xxxx X. Xxxxxx, Xx.
Title: President
Address: 0000 X. Xxxxx Xxxxxxx Xxxx.
Xxxxx 000
Xxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
EXECUTIVE:
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/s/ XXXXXXX X. XXXXXXX
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XXXXXXX X. XXXXXXX
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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EXHIBIT A
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(a) BASE SALARY: $140,000 per year.
(b) BONUS: Bonus program to be established whereby Executive could
earn an additional amount up to 50% of Base Salary based
upon achieving performance objectives to be determined and
may be in excess of such amount in the event such
objectives are exceeded; provided, however, the Executive
will be entitled to receive a guaranteed bonus of $70,000
for fiscal year 1998 payable one-half on or before January
30, 1998, and one-half on or before December 31, 1998.
(c) OPTIONS: The Company intends to institute a stock option program,
the terms and conditions of which are to be determined by
the Board of the Company, in its sole discretion. Executive
will be eligible to be awarded options to purchase the
equivalent of 100 common shares of Company stock, at $2,000
per share (as adjusted for any stock splits). It is
anticipated that the stock option plan will provide that
these options would vest over a three year period from date
of issue.
