EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, by and between Xxxxx X. Xxxxx (the "Employee") and Teledata
Solutions, Inc., an Illinois corporation (the "Company"), is made as of
March 19, 1996.
In consideration of the mutual covenants herein contained, and in
consideration of the employment of Employee by the Company, the parties agree as
follows:
1. Duties and Scope of Employment.
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(a) Position. The Company agrees to employ the Employee under the terms of
this Agreement in the position of President and Chief Operating Officer. As
President and Chief Operating Officer, Employee shall report to the Chief
Executive Officer and the Board of Directors of the Company. The primary duties
and responsibilities of President and Chief Operating Officer are defined in
Exhibit A. Exhibit A is intended to demonstrate Employee's primary duties and
responsibilities as envisioned by the Board of Directors as of the date hereof
and is not intended to comprise a definitive or unmodifiable list. Accordingly,
Employee's responsibilities may be modified, reduced or expanded at any time to
accommodate Company's needs, consistent with Employee's position as President
and Chief Operating Officer of the Company.
(b) Obligations. During the term of this Agreement, the Employee shall
devote his full business efforts and time to the Company during normal working
hours.
(c) Director. As long as the Employee serves as President, Employee shall
be nominated to serve on the Company's Board of Directors. Employee agrees to
submit his resignation from the Board immediately if Employee ceases to be
President and Chief Operating Officer.
(d) Approval Required for Change in President and Chief Operating Officer.
Until the fourth anniversary of the date of this Agreement, removal of the
position and/or title of "President and Chief Operating Officer" from Employee
shall require the approval of a majority of the Board of Directors, including
the affirmative vote of the two directors elected solely by the holders of
Series A Convertible Preferred Stock. The existence of this provision shall in
no way eliminate any of the Company's other obligations to Employee hereunder,
including without limitation severance payment obligations.
2. Compensation.
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(a) Base Salary and Bonus. Beginning on the effective date of this
Agreement, the Employee shall be paid a base salary (the "Base Compensation") of
$90,000, per year, payable in accordance with the Company's standard payroll
policies. The Board of Directors shall review Employee's performance and the
Company's financial and operating results on at least an annual basis and shall
adjust Employee's base salary as it deems appropriate based on such review.
(b) Bonus. Employee shall also be eligible for a bonus of up to $35,000
for fiscal year 1996 based on the criteria set forth in Exhibit B. The bonus
will be due and payable on the 15th day of February, 1997. The Board of
Directors shall set bonus levels and targets for years after fiscal year 1996 as
it deems appropriate. In the event Employee's employment with the Company
terminates for any reason other than pursuant to Section 7(c) hereof (voluntary
termination by the Employee) or 7(b)(ii) hereof (Termination for Cause),
Employee shall be entitled to receive a pro rated bonus for such year,
determined by dividing the aggregate bonus that he would have earned for the
entire year (assuming he had remained employed for the entire year and the
original revenue/milestone targets established for such year continued to apply)
by the number of days (including weekends) during which he was employed by the
Company during such year by 365. Such bonus shall be paid on February 15 of the
following year. If Employee's employment with the Company terminates pursuant to
Section 7(c) hereof or Section 7(b)(ii) hereof, Employee shall be deemed to have
forfeited his entire bonus for such year and no such bonus shall be due or
payable by the Company.
(c) Stock. Employee shall receive an incentive stock option, as described
in the Stock Option Agreement attached hereto as Exhibit C (the "ISO
Agreement").
(d) Vacation. Employee shall be entitled to three (3) weeks paid vacation
during each year of employment. Such vacation shall be taken at a time mutually
convenient for both the Company and the Employee. Unused vacation time may not
be accrued from year to year during the term of this Agreement without the
Company's prior written approval. In the event this Agreement is terminated by
either the Company or the Employee, the Employee shall be paid for any unused,
accrued vacation time.
3. Relocation Expenses. The Company shall reimburse Employee for the
direct moving costs incurred in relocating himself and his family and their
household possessions (including vehicles) to the Chicago area, including air
fare for approximately 8 trips between Chicago and the Employee's current
residence. In addition, the Company shall reimburse Employee for reasonable
housing expenses incurred for three months from the date of this Agreement or
Employee's securing of permanent housing arrangements in the Chicago area,
whichever is earlier, as well as any other reasonable out-of-pocket expenses
associated with Employee's relocation. The Company shall promptly make such
reimbursement after receiving from Employee documentation of the expenses
incurred. The Company's total relocation reimbursement shall not exceed $10,000.
4. Definitions. As used herein, the following definitions shall apply:
(a) "Termination for Cause" shall mean the termination of
employment of Employee as a result of (i) act or acts of dishonesty
undertaken by Employee and intended to result in substantial gain or
personal enrichment of Employee at the expense' of the Company, (ii)
persistent failure by Employee to perform the duties and obligations of
Employee's employment which are not remedied in a reasonable period of time
after receipt of written notice from the Company; (iii) the conviction of
Employee of a felony; or (iv) Employee's continued breach of any material
term of this Agreement or a breach of the Noncompetition, Nondisclosure and
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Developments Agreement of even date herewith between the Company and
Employee.
(b) "Constructive Termination" shall mean (i) a material
reduction in Employee's salary or benefits not agreed to by Employee
(except in connection with a decrease to be applied because the Company's
performance has decreased and which is also applied to other officers, and
excluding the substitution of substantially equivalent compensation and
benefits), or (ii) a material change in Employee's responsibilities (other
than as contemplated by, and consistent with the spirit of, Section 1(a))
not agreed to by Employee.
(c) "Disability" shall mean that the Employee, at the time
notice is given, has been unable to perform his duties under this Agreement
for a period of not less than six (6) consecutive months or for a period of
two hundred seventy (270) days in any three hundred sixty-five (365) day
period as the result of his incapacity due to physical or mental illness.
In the event that the Employee resumes the performance of substantially all
of his duties hereunder before the termination of his employment under
Section 7(b)(iii) becomes effective, the notice of termination shall
automatically be deemed to have been revoked.
(d) "Voluntary Termination of Employment" shall mean Employee
voluntarily terminates his employment with the Company, unless such
termination occurs within three (3) months following a Constructive
Termination.
(e) "Change in Control" shall mean the occurrence of the
following event: The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than as
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the
total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or all agreement for the sale or
disposition of the Company of all or substantially all the Company's
assets.
5. Employee Benefits.
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(a) General. During the term of his employment under this Agreement, the
Employee shall be entitled to the full benefits for which Employee is eligible
under the employee benefit plans and including (without limitation) pension
plans, savings or profit-sharing plans, deferred compensation plans,
supplemental retirement plans, stock option, incentive or other bonus plans,
life, disability, health, accident and other insurance programs, paid vacations
and sabbatical, and similar plans or programs, subject in each case to the
generally applicable terms and conditions of the plan or program in question and
to the determination of any committee or the Board of Directors administering
such plan or program.
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6. Business Expense and Travel. During the term of his employment under
this Agreement, the Employee shall be authorized to incur necessary and
reasonable travel, entertainment and other business expenses in connection with
his duties hereunder. The Company shall reimburse the Employee for such expenses
upon presentation of an itemized accounting and appropriate supporting
documentation, all in accordance with the Company's generally applicable
policies.
7. Term of Employment.
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(a) Basic Rule. The Company agrees to continue the Employee's employment,
and the Employee agrees to remain in the employ of the Company, from the
effective date of this Agreement until the date when the Employee's employment
terminates pursuant to the provisions of this Agreement.
(b) Termination by the Company. The Company may terminate Employee's
employment at any time, for any reason or for no reason.
(i) Termination Without Cause. If the Company terminates Employee's
employment during the term of this Agreement for any reason whatsoever,
other than Voluntary Termination of Employment, Termination for Cause, or
termination as a result of Employee's Death or Disability, the provisions
of Section 8(a) shall apply.
(ii) Termination for Cause. If the Company terminates Employee's
employment for Cause during the term of this Agreement, the provisions of
Section 8(b) shall apply.
(iii) Termination on Death or Disability. If the Company terminates
Employee's employment as a result of Employee's Death or Disability, the
provisions of Section 8(c) shall apply.
(c) Voluntary Termination by the Employee. The Employee may terminate his
employment voluntarily by giving the Company sixty (60) days' advance notice in
writing, at which time the provisions of Section 9(b) shall apply. However, if
the Employee terminates his employment within three (3) months following a
Constructive Termination or within six (6) months following a Change in Control,
the provisions of Section 8(a) shall apply.
(d) Waiver of Notice. Any waiver of notice shall be valid only if it is
made in writing and expressly refers to the applicable notice requirement in
this Section 7.
8. Payments Upon Termination of Employment.
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(a) Payments Upon Termination Pursuant to Section 7(b)(i) and Constructive
Termination. If, during the term of this Agreement, the Employee's employment is
terminated by the Company pursuant to Section 7(b)(i) or voluntarily by Employee
within three (3) months following a Constructive Termination or within six (6)
months of a Change in Control, the Employee shall be entitled to receive the
following:
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(i) Severance Payment. The Company shall continue to pay to the
Employee his Base Compensation for six (6) months following the date of
Employee's actual termination of employment (the "Severance Payment"). Such
Base Compensation amount shall be the Base Compensation determined as of
the commencement date of this Agreement, and as is agreed to in future
years by the Board of Directors.
(ii) Method of Payment. The Severance Payment shall be made in
monthly installments.
(iii) Payment in Lieu of Contract Damages. The Severance Payment shall
be in lieu of any further payments to the Employee and any further accrual
of benefits with respect to periods subsequent to the date of the
employment termination. Notwithstanding, the preceding sentence, neither
the Severance Payment nor any other payments under this Section 8(a) shall
reduce or offset any benefits the Employee may be entitled to under the
specific terms of the benefit plans of the Company.
(b) Termination By Company for Cause or Voluntary Termination. If the
Employee's employment is terminated pursuant to Section 7(b) (ii) or voluntarily
(other than within three (3) months following a Constructive Termination)
pursuant to Section 7(c), no compensation or payments will be paid or provided
to the Employee for the periods following the date when such a termination of
employment is effective. Notwithstanding the preceding sentence, the Employee's
rights under the benefit plans and the ISO Agreement shall be determined under
the provisions of those plans and agreement.
(c) Termination on Death or Disability. If the Employee's employment is
terminated because of Employee's Death or Disability (as defined in Section 4(d)
herein), then the Company shall continue to pay to the Employee or his estate,
as the case may be, his Base Compensation for six (6) months following the date
of Employee's actual termination of employment. Employee shall also receive any
severance and disability payments that are provided in the Company's standard
benefit plans, which amounts shall offset and reduce the Base Compensation
otherwise payable under the preceding sentence.
9. Noncompetition, Nondisclosure and Developments. As a condition of
employment, concurrently with the execution hereof, Employee agrees to execute
the Noncompetition, Nondisclosure and Developments Agreement set forth in
Exhibit D.
10. Successors.
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(a) Company's Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume this Agreement and agree expressly to perform this Agreement in the
same manner and to the same extent as the Company would be required to perform
it in the absence of a succession. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
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assets which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by this Agreement by operation of law.
(b) Employee's Successors. This Agreement and all rights of the Employee
hereunder shall be binding upon, inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, devises and legatees. Any
purported or attempted assignment or transfer by the Employee of any of the
Employee's duties, responsibilities or obligations hereunder shall be void.
11. Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or three (3) days after being mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing in accordance herewith
(provided that no such change shall be effective until actually received by the
Company). In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Chief Executive Officer.
12. Termination of this Agreement. This Agreement shall terminate upon the
earlier of (i) the date that all obligations of the parties hereunder have been
satisfied, (ii) four (4) years from the date of this Agreement. A termination of
this Agreement pursuant to the preceding sentence shall be effective for all
purposes, except that such termination shall not affect (A) the payment or
provision of compensation or benefits on account of a termination of employment
occurring prior to the termination of this Agreement as contemplated herein, or
(B) the rights and obligations of the parties contained in ancillary agreements
hereto or set forth in the Exhibits. No payments under this Agreement shall be
required for any termination of employment occurring after four (4) years from
the date of this Agreement.
13. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by the Chief Executive Officer. No waiver by
either party of any breach of, or of compliance with any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether expressed or implied) that are not
expressly set forth in this Agreement or the Exhibits hereto have been made or
entered into by either party with respect to the subject matter hereof. This
Agreement shall not supercede any vesting provisions contained in the ISO
Agreement. This Agreement shall supersede and control in the event of any
conflict between this Agreement and any other correspondence with the Company.
(c) Choice of Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois. Any dispute or claim
by one party against the other arising out of the interpretation, making,
performance, breach or termination of this Agreement
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shall be governed by the laws of the State of Illinois and shall be finally
settled by binding arbitration commenced and maintained in Xxxx County, Illinois
under the Commercial Arbitration Rules of the American Arbitration Association
by one arbitrator appointed in accordance with said Rules. Judgment on the award
rendered by the arbitrator may be entered in any Court having jurisdiction
thereof. The arbitrator shall apply Illinois law to the merits of any dispute or
claim, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to the state arbitration law.
(d) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(e) No Assignment of Benefits. To the extent permitted by law, the rights
of any person to payments or benefits under this Agreement shall not be made
subject to option or assignment, either by voluntary or involuntary assignment
or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, and any action in violation of this
subsection (e) shall be void.
(f) Employment At Will; Limitation of Remedies. The Company and the
Employee acknowledge that the Employee's employment is at will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement.
(g) Employment Taxes. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
(h) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.
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IN WITNESS THEREOF, each of the parties has executed this Agreement, in the
case of the Company by its President, as of the day and year first above
written.
"COMPANY"
TELEDATA SOLUTIONS, INC.
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Xxxxxxx X. Xxxxx
President
"EMPLOYEE"
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Xxxxx X. Xxxxx
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List of Exhibits
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Exhibit A: Duties & Responsibilities of President, COO
Exhibit B: 1996 Bonus Criteria
Exhibit C: Stock Option Agreement
Exhibit D: Noncompetition, Nondisclosure and Developments Agreement
