EXHIBIT 10.6
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 31st day of January, 2002, by and among TOWER TECH, INC., an Oklahoma
corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive").
Whereas, the Company desires to employ the Executive as the Chief
Financial Officer of the Company, and the Executive desires to continue such
employment, on the terms and subject to the conditions hereinafter set forth;
and
Whereas, the Company has been reorganized pursuant to a plan of
reorganization (the "Plan") under Chapter 11 of the Bankruptcy Code in the
Western District of Oklahoma as approved by the Court;
Now, therefore, in consideration of the premises, and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment of Executive. The Company hereby employs the Executive,
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and the Executive accepts such employment by the Company, upon the terms and
subject to the conditions hereinafter set forth.
2. Term. Subject to earlier termination as provided in this Agreement,
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the employment of the Executive hereunder shall be for the initial term (the
"Initial Term") of two years commencing on the date set forth above (the
"Commencement Date") and ending on the second anniversary of the Commencement
Date, provided, however, that unless otherwise terminated pursuant to this
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proviso, the Employment Period (as hereinafter defined) shall be automatically
extended for successive periods of one year each (a "Renewal Period"), one on
each anniversary of the Commencement Date beginning with that anniversary which
coincides with the scheduled expiration of the Initial Term (each such
anniversary, a "Renewal Date"), unless either party gives the other party
written notice on or prior to the Termination Notice Date (as hereinafter
defined) of its election not to so extend the Employment Period beyond the then
scheduled expiration of the Employment Period. The Initial Term as so extended
from time to time (if at all) is called the "Employment Period" in this
Agreement. As used herein, the term "Termination Notice Date" shall mean that
date which is 120 days prior to the next Renewal Date.
3. Duties. During the Employment Period, the Executive shall be
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employed by the Company as its Chief Financial Officer, and the Company shall
cause each of its subsidiaries to appoint the Executive as its Chief Financial
Officer, and the Executive shall perform such duties as are consistent with such
positions. The Executive shall have such other titles and duties as each of the
Boards of Directors of the Company and its subsidiaries may in its discretion
designate, consistent with the Executive's status as the Chief Financial Officer
of the Company. In furtherance of the foregoing, the Executive shall use his
best efforts to perform well and faithfully the foregoing duties and
responsibilities.
4. Time to be Devoted to Employment. During the Employment Period, the
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Executive shall devote substantially all of his working time, attention and
energies to the performance of his duties and responsibilities under this
Agreement (except for vacations to which he is entitled pursuant to Section 5(d)
hereof and except for illness or incapacity). During the Employment Period, the
Executive shall not engage in any business activity that, in the reasonable
judgment of the Board of
Directors of the Company, conflicts with the Executive's duties hereunder,
whether or not such activity is pursued for gain, profit, or other pecuniary
advantage. Without limiting the generality of the foregoing, and subject to
Section 8 hereof, the Executive may (i) attend to outside investments, (ii)
serve as a director, trustee, or officer of or otherwise participate in
educational, welfare, social, religious, and civic organizations, and (iii)
serve as an outside or independent director on the board of directors of another
Person, so long as any such activity described in this sentence does not
interfere with the Executive's performance of his duties hereunder.
5. Compensation Benefits; Reimbursement.
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(a) The Company (or at the Company's option, any of its Affiliates)
shall pay to the Executive a base salary (the "Base Salary") during the
Employment Period at an initial rate of $110,000 per annum, payable in such
installments (but not less often than monthly) as is generally the policy of the
Company with respect to the regular compensation of its executive officers
generally. Effective as of each February 1 occurring during the Employment
Period, commencing with February 1, 2003 (each such February 1 being referred to
herein as an "Adjustment Date"), the Base Salary shall be adjusted to an amount
equal to the Base Salary plus any increase which the Board of Directors in good
faith determines to be necessary to make the Executive's Base Salary
commensurate with salaries of executives serving as chief financial officers of
companies in the Oklahoma City area which have comparable business, revenues,
profitability, and other attributes.
(b) In addition to the Base Salary, (i) during the first three
fiscal years during the Employment Period, the Executive shall be paid an annual
bonus (the "Profit Bonus") equal to two percent (2.0%) of that portion of the
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA"), calculated in accordance with Generally Accepted Accounting
Principles ("GAAP") in excess of $750,000, $1,000,000, and $1,500,000 for the
first, second, and third fiscal years, respectively, commencing with the fiscal
year ending January 31, 2003; provided, however, that for purposes of
calculating the "Profit Bonus," each fiscal year's EBITDA will be adjusted from
GAAP to include any technology transfer fee cash payments received by the
Company during such period, and (ii) during each year of the Employment Period
thereafter, at the sole discretion of the Board of Directors, the Executive may
also receive additional cash bonuses.
(c) During the Employment Period, the Company shall provide the
Executive with such employee benefits as are provided by the Company from time
to time to its employees generally. In addition, the Executive shall be entitled
to receive from the Company an automobile expense allowance of $1,000 per month
and Company paid health insurance for Executive and his family which is no less
favorable to the Executive and his family than the Company currently provides.
(d) During the Employment Period, the Executive shall be entitled
to four weeks paid vacation for each twelve-month period worked, beginning on
the Commencement Date, in addition to holidays observed by the Company.
Executive shall also be entitled to leave for personal or health reasons which
is no less favorable to Executive than that provided to employees generally.
(e) Reimbursement of Expenses. The Company shall, in accordance
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with the Company's regular policies with respect to the reimbursement of
expenses reimburse the
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Executive for all reasonable and necessary expenses and other disbursements
incurred by the Executive for or on behalf of the Company in connection with the
performance of the Executive's duties hereunder upon presentation of appropriate
receipts therefor.
(f) Sales Bonus. If a majority of the shares of New Common Stock (as
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defined in the Plan) issued pursuant to the Plan are subsequently transferred to
any Person other than an Affiliate of the original holder, or if more than 50%
of the Company's assets (based on book value or fair market value as determined
by the Board of Directors) is sold (a "Sale Event"), the Company shall pay a
bonus (the "Sale Bonus") to Management as follows:
(i) If the aggregate sale price is equal to or less than
$15,000,000, the Sale Bonus amount shall be $600,000.
(ii If the aggregate sale price is greater than $15,000,000 but
less than $25,000,000, the Sale Bonus amount shall be equal to four percent
(4.0%) of the aggregate sale price.
(iii) If the aggregate sale price is greater than $25,000,000,
the Sale Bonus amount shall be equal to six percent (6.0%) of the aggregate sale
price.
(iv) The Sale Bonus shall be deemed earned and payable to
Management simultaneous with the Sale.
Subject to Section 7(b) hereof, the Sale Bonus shall be payable to and
divided evenly between Executive and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; provided, however, at any
time prior to the earliest to occur of (i) the public announcement of a Sale
Event or (ii) the execution of a definitive contract for a Sale Event, Executive
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ may, by written notice to the Board of Directors, direct the
payment of a portion of the Sale Bonus to other members of management.
(g) Reimbursement of Back Pay. As reimbursement for aggregate back pay
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owed to the Executive in the amount of $10,000, the Company shall issue to the
Executive, promptly after execution of this Agreement, 5,000 shares of Company
common stock, par value $0.01 per share, at an agreed value of $2.00 per share,
plus an additional amount of cash sufficient to offset all of Executive's
personal income tax (federal, state and local) liabilities for (i) the issuance
of such stock (but not the subsequent sale thereof) and (ii) the cash payments,
sufficient to assure that the Executive receives distributions in the amount of
$10,000, net of all income tax liabilities for the year in which distribution is
made. The Company shall also pay Executive, promptly after execution hereof, the
sum of $2,899.98, less payroll taxes, for salary previously unpaid to Executive
as a result of limitations required by the bankruptcy proceedings.
(h) Stock Option Grant. As promptly as practicable after execution of
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this Agreement, the Company shall issue to the Executive options to purchase up
to 308,029 shares of the Company's common stock, par value $0.01 per share, at
an exercise price of $2.00 per share. Such options shall be granted pursuant to
the Tower Tech, Inc. 2002 Management Incentive Stock Option Plan and the
Management Incentive Stock Option Plan Agreement, each substantially in the form
of Exhibits A and B, respectively, hereto. As promptly as practicable after the
execution of this Agreement, the Company will file, and use its best efforts to
cause to become effective with the Securities and Exchange Commission, a
registration statement on Form S-8, or successor form, for the issuance of the
shares upon exercise of the options and to keep such registration statement
effective so long as such options are outstanding. The Company shall also take
any and all actions
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necessary or desirable to cause such shares to be registered for resale or
exempt from registration requirements under applicable state securities or blue
sky laws. The Board of Directors shall also consider not less than annually
whether to grant Executive additional stock options and shall grant such options
as the Board of Directors deems appropriate based upon the Executive's and the
Company's performance.
6. Termination.
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(a) Death or Disability. If the Executive is incapacitated or
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disabled by accident, sickness or otherwise so as to render him mentally or
physically incapable of performing the services required to be performed by the
Executive hereunder (such condition being referred to in this Agreement as a
"Disability") for a period of 120 consecutive days, or for an aggregate of 180
days during any twelve-month period, the Company may, at its option, terminate
the employment of the Executive under this Agreement upon giving the Executive
at least 15 days prior written notice to that effect. Until the Executive's
employment hereunder shall have been terminated in accordance with the
foregoing, the Executive shall be entitled to continue to receive his
compensation and benefits under Section 5 notwithstanding any such Disability.
If the Executive dies during the Employment Period, the Executive's employment
hereunder shall be deemed to cease as of the date of the Executive's death. Any
termination pursuant to this Section 6(a) is called an "Involuntary Termination"
in this Agreement.
(b) Cause. The Company may terminate the employment of the
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Executive hereunder at any time for Cause (as hereinafter defined) (such a
termination being referred to in this Agreement as a "Termination For Cause") by
giving the Executive written notice of such termination, such termination to
take effect immediately upon the giving of such notice to the Executive. As used
in this Agreement, "Cause" means the Executive's gross negligence in the
performance of his duties hereunder.
(c) The Company may terminate the employment of the Executive
hereunder without Cause (such a termination being referred to in this Agreement
as a "Termination Without Cause") by giving the Executive written notice of such
termination, such termination to take effect on the date specified in such
notice, which date shall not be earlier than the date of such notice.
(d) Voluntary. The Executive may voluntarily resign from his
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employment hereunder at any time after the third anniversary of the date hereof
by giving the Company written notice of such resignation at least 120 days prior
to the effective date of such resignation. Any termination of the Executive's
employment hereunder pursuant to the Executive's voluntary resignation in
accordance with this Section 6(d) is referred to herein as a "Voluntary
Termination."
7. Effect of Termination. (a) Upon the termination of the Executive's
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employment hereunder due to a Termination for Cause or a Voluntary Termination,
neither the Executive nor his beneficiary or estate shall have any further
rights or claims against the Company or any of its Affiliates (as defined below)
under this Agreement, except to receive (A) the unpaid portion, if any, of the
Base Salary provided for in Section 5(a), computed on a pro rata basis through
the effective date of termination (the "Termination Date") (based on the actual
number of days elapsed over a year of 365 or 366 days, as applicable), and (B)
any unpaid accrued benefits of the Executive
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pursuant to Section 5(c), and (C) reimbursement for any expenses for which the
Executive shall not have been previously reimbursed as provided in Section 5(e).
(b) Upon the termination of the Executive's employment
hereunder due to an Involuntary Termination or a Termination Without Cause, the
Company shall (A) be obligated to pay the balance of Executive's Base Salary,
Profit Bonus, health insurance premiums and automobile allowance in bi-weekly
payroll installments for the remainder of the Employment Period, unless
Executive is terminated involuntarily within one year of the end of the
Employment Period, in which case the Company shall pay all remaining
compensation due under the contract, including Executive's Base Salary, Profit
Bonus, health insurance premiums and automobile allowance, in a lump sum upon
termination, (B) be obligated to pay the Sale Bonus to Executive; provided,
however, that the Sale Event must not have occurred more than one year after the
date on which Executive is terminated, and (C) vest all stock options granted to
Executive, including those which were scheduled to vest after the date of his
termination.
8. Confidential and Proprietary Information. The Executive
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acknowledges and recognizes that during the Employment Period he will be privy
to trade secrets and confidential proprietary information critical to the
Company, and further acknowledges that the Company would be irreparably damaged
if the confidential information possessed by him relating to the business of the
Company were disclosed to or utilized by or on behalf of others in direct
competition with the Company. Accordingly, the Executive will not, at any time
prior to, during or after the Employment Period, without the Company's express
written consent (i) disclose to any Person (as hereinafter defined), except as
required by law, subpoena or investigation, any nonpublic information concerning
the business, clients or affairs of the Company for any reason or purpose
whatsoever, or (ii) make use of any of such non-public information for his own
purpose or benefit or for the purpose or benefit of any Person except the
Company or any of its Subsidiaries. For the purposes of this Section 8,
non-public information shall not be deemed to include information which (i) is
at the time of receipt or thereafter becomes publicly known through no wrongful
act of the Executive, or (ii) is received from a third party not under an
obligation to keep such information confidential.
9. Severability. It is the desire and intent of the parties
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hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
10. Remedies. The Executive acknowledges and understands
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that the provisions of this Agreement are of a special and unique nature, the
loss of which cannot be adequately compensated for in damages by an action at
law, and that the breach or threatened breach of the provisions of this
Agreement would cause the Company or any of its Subsidiaries irreparable harm.
In the event of a breach of threatened breach by the Executive of the provisions
of this Agreement, the Company or any of its Subsidiaries shall be entitled to
an injunction restraining the Executive from such breach. Nothing contained in
this Agreement shall be construed as prohibiting the Company or any of its
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Subsidiaries from pursuing, or limiting the Company's or any of its
Subsidiaries' ability to pursue, any other remedies available for any breach or
threatened breach of this Agreement by the Executive.
11. Executive's Representations. The Executive hereby represents and
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warrants to the Company that (a) the execution, delivery and performance of this
Agreement by the Executive does not and will not conflict with, breach, violate
or cause a default under any agreement, contract or instrument to which the
Executive is a party or any judgment, order or decree to which the Executive is
subject and (b) the Executive is not a party to or bound by any employment
agreement, consulting agreement, non-compete agreement, confidentiality
agreement or similar agreement with any other Person.
12. Definitions. As used in this Agreement, the following terms have
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the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with such Person. For the
purpose of the above definition, the term "control" (including, with
correlative meaning, the terms "controlling," "controlled by" and
"under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Person" shall be construed broadly and shall include an individual, a
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partnership, a corporation, an association, a joint stock company, a
limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or
political subdivision thereof.
"Subsidiary" means, with respect to any Person, any other Person whose
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shares of stock or other Securities having a majority of the general
voting power in electing the board of directors or equivalent
governing body of such other Person are, at the time as of which any
determination is being made, owned by such Person either directly or
indirectly through one or more other entities constituting
Subsidiaries.
13. Notices. All notices, claims, certificates, requests, demands and
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other communications hereunder shall be in writing and shall be deemed to have
been duly given and delivered if (a) delivered personally, (b) sent by
nationally-recognized overnight courier guaranteeing next business day delivery,
(c) sent by facsimile or (d) sent by registered or certified mail, postage
prepaid, return receipt requested and addressed as follows:
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(i) if to the Company, to:
Tower Tech, Inc.
▇▇▇▇▇ ▇. ▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Executive, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery, (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (iii) in the case of facsimile transmission, when received, and (iv)
in the case of mailing, on the fifth Business Day following that on which the
piece of mail containing such communication is posted. As used herein, "Business
Day" means a day that is not a Saturday, Sunday or a day on which banking
institutions in Oklahoma City, Oklahoma are not required to be open.
14. Amendment and Waiver. No waiver, amendment or modification of any
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provision of this Agreement shall be effective unless in writing and signed by
each party hereto. No failure or delay by any party in exercising any right,
power or remedy under this Agreement shall operate as a waiver thereof or of any
other right, power or remedy. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
15. Arbitration. Any dispute between the parties out of or related to
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this Agreement and involving a claim for money damages shall be conducted
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. All arbitration shall be governed by the Federal Arbitration Act
and the arbitration decision shall be enforceable in any court of competent
jurisdiction. This obligation to arbitrate shall survive even if this Agreement
shall be alleged to be rescinded or terminated. In any dispute involving claims
in excess of $50,000, three arbitrators shall be employed. The arbitration
hearing shall be convened in Oklahoma City, Oklahoma and shall take place within
six months from the service of the statement of claim unless the hearing cannot
fairly and practicably be so convened. No discovery deposition shall be taken
although the parties shall be entitled to engage in document discovery.
16. Governing Law. All questions concerning the construction,
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interpretation and validity of this Agreement shall be governed by and construed
and enforced in accordance with the domestic laws of the State of Oklahoma,
without giving effect to any choice or conflict of law provision or rules
(whether in the State of Oklahoma or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Oklahoma, except as otherwise
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provided by Section 15. In furtherance of the foregoing, the internal law of the
State of Oklahoma will control the interpretation and construction of this
Agreement, even if, under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily apply.
17. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous negotiations, correspondence, understandings and
agreements between the parties with respect thereto, whether oral or written.
This Agreement may be amended only by an agreement in writing signed by both
parties hereto.
18. Binding Effect; Assignment. This Agreement shall be binding upon
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and inure to the benefit of the parties hereto and their respective Affiliates,
officers, employees, agents, successors and assigns (including, in the case of
the Company or any of its Subsidiaries, the successor to the business of the
Company as a result of the transfer of all or substantially all of the assets or
capital stock of the Company or any of its Subsidiaries); provided, however,
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that the Executive may not assign this Agreement or any of his rights or
interests herein, in whole or in part, to any other Person without the prior
written consent of the Company.
19. Headings. The section headings contained in this Agreement are for
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reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in any number of
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counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
agreement.
Dated the day and year first above written.
COMPANY: TOWER TECH, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name:
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Title:
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EXECUTIVE:
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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