EMPLOYMENT AND SETTLEMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
this 14th day of October, 1997, the Effective Date, by and between Electronic
Transmission Corporation, a Delaware corporation ("ETC"), and W. Xxxx Xxxxxxx
("Xx. Xxxxxxx").
ETC desires to employ Xx. Xxxxxxx, as Chief Financial Officer and Xx.
Xxxxxxx desires to accept such employment with ETC, all on the following
terms and subject to the following conditions.
NOW, THEREFORE, ETC and Xx. Xxxxxxx hereby agree as follows.
1. EMPLOYMENT. ETC hereby employs Xx. Xxxxxxx, and Xx. Xxxxxxx hereby accepts
employment by ETC, for the term and compensation and subject to the terms
and conditions hereinafter set forth.
2. DUTIES. Xx. Xxxxxxx shall serve in the capacity of Executive Vice President
and Chief Financial Officer. In that capacity, Xx. Xxxxxxx'x
responsibilities will include; all accounting functions; audit of
financial statements on an annual basis; timely financial reporting in
compliance with all regulatory bodies, including but not limited to those
required by the United States Securities and Exchange Commission for
public reporting companies; acquisition and management of capital whether
debt or equity; interfacing with the investment community with regards to
financial needs of the company; assisting in any way possible the company
in attracting sponsorship for the company's shares; financial
forecasting; and budgeting. Further, Xx. Xxxxxxx will review the
practices of the company and establish any further policies and
procedures as needed or amend existing policies and procedures to
stabilize the company financially, including but not limited to spending
controls, and organization of departmental budgeting practices. Xx.
Xxxxxxx will evaluate the current Staff being utilized and make any
changes necessary in the best interest of the company. Xx. Xxxxxxx will
review the existing debt arrangements the company has with its creditors
and make changes where be deems necessary. This will include but not be
limited to moving lines of credit, changing banking relationships,
securing additional lines of credit or additional equity that he deems to
be in the best interest of the company. Xx. Xxxxxxx will report directly
to the CEO and the Chairman of the Board of Directors.
3. COMPENSATION. As compensation for his services rendered to ETC in the
capacities set forth above, ETC shall pay Xx. Xxxxxxx a salary of
$150,000 per year with a review in 180 days and prior to the end of the
first year for increases in compensation which may be tied to the
performance of the employee and or the company. Additionally, Xx. Xxxxxxx
may receive salary increases and bonuses in such amounts as determined at
the discretion of the CEO and the Board of Directors at any time.
Employment and Settlement Agreement Between ETC and W. Xxxx Xxxxxxx - Page 2
4. BENEFITS. During the term hereof, Xx. Xxxxxxx shall be entitled to
participate in all benefits plans, including stock option plans, provided
by ETC on the same basis as other ETC senior executive officers and will
additionally receive free medical insurance for himself. ETC reserves the
right unilaterally to modify, amend, or terminate any such plans and
programs at any time and from time to time during the term of this
Agreement. Xx. Xxxxxxx shall be entitled to four weeks of paid vacation
time each year. Xx. Xxxxxxx shall also be entitled to all paid holidays
given by ETC to its senior executive officers. Xx. Xxxxxxx may perform
all of his duties while living in Dallas, Texas and may not be relocated
against his will.
5. REIMBURSEMENT OF EXPENSES. ETC shall reimburse Xx. Xxxxxxx for expenses
actually incurred by him in connection with ETC business, provided that
such expenses are reasonable and are in accordance with ETC policies.
Such reimbursement shall be made to Xx. Xxxxxxx upon appropriate
documentation of such expenditures in accordance with ETC policies.
6. TERM. The term of this Agreement shall be for the period commencing on
November 1, 1997 and ending on October 31, 2002, subject to earlier
termination as provided in Section 7. The term of this Agreement will
automatically extend for a period of 1 (one) additional year to October
31, 2003 unless either party gives notice at least 30 days prior to
October 31, 2002.
7. TERMINATION. This Agreement and Xx. Xxxxxxx'x employment hereunder shall
terminate in the event of Xx. Xxxxxxx'x death or if Xx. Xxxxxxx becomes
permanently disabled as determined by the ETC Board of Directors. This
Agreement and Xx. Xxxxxxx'x employment hereunder may be terminated
immediately by ETC "for cause" at any time the ETC Board of Directors
determines, in the exercise of its good faith judgment, that Xx. Xxxxxxx
has engaged in gross malfeasance or willful misconduct in performing his
duties hereunder and that his continued employment by ETC no longer is in
the best interests of ETC.
8. NON-COMPETITION FOR EXISTING CLIENTS AFTER TERM. Xx. Xxxxxxx agrees, for a
period of two years after the expiration of the term hereof, not to
solicit, on his own behalf or on behalf of any future employer or other
entity, any business of the same or similar nature to any business
conducted by ETC or any subsidiary or affiliate during the term hereof,
from any entity with which ETC did business, during the term hereof. The
patties recognize that this covenant not to compete for specified
customers for a limited time period is an integral part of this Agreement
and that ETC would not enter into this Agreement, or would do so only on
the basis of decreased compensation to Xx. Xxxxxxx, without this covenant.
9. NON-DISCLOSURE OF INFORMATION AND TRADE SECRETS. During his employment
hereunder and thereafter, Xx. Xxxxxxx will not disclose to any person or
entity not directly connected
Employment and Settlement Agreement Between ETC and W. Xxxx Xxxxxxx - Page 3
with ETC, or use for his own benefit, any of the trade secrets, financial
information, systems, records, or business methods of ETC or its
subsidiaries or affiliates, or any of the business relationships between
ETC or its subsidiaries or affiliates and any of their business partners
or customers, unless such disclosure shall be in direct connection with or
a part of Xx. Xxxxxxx'x performance of his duties hereunder or as may be
required by law or regulations. See addendum "A". Xx. Xxxxxxx will also
execute an Employee NonDisclosure Agreement.
10. ETC Stock options for Services. As additional compensation for his services,
Xx. Xxxxxxx shall be offered the option to purchase a total of 200,000
shares of ETC stock The purchase price will be set at the closing price
(last trade) on the effective date (or if no trades are made on the
effective date then the closing price on the closest day prior to the
effective date. This price is considered a price that constitutes 100% of
the fair market value of such shares on the effective date (the date of
the agreement. (See addendum"B") The shares shall be available to Xx.
Xxxxxxx according to the following schedule so long as he remains in the
employ of ETC: 50,000 shares on October 31, 1998; 50,000 shares on
October 31, 1999; 50,000 shares on October 31, 2000; and the balance of
50,000 shares on October 31, 2001. Upon exercising of this option Xx.
Xxxxxxx shall be entitled to include any shares purchased pursuant to
this agreement in the next registration of shares filed by the company.
Xx. Xxxxxxx represents and warrants that:
(a) he has received and carefully read this Agreement and the
materials prepared by ETC regarding its respective businesses
and statuses, is familiar with and understands them, has based
his investment decision on the information contained therein,
and has not asked any questions or requested any materials of
ETC which have not been answered or supplied; and
(b) he is acquiring the Stock for his own account for investment
and not with a view to distribution or resale thereof, (ii)
meets the suitability standards for an investment in the Stock
as set forth in the Securities Act of 1933, and applicable
U.S. and state securities laws, and all applicable regulations
under any of the foregoing (collectively the "Securities Laws
and Regulations"), (iii) understands that the Stock and the
issuance thereof, have not been registered under the
Securities Laws and Regulations, (iv) will not sell or
otherwise transfer the Stock except in compliance with the
Securities Laws and Regulations, or by will or the laws of
descent and distribution, and (v) resides at his address as
set forth in section 12 below.
11. UNAUTHORIZED TERMINATION: If ETC shall terminate Xx. Xxxxxxx'x employment
hereunder prior to the expiration of the term hereof, other than "for
cause" as set forth above, and recognizing that there is no right to
terminate such employment, then ETC shall promptly pay to Xx. Xxxxxxx as
liquidated damages an amount equal to twelve (12) months base salary.
Such amounts shall be payable to Xx. Xxxxxxx at his current monthly
salary rate
Employment and Settlement Agreement Between ETC and W. Xxxx Xxxxxxx - Page 4
until the balance is paid. Further, should such termination occur,
then all stock options that would have vested at the end of that year
will be accelerated and be available to Xx. Xxxxxxx at the time of
termination. Should there be a sale of ETC which results in a change
of control and should Xx. Xxxxxxx be terminated, the following
provisions will apply. Xx. Xxxxxxx shall receive an amount each year
until the end of this contract term equal to what his yearly salary,
raises and bonuses would have been had he remained employed by ETC and
all remaining stock options will automatically accelerate and be
available to Xx. Xxxxxxx at that time. In either case, upon exercising
of any stock options, Xx. Xxxxxxx shall be entitled to include any
shares purchased pursuant to this agreement in the next registration of
shares filed by the company. If ETC shall remove Xx. Xxxxxxx from the
office set forth in section 2 above, or significantly change his duties
as set forth therein, without his consent, then Xx. Xxxxxxx at his
option may treat such actions as an unauthorized termination under this
section II.
12. NOTICES. All notices hereunder shall be in writing and delivered personally
or sent by U.S. Mail or recognized courier service, addressed as follows or
to such other address for itself as any party may specify hereunder:
If to ETC: Electronic Transmission Corporation
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to Xx. Xxxxxxx: W. Xxxx Xxxxxxx
0000 Xxxxxxxx
Xxxxxx, XX 00000-0000
13. ENTIRE AGREEMENT COUNTERPARTS GOVERNING LAW. This Agreement expresses the
complete understanding of the parties with respect to the subject matter
hereof, superseding all prior or contemporaneous understandings,
arrangements, or agreements of the parties, and may be amended,
supplemented, or waived in whole or in part only by an instrument in
writing executed by the parties hereto, save and except for any
Non-Disclosure, Non-Compete agreement which may be in effect between the
parties. No party may assign this Agreement or its rights or obligations
hereunder without the written consent of all other parties hereto.
Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
administrators, successors, and assigns. The invalidity or
un-enforceability of any provision or provisions in this agreement shall
not affect the validity or enforceability of any other provision in this
agreement which shall remain in full force and effect. The headings
herein are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement. This Agreement may be
executed in multiple counterparts, and by the parties in separate
counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the
State of Texas.
Employment and Settlement Agreement Between ETC and W. Xxxx Xxxxxxx - Page 5
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representatives, on and
effective as of the Effective Date.
ELECTRONIC TRANSMISSION CORPORATION
By: /s/ L. Xxxx Xxxxxx
---------------------------------
L. Xxxx Xxxxxx
Chairman and CEO
/s/ W. Xxxx Xxxxxxx
---------------------------------
W. Xxxx Xxxxxxx
Employment and Settlement Agreement Between ETC and W. Xxxx Xxxxxxx - Page 6
ADDENDUM
"A"
Confidential information shall not include any information known generally to
the public (other than as a result of an unauthorized disclosure by Xx.
Xxxxxxx) or any information of a type not otherwise considered confidential
by persons engaged in the same business or businesses similar to that
conducted by ETC or any subsidiary or affiliate.
"B"
The shares of ETC stock covered by this agreement and the exercise price
thereof, shall be subject to adjustment to reflect any stock dividend, stock
split, share combination, exchange of shares, re-capitalization, mergers,
consolidation, separation, reorganization, liquidation or the like of or in
any manner involving ETC.
