Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT (The "Agreement") is made, entered into and executed as of this
1st day of January, 1999, by and between Xxxxx Xxxxx (hereinafter referred to as
the "Executive"), and Blue Wave Systems, a Delaware corporation (herein referred
to as the "Employer").
WITNESSETH
WHEREAS, Employer desires to employ Executive as President and Chief Executive
Officer;
WHEREAS, Executive desires to accept such employment on the terms and conditions
herein set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Employer and Executive agree as follows:
ARTICLE I
AGREEMENT
Employment
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1.01 Subject to the terms and conditions of this Agreement, Employer agrees to
employ Executive as President and Chief Executive Officer, and
Executive hereby accepts such employment with Employer.
Term
----
1.02 The initial term ("Initial Term") of Executive's employment hereunder
shall commence on April 30, 1998 (hereunder referred to as the
"Effective Date") and shall continue thereafter through April 30,
2002, unless earlier terminated as provided herein.
ARTICLE II
TITLE AND AUTHORITY
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General
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2.01 Executive shall render such services as are normally delegated to the
position for which Executive is being hired. In performing such
duties hereunder, shall give employer the benefit of his special
knowledge, skills, contacts and business experience and shall devote
substantially all of his business time, attention, ability and
energy to the business of the Employer. Executive may not serve as a
Director of other companies without the prior approval of the Board
of Directors.
ARTICLE III
COMPENSATION
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General
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3.01 As compensation for services rendered under this Agreement, Executive
shall be entitled to receive from Employer the Base Salary, Short
Term Incentive Bonus, Stock Options and other Benefits, described
hereinafter.
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Base Salary
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3.02 Executive shall receive an aggregate Base Salary at the rate of $12,500
Dollars (per month), to be paid in accordance with the employer's
general salary policy in effect from time to time. Said Base Salary
shall be adjusted annually on the anniversary date of the Effective
Date of this Agreement in a percentage not less than the average
annual increase for like positions as reported in the Annual
Compensation Survey of the American Electronics Association (AEA),
or similar survey.
Short Term Incentive Bonus
--------------------------
3.03 Employer and Executive shall agree, on an annual basis, on a Short-Term
Incentive Bonus ("Bonus") plan for Executive. The intent of the
parties is that the Bonus Plan will result in total cash
compensation, including Base Salary and Bonus, which is consistent
with compensation practices of similar companies with similar
performance.
Employer and Executive agree that the Bonus Plan will be tied to survey
data published by the American Electronics Association (AEA), which
provides survey information regarding the performance of companies
based on various measures, for example but not limited to, return on
assets or return on capital, as well as survey information regarding
executive compensation practices. Employer and Executive will agree
each year on the method of measuring Employer's performance which
will be used in the Bonus Plan for that year. For example, if
Employee and Executive agree in a given year that return on assets
will be the appropriate measure of Employer's performance for that
year, and if the AEA survey indicates that Employer's return on
assets would fall in the 50th percentile of companies similar to
Employer, then the Bonus Plan would result in total compensation to
President and Chief Executive Officer that would at least equal that
of the total compensation of executives who rank in the 50th
percentile of total compensation for similar companies according to
the AEA survey.
As such compensation survey data records actual compensation practices in
prior years and will be used to establish compensation for the
Executive in future years, survey data will be adjusted for
inflation in executive cash compensation over time. This survey data
will be based upon current information no more than six (6) months
to one year aged.
The Employer and Executive shall agree on a Bonus Plan by the first Board
Meeting following the end of the prior Financial Year of the
Company. In the absence of an agreed upon Bonus Plan, the annual
Bonus shall be equal to 5% of the Net Income Before Interest and
Taxes.
Said Bonus shall be paid to Executive within sixty (60) days of the end of
the Financial Year of the Company.
Executive and Employer agree that the basis of future Bonuses may be
altered by the mutual consent of both parties.
Other Benefits
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3.04 Employer shall provide Executive with Medical Insurance, Dental Insurance,
Life Insurance and other such benefits that are the same or
substantially similar to, coverage provided from time to time to
other Officers of Employer. Executive shall be allowed twenty-five
(25) business days of vacation per calendar year.
1999 Short term Incentive Bonus
-------------------------------
3.05 Based on the financial performance of Employer during FY 1999, Employer
shall pay to Executive a FY99 on target Bonus of $15,000 for the
period January 1, 1999 to June 30, 1999.
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ARTICLE IV
TERMINATION
General
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4.01 Employer and Executive shall have the right to terminate the employment of
Executive as set forth in this Article IV.
Inability of Executive to Perform
---------------------------------
4.02 If Executive shall become unable to carry out and perform fully his duties
hereunder, and such inability shall continue for a period of ninety
(90) consecutive days, the Board of Directors may, at any time
thereafter, by giving Executive written notice of such termination,
fully and finally terminate this Agreement. Termination under this
Section 4.02 shall become effective as of the date provided in such
notice. Upon such termination, Executive shall receive only such
amounts as are earned under and due to him under this Agreement.
including any unpaid Base Salary and a prorate share of any Bonus
earned as a result of his activities prior to termination, and
thereafter no further consideration or compensation shall be owed by
Employer to Executive. Since the Bonus for the current Company
Financial Fiscal Year can not be calculated until the end of the
Company Financial Fiscal Year, the prorata Bonus shall be paid out
at the end of the Company Financial Fiscal Year at the same time it
would have been paid had Executive remained employed through the end
of the Company Financial Fiscal Year. The Company will pay
reasonable relocation expenses to the UK, if at time of termination,
the executive has not received a visa entitling him to permanent
residency in the USA. The remedy described in this paragraph shall
be in addition to, and not to the exclusion of, the other remedies
of termination rights set forth in this Agreement.
Death of Executive
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4.03 The employment of Executive shall automatically terminate upon the death
of Executive. Upon such termination, Executives estate shall receive
only such amounts as are earned under and due to him under this
Agreement including any unpaid Base Salary and a prorata share of
any Bonus earned as a result of his activities prior to termination
plus any Life Insurance benefits, and thereafter no further
consideration or compensation shall be owed by Employer to Executive
or to his estate. Since the Bonus for the current Company Financial
Fiscal Year can not be calculated until the end of the Company
Financial Fiscal Year, the prorata Bonus shall be paid out at the
end of the Company Financial Fiscal Year at the same time it would
have been paid had Executive remained employed through the end of
the Company Financial Fiscal Year. The Company will pay reasonable
relocation expenses to the UK, if at time of termination, the
executive has not received a visa entitling him to permanent
residency in the USA.
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Termination for Cause
---------------------
4.04 In addition to any other remedies that Employer may have at law or in
equity, the Board of Directors may immediately terminate Executive's
employment under this Agreement by giving Executive written notice
of such termination upon occurrence of any of the following events:
A. Failure of Executive to present for work or duties set forth herein for
three (3) or more consecutive business days, except during
vacations, periods of illness or other personal emergencies without
giving notice to Employer and receiving approval of Employer of such
absence, which approval shall not be unreasonably withheld.
B. Executive's conviction of a felony offense or commission by Executive of
any act materially damaging to the reputation of Employer.
C. Dishonesty, fraud, unlawful discrimination or theft on the part of
Executive.
D. Executive's using any confidential or proprietary information of the
employer, or divulging any such information to third parties in a
manner clearly opposed to the best interests of Employer.
E. Executive has materially breached any of the terms, provisions, covenants
or representations set forth in this Agreement.
Upon termination for any of the reasons described above, Executive shall
receive only such amounts as are earned under and due to him under
this Agreement including any unpaid Base Salary earned as a result
of his activities prior to termination, and thereafter no further
consideration or compensation shall be owed by Employer to
Executive. In particular, Executive shall not be entitled to any
severance or benefits of any sort, nor any Bonus. Employer may
deduct from Executive's paycheck any unauthorized expenses, charges
or misappropriations for which Employer may be responsible as result
of Executive's conduct.
Before Employer may terminate this Agreement under Subparagraphs 4.04 E or
F, Employer must give Executive thirty (30) days written notice of
the specific acts or omissions complained of and must allow
Executive to cure engaging in such conduct during the thirty day
notice period. Employer and Executive specifically agree that
failure to meet performance expectations shall not be grounds for
termination under this paragraph.
Termination by Employer Without Good Cause or Poor Performance
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4.05 The Board of Directors may terminate Executive's employment under this
Agreement without any cause whatsoever by giving written notice of
such termination to Executive, specifically including termination
for poor performance. Upon such notice of termination Employer shall
pay Executive a total of current annual salary in twelve (12) equal
monthly installments, with the first installment to be paid no later
than 30 days after the effective date of termination.
Termination by Executive
------------------------
4.06 Executive may, with or without cause, terminate his employment under this
Agreement by giving Employer at least ninety (90) days notice of
such termination. Upon such termination, Executive shall receive
only such amounts as owed to him under this Agreement as a result of
his activities prior to the termination date. Upon receipt of such
notice, Employer may elect to terminate Executive's employment at
any time upon the payment of the prorata Base Salary through the end
of the ninety day notice period.
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In the event Executive gives such notice prior to the end of any Financial
Year of the Company no Bonus shall be earned for that Financial Year
of the Company. In the event Executive gives such notice after the
end of Financial Year of the Company but prior to the payment of any
earned Bonus said Bonus shall continue to be due and payable on the
required payment date.
4.07 Executive agrees that after employment with the Employer terminates, he
will not directly or indirectly use or disclose to any person or
business entity any financial information involving Blue Wave
Systems or proprietary information involving its products,
manufacturing processes, marketing, sales, and operations. Executive
agrees that all financial information involving Blue Wave Systems
and information involving Blue Wave Systems products, manufacturing
processes, marketing, sales, and operations are the exclusive
property of Blue Wave Systems and that he shall not retain any
records, materials or other documents involving the above designated
matters.
4.08 Executive agrees that during the one-year period following the termination
of his employment by Blue Wave Systems, he will not, directly or
indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in
any other individual or representative capacity, engage or
participate in any business or activity that is of the type
conducted, authorized, offered, or provided by Blue Wave Systems.
Further, during this same period Executive agrees that he will not,
directly or indirectly, recruit or hire or attempt to recruit or
hire any person who is employed by Blue Wave Systems during the
twelve-month period subsequent to the termination of his employment.
During this same period, Executive agrees that he shall not contact,
directly or indirectly, any vendor or customer of Blue Wave Systems
for the purpose of encouraging the vendor or customer to alter in
any way its business relationship with Blue Wave Systems. Executive
represents to Blue Wave Systems that the enforcement of the
restrictions contained in this paragraph will not be unduly
burdensome to him because, among other things, Executive will
receive the Severance Payment referenced herein and, in order to
induce Blue Wave Systems to enter into this Agreement, Executive
further represents and acknowledges that he will be willing and able
to work and earn a livelihood not prohibited by this paragraph.
Multiple Causes of Termination
------------------------------
If Executive's employment is terminated in a fashion that would qualify
him for severance payments and benefits under more than one
provision of this Agreement, Executive will be entitled to select
among the severance packages for which he qualifies, at his sole
option, the severance package that he will accept. In no event shall
Executive be entitled to receive more than one of the severance
packages described herein.
ARTICLE V
EXPENSE REIMBURSEMENT
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General
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5.01 Executive is authorized to incur reasonable business expenses in promoting
the business of Employer, including expenditures and travel in
accordance with Employer's standard procedures in effect from time
to time.
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ARTICLE VI
MISCELLANEIOUS
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Notices
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6.01 Any notices to be given hereunder by either party to the other may be
effected either by personal delivery or by mail, registered or
certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the following
addresses:
If to Employer: Blue Wave Systems Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
If to Executive: Xxxxx Xxxxx
0000 Xxx Xxxxx
Xxxxxxxxxx, XX 00000
Any party may change his or its address by written notice in accordance
with this section. Notices delivered personally shall be deemed
communicated as of the actual receipt, mailed notices shall be
deemed communicated as of three (3) days after proper mailing.
Inclusion of Entire Agreement Herein
------------------------------------
6.02 This Agreement supersedes any and all other agreements either oral or in
writing, between the parties hereto with respect to the employment
of Executive by Employer and contains all of the covenants and
agreements between the parties with respect to such employment in
any manner whatsoever.
Law Governing Agreement
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6.03 This Agreement shall be governed by and constructed in accordance with the
laws of the State of Texas.
Attorney's Fees and Costs
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6.04 If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
Waiver
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6.05 No term or condition of this Agreement shall be deemed to have been waived
nor shall there be any estoppel to enforce any of the terms or
provisions of this Agreement except by written instrument of he
party charged with such waiver or estoppel. Further, it is agreed
that no waiver at any time of any of the terms or provisions of this
Agreement shall be construed as a waiver at any of the other terms
of provision of this Agreement and that a waiver at time of any of
the terms or provisions of the Agreement shall be constructed as a
waiver at any subsequent time of the same terms or provisions.
Amendments
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6.06 Except as otherwise provided in Section 6.07, no amendment or modification
of this Agreement shall be deemed effective unless and until
executed in writing by all of the parties hereto.
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Severability and Limitation
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6.07 All agreements and convenants contained herein are severable and, in the
event any of them shall be held to be invalid by any competent
court, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein. Should any court
or other legally constituted authority determined that for any such
agreement or covenant to be modified to limit its duration or scope,
the parties hereto shall consider such agreement or covenant to be
amended or modified with respect to duration and scope so as to
comply with the orders of any such court or other legally
constituted authority, and as to all other portions of such
agreement or covenants they shall remain in full force and effect as
originally written.
Headings
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6.08 All heading set forth in this Agreement are intended for convenience only
and shall not control or affect the meaning, construction or effect
of this Agreement or of any of the provisions thereof.
Assignment
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6.09 Executive agrees that his representations, warranties, covenants,
promises and obligations contained herein may be assigned by
Employer to any person, partnership, firm, association, corporation
or other business entity to which Employer may transfer its business
and assets or any portion thereof, but without prejudice to
Executive's rights against Employer hereunder.
Executed as of this day year first above written.
EMPLOYER:
Blue Wave Systems:
By:
----------------------------------
Its: Director and Member, Compensation Committee
EXECUTIVE:
----------------------------------------
Xxxxx Xxxxx
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Arbitration Agreement
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Executive and Employer agree to use binding arbitration for any dispute or
disagreement that Executive may have with Employer or that Employer may have
with Executive that arises in any way from Executive's employment or from
Executive's Employment Agreement, whether over hiring, termination, pay,
benefits, discrimination, or any other topic, and whether arising in contract,
tort, under statute or otherwise. Employer and Executive understand that by
means of this Agreement, they are both substituting the binding arbitration
process for their rights to access a court and/or jury, and they further agree
that each party to this Agreement is entitled to rely on the existence of this
Agreement in all matters related to Executive's employment. The parties agree
that the arbitration will be governed by the rules of the American Arbitration
Association except as otherwise set forth in this Agreement. Employer and
Executive will agree upon an arbitrator to hear any dispute. If they can not
agree, they will select the arbitrator pursuant to the rules of the American
Arbitration Association. The arbitrator may not grant any award or relief to
either Employer or Executive that exceeds, in amount or form, that allowed by
applicable law. The prevailing party shall be entitled to reasonable attorney's
fees, cost, expert witness fees and necessary disbursements in addition to any
other relief to which such party may be entitled. The arbitrator will hear each
side's arguments and will reach a decision that binds both parties. Either
party may have that judgment entered on the arbitrator's award in any court of
competent jurisdiction and it will be binding, final and unappealable.
Arbitration shall occur in Dallas County, Texas unless otherwise agreed in
writing by the parties.
EMPLOYER:
Blue Wave Systems:
By:________________________________________
Its: Director and Member, Compensation Committee
Date:______________________________________
EXECUTIVE:
_____________________________________
Xxxxx Xxxxx
Date:________________________________
