EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("AGREEMENT") is made and effective
this 23rd day of September, 1999, by and between Telecom Wireless Corporation
("COMPANY") and Xxxxx X. Xxxxxxxx ("EXECUTIVE").
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT
A. Company hereby agrees to initially employ Executive as Vice President
and Executive accepts such employment in accordance with the terms of
employment applicable to regular employees. Company hereby appoints
Executive as President of Prentice Technologies, Inc., a subsidiary of
the Company, through March 31, 2002 and Executive hereby accepts such
appointment. In the event of any conflict or ambiguity between the
terms of this Agreement and terms of employment applicable to regular
employees, the terms of this Agreement shall control. Election or
appointment of Executive to another office or position, regardless of
whether such office or position is inferior to Executive's initial
office or position, shall not be a breach of this Agreement.
B. The Employee will devote full time, attention, and energies to the
business of the Company and during this employment, will not engage in
any other business activity, regardless of whether such activity is
pursued for profit, gain, or other pecuniary advantage, except as
approved in writing, not to be unreasonably withheld. Employee is not
prohibited from making personal investments in other business provided
those investments do not require active involvement in the operation of
said companies.
C. Employee agrees, during and after the term of this employment, not to
reveal confidential information, or trade secrets to any person, firm,
corporation, or entity. Should Employee reveal or threaten to reveal
this information, the Company shall be entitled to an injunction
restraining the Employee from disclosing same, or from rendering any
services to any entity to whom said information has been or threatened
to be disclosed. The right to secure an injunction is not exclusive,
and the Company may pursue any other remedies it has against the
Employee for breach or threatened breach of this condition, including
the recovery of damages from the Employee.
2. DUTIES OF EXECUTIVE
A. The duties of Executive shall include the performance of all of the
duties typical of the office held by Executive as described in the
bylaws of the Company and such other duties and projects as may be
assigned by a superior officer of the Company, if any, or the board of
directors of the Company. Executive shall devote his entire productive
time, ability and attention to the business of the Company and shall
perform all duties in a professional, ethical and businesslike manner.
Executive will not, during the term of this Agreement, directly or
indirectly engage in any other business, except as approved in writing
by
Company, such approval not to be unreasonably withheld, either as an
employee, employer, consultant, principal, officer, director, advisor,
or in any other capacity, either with or without compensation, without
the advisor, or in any other capacity, either with or without
compensation, without the prior written consent of Company as defined
in Paragraph I.B above. In addition to the duties described herein,
Executive is also authorized and directed to do the following:
Unrestricted involvement as a principal in Richmond & Company Capital
Group, LLC, a venture capital firm.
3. COMPENSATION
Executive will be paid compensation during this Agreement as follows:
A. A base salary of $125,000.00 per year, payable in installments
according to the Company's regular payroll schedule. The base salary
may be increased at the end of each year by the compensation committee
of the board of directors. The adjustment will be based upon a written
evaluation of the Executive, prepared by the Executive's immediate
supervisor.
B. The Executive is eligible for an award of an Executive Bonus, computed
as defined in 3.C below beginning with the Company's fiscal year end
2000 and each fiscal year thereafter during the term of this Agreement.
C. A portion (as determined by the Company's Board of Directors) of an
Executive Bonus pool, such pool equal to 5.0% of the adjusted net
profits (hereinafter defined) of the Company. "ADJUSTED NET PROFIT"
shall be the net profit of the Company before federal and state income
taxes, determined in accordance with generally accepted accounting
practices by the Company's independent accounting firm and adjusted to
exclude: (i) any Executive Bonus payments paid pursuant to this
Agreement; (ii) any contributions to pension and/or profit sharing
plans; (iii) any extraordinary gains or losses (including, but not
limited to, gains or losses on disposition of assets); (iv) any refund
or deficiency of federal and state income taxes paid in a prior year;
and (v) any provision for federal or state income taxes made in prior
years which is subsequently determined to be unnecessary. The
determination of the adjusted net profits made by the independent
accounting firm employed by the Company shall be final and binding upon
Executive and Company. The Executive Bonus payment shall be made within
thirty (30) days after the Company's independent accounting firm has
concluded its audit. If the final audit is not prepared within ninety
(90) days after the end of the fiscal year, then Company shall make a
preliminary payment equal to fifty percent (50%) of the amount due
based upon the adjusted net profits preliminarily determined by the
independent accounting firm, subject to payment of the balance, if any,
promptly following completion of the audit by the Company's independent
accounting firm. The maximum Executive Bonus payable for any one year
shall not exceed 100% of the then applicable base salary of Executive.
D. In addition, Executive is entitled to a discretionary bonus, to be
based upon an annual, or more frequent, review of Executive's
performance, such bonus to be determined entirely
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at the discretion of the Board of Directors of the Company or an
authorized committee constituted thereof.
E. Executive will be entitled to participate in the Company's employee
stock option plan as detailed therein.
4. INCENTIVE STOCK OPTION GRANT. Employee shall be issued incentive stock
options, so long as Company employs Executive in a senior executive
position, such options to be issued in addition to any options which
may be issued Executive pursuant to the Company stock option plan, and
in accordance with the provisions set forth below:
A. The Company hereby grants to the Executive the right and option (the
"OPTION") to purchase from the Company, on the terms and subject to the
conditions set forth below, 350,000 shares of the common stock of the
Company (the "STOCK"). This Option shall constitute an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE"), to the maximum extent permitted by
applicable law, rule and regulation, and otherwise shall be treated as
a non-incentive option. The date of grant of this Option is September
23, 1999. This Option shall expire September 23, 2009.
B. The purchase prices (the applicable price being referred to herein as
the "OPTION PRICE") for the shares of Stock subject to the Option
evidenced by this Agreement and the vesting of the Option shall be as
set forth below:
(i) a portion of the Option consisting of options to purchase
50,000 shares shall have an Option Price equal to $.10 per
share and shall vest on July 1, 2000, and a portion of the
Option consisting of options to purchase an additional 50,000
shares shall have an Option Price equal to $7.73 and shall
vest on July 1, 2000, if Executive has been providing services
to the Company or a subsidiary continuously from the date of
grant through such date, subject to achievement of certain
reasonable financial performance targets approved by the
Board, consisting of, annual projections for revenue and cash
from operations and minimum annual revenues from the Company's
ASP business line (including acquisitions related thereto) of
not less than $10,000,000 for the fiscal year ended June 30,
2000.
(ii) a portion of the Option consisting of options to purchase
50,000 shares shall have an Option Price equal to $.10 per
share and shall vest on July 1, 2001, and a portion of the
Option consisting of options to purchase an additional 50,000
shares shall have an Option Price equal to $7.73 and shall
vest on July 1, 2001, if Executive has been providing services
to the Company or a subsidiary continuously from the date of
grant through such date, subject to achievement of certain
reasonable financial performance targets approved by the
Board, consisting of, annual projections for revenue and cash
from operations and minimum annual
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revenues from the Company's ASP business line (including
acquisitions related thereto) of not less than $20,000,000
for the fiscal year ended June 30, 2001.
(iii) a portion of the Option consisting of options to
purchase 75,000 shares shall have an Option Price equal to
$.10 per share and shall vest on July 1, 2002, and a portion
of the Option consisting of options to purchase an additional
75,000 shares shall have an Option Price equal to $7.73 and
shall vest on July 1, 2002, if Executive has been providing
services to the Company or a subsidiary continuously from the
date of grant through such date, subject to achievement of
certain reasonable financial performance targets approved by
the Board, consisting of, annual projections for revenue and
cash from operations and minimum annual revenues from the
Company's ASP business line (including acquisitions related
thereto) of not less than $30,000,000 for the fiscal year
ended June 30, 2002.
C. Service for this purpose includes service as an employee or director
providing bona fide services to the Company or a subsidiary. For
purposes of this Agreement, termination of service would not be deemed
to occur if the Executive, after terminating service in one capacity,
continues to provide service to the Company or any subsidiary in
another capacity. Termination of service is sometimes also referred to
herein as termination of employment or other relationship with the
Company or its subsidiaries.
D. All Options shall immediately vest and become exercisable in full upon
a Change in Control, even if all or any portion of the Options shall
have not vested. For purposes of this Agreement, a "CHANGE IN CONTROL"
shall mean: (i) any transaction or series of transactions in which any
person or group of persons, other than Xx. Xxxxx X. Xxxxxxx, directly
or indirectly (a) becomes the beneficial owner of outstanding
securities of the Company having 30% or more of the power to vote upon
the election of the Company's directors or (b) acquires 50% or more of
the Company's assets, or (ii) the occurrence of any transaction or
event in connection with which all or substantially all of the voting
securities of the Company are exchanged for, converted into, acquired
for or constitute solely the right to receive cash, securities,
property or other assets, or (iii) the conveyance, sale, lease,
assignment, transfer or other disposal of all or substantially all of
the Company's property, business or assets otherwise than in the
ordinary course of business.
5. BENEFITS
CAR ALLOWANCE. Executive will be entitled to a monthly car allowance of $650.
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HOLIDAYS. Executive will be entitled to at least seven (7) paid holidays and
four (4) personal days each calendar year. Company will notify
Executive on or about the beginning of each calendar year with
respect to the holiday schedule for the coming year. Personal
holidays, if any, will be scheduled in advance subject to
requirements of Company. Such holidays must be taken during the
calendar year and cannot be carried forward into the next year.
Executive is not entitled to any personal holidays during the first
six months of employment.
VACATION. Following the first six months of employment, Executive shall be
entitled to twenty-one paid vacation days each year.
SICK LEAVE. Executive shall be entitled to sick leave and emergency
leave according to the regular policies and procedures of Company.
Additional sick leave or emergency leave over and above paid leave
provided by the Company, if any, shall be unpaid and shall be
granted at the discretion of the board of directors.
MEDICAL AND GROUP LIFE INSURANCE. Company agrees to include Executive in
the group medical and hospital plan of Company and provide group
life insurance for Executive at no charge to Executive in the
amount of one times the annual income during this Agreement.
Executive shall be responsible for payment of any federal or state
income tax imposed upon these benefits.
PENSION AND PROFIT SHARING PLANS. Executive shall be entitled to
participate in any pension or profit sharing plan or other type of
plan adopted by Company for the benefit of its officers and/or
regular employees.
EXPENSE REIMBURSEMENT. Executive shall be entitled to reimbursement for all
preapproved reasonable expenses, including travel and
entertainment, incurred by Executive in the performance of
Executive's duties. Executive will maintain records and written
receipts as required by the Company policy and reasonably requested
by the board of directors to substantiate such expenses.
6. TERM AND TERMINATION.
A. The Initial Term of this Agreement shall commence on September 23, 1999
and it shall continue in effect for a period of three years.
Thereafter, the Agreement shall be renewed upon the mutual agreement of
Executive and Company. This Agreement and Executive's employment may be
terminated at Company's discretion during the Initial Term, provided
that Company shall pay to Executive an amount equal to payment at
Executive's then applicable base salary rate for the remaining period
of Initial Tenn. In the event of such termination, Executive shall not
be entitled to any incentive salary payment or any other compensation
then in effect, prorated or otherwise, except that all Options that
have a vesting date after the date of termination above shall
immediately vest in full upon termination regardless of whether Company
has attained the performance criteria.
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This Agreement and Executive's employment may be terminated by Company
at its discretion at any time after the Initial Term, provided that in
such case, Executive shall be paid a payment equal to six (6) months of
Executive's then applicable base salary. In the event of such a
discretionary termination, Executive shall not be entitled to receive
any incentive salary payment or any other compensation then in effect,
prorated or otherwise, except that all Options that have a vesting date
after the date of termination shall immediately vest in full upon
termination regardless of whether Company has attained the performance
criteria.
B. This Agreement may be terminated by Executive at Executive's discretion
by providing at least thirty (30) days prior written notice to Company.
In the event of termination by Executive pursuant to this subsection,
Company may immediately relieve Executive of all duties and immediately
terminate this Agreement, provided that Company shall pay Executive at
the then applicable base salary rate to the termination date included
in Executive's original termination notice.
C. In the event that Executive is in breach of any material obligation
owed Company in this Agreement, habitually neglects the duties to be
performed under this Agreement, engages in any conduct which is
dishonest, damages the reputation or standing of the Company, or is
convicted of any criminal act or engages in any act of moral turpitude
(a "CAUSE"), then Company may terminate this Agreement upon five (5)
days notice to Executive. Prior to termination the Executive will be
given written notification of lack of performance of breach of items
identified in this paragraph. The notification will identify the breach
and provide an adequate (typically 60 days or less) time for the
Executive to remedy the breach. In e ' vent of termination of the
agreement pursuant to this subsection, Executive shall be paid only at
the then applicable base salary rate up to and including the date of
termination. Executive shall not be paid any incentive salary payments
or other compensation, prorated or otherwise, including any unvested
Options described in Paragraph 4.B, above.
D. In the event Company is acquired, or is the non-surviving party in a
merger, or sells all or substantially all of its assets, The Company
will use its best efforts to have this Agreement assigned to the
acquirer or surviving Company.
7. NOTICES
Any notice required by this Agreement or given in connection with it,
shall be in writing and shall be given to the appropriate party by
personal delivery or by certified mail, postage prepaid, or recognized
overnight delivery services;
If to Company:
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Telecom Wireless Corporation
0000 XXX Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxx X. Xxxxxx, General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Executive:
Xxxxx X. Xxxxxxxx
00000 Xxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Tel: (303)
8. FINAL AGREEMENT
This Agreement terminates and supersedes all prior understandings or
agreements on the subject matter hereof. This Agreement may be modified
only by a further writing that is duly executed by both parties.
9. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
laws of the state of Colorado.
10. HEADINGS
Headings used in this Agreement are provided for convenience only and
shall not be used to construe meaning or intent.
11. NO ASSIGNMENT
Neither this Agreement nor any or interest in this Agreement may be
assigned by Executive without the prior express written approval of
Company, which may be withheld by Company at Company's absolute
discretion.
12. SEVERABILITY
If any term of this Agreement is held by a court of competent
jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, will remain in full force and
effect as if such invalid or unenforceable term had never been
included.
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13. ARBITRATION
The parties agree that they will use their best efforts to amicably
resolve any dispute arising out of or relating to this Agreement. Any
controversy, claim or dispute that cannot be so resolved shall be
settled by final binding arbitration in accordance with the rules of
the American Arbitration Association and judgment upon the award
rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. Any such arbitration shall be conducted in
Denver, Colorado, or such other place as may be mutually agreed upon by
the parties. Within fifteen (15) days after the commencement of the
arbitration, each party shall select one person to act as arbitrator,
and the two arbitrators so selected shall select a third arbitrator
within ten (10) days of their appointment. Each party shall bear its
own costs and expenses and an equal share of the arbitrator's expenses
and administrative fees of arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TELECOM WIRELESS CORPORATION
/s/ Xxxxx X. Xxxxxxxx By: /s/ X. X. Xxxxxxxx
----------------------------- -----------------------------
Xxxxx X. Xxxxxxxx Title: President
--------------------------
Name: X. X. Xxxxxxxx
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