EMPLOYMENT AGREEMENT
EXHIBIT
10.16
This
Employment Agreement ("Agreement") is entered into by Eagle Broadband, Inc.
("Company") and Xxxxxxx Xxxxxx Xx. ("Employee"), to be effective as of July
21,
2004 (the "Effective Date").
WITNESSETH:
WHEREAS,
Employee will become employed by Company on the Effective Date; and
WHEREAS,
the Company desires to employ Employee from and after the Effective Date
pursuant to the terms and conditions and for the consideration set forth in
this
Agreement, and Employee desires to be employed by Company pursuant to such
terms
and conditions and for such consideration.
NOW,
THEREFORE, for and in consideration of the mutual promises, covenants, and
obligations contained herein, the Company and Employee agree as
follows:
ARTICLE
l: EMPLOYMENT AND DUTIES:
1.1
The
Company agrees to employ Employee, and Employee agrees to be employed by the
Company, beginning as of the Effective Date and continuing until the date of
termination of Employee's employment ("Termination Date") or the expiration
of
this Agreement by its terms at the end of the Term and any renewals thereof
("Expiration Date"), subject to the terms and conditions of this Agreement.
The
"Employment Period," as used herein, shall mean the period commencing on the
Effective Date, and ending on the earlier of the Termination Date or the
Expiration Date. The "Term," as used herein, shall mean the two-year period
commencing on the Effective Date, and expiring at midnight of the day before
the
second anniversary of the Effective Date.
(a)
At
least 30 days prior to the expiration of the Term (and each mutually agreed
to
extension thereof), the board of directors ("Board") of the Company shall notify
the Employee, in writing pursuant to Section 5.1 , of the Board's
desire to continue Employee's employment beyond the end of the Term (or any
mutually agreed to extension thereof). If the Board desires to retain the
Employee, then the parties shall amend this agreement to extend the Employment
Period for an additional two-year period ("Extension Period"), and the Term
(or
any mutually agreed to extension thereof) shall be extended for an additional
two years, or a new employment agreement (on substantially the same terms as
this Agreement) shall be negotiated, prepared, and put into effect prior to
the
end of the Term (or any mutually agreed to extension thereof); however if the
parties cannot agree to the terms of a new agreement by the expiration of the
Term (or any mutually agreed to extension thereof), then Employee's employment
shall terminate at the end of the Term (or any mutually agreed to extension
thereof), and shall be subject to 3.1(b).
(b)
For
the avoidance of doubt it is the parties' understanding that if this Agreement
is extended for an Extension Period or any subsequent Extension Period, at
the
end of any such Extension Period, the provisions of Section 1.1(a) shall apply,
and any reference
in this Agreement to the Term shall include any mutually agreed extension
thereof, whether or not expressly noted.
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1
1.2
Beginning as of the Effective Date and throughout the Term (and mutually agreed
to extension thereof), Employee shall be employed as Chief Board Administrative
Officer of the Company. Employee agrees to serve in such position, and to
perform diligently and to the best of Employee's abilities the duties and
services pertaining to such positions as reasonably determined and assigned
by
the Board, as well as such additional or different duties and services
appropriate to such positions which the Employee from time to time may be
directed to perform by the Board. The Board initially will require Employee
to
review and revise the Company's compliance procedures, with particular attention
to the requirements of Section 404 of the Sarbanes Oxley Act. Employee shall
report to the lead independent director of the Board or to the independent
directors of the Board as the Board shall designate.
1.3
Employee shall at all times comply with and be subject to such policies and
procedures as the Company may establish from time to time, including, without
limitation, the Company's Employee Handbook and Code of Business
Ethics.
1.4
Employee shall, during the Employment Period, devote Employee's full business
time, energy, and best efforts to the business and affairs of the Company.
Employee may not engage, directly or indirectly, in any other business,
investment, or activity that interferes with Employee's performance of
Employee's duties hereunder, is contrary to the interest of the Company or
any
of its affiliated subsidiaries and divisions (collectively, "Eagle Broadband,
Inc."), or requires any significant portion of Employee's business time. The
foregoing notwithstanding, the parties recognize and agree that Employee may
engage in passive personal investments and other business activities that do
not
conflict with the business and affairs of the Company or interfere with
Employee's performance of his duties hereunder. Employee shall be eligible
to
serve on the board of directors or committees thereof of entities other than
Eagle Broadband, Inc. during Employee's employment by the Company, subject
to
the Board's advance consideration and approval thereof. Employee shall be
permitted to retain any compensation received for approved service on any
unaffiliated corporation's board of directors or committees
thereof.
1.5
Employee acknowledges and agrees that Employee owes a fiduciary duty of loyalty,
fidelity, and allegiance to act at all times in the best interests of the
Company and to do no act which would, directly or indirectly, injure any such
entity's business, interests, or reputation. It is agreed that any direct or
indirect interest in, connection with, or benefit from any outside activities,
particularly commercial activities, which interest might in any way adversely
affect the Company or involves a possible conflict of interest. In keeping
with
Employee's fiduciary duties to the Company, Employee agrees that during the
Employment Period Employee shall not knowingly become involved in a conflict
of
interest with the Company, or upon discovery thereof, allow such a conflict
to
continue. Moreover, during the Employment Period Employee shall not engage
in
any activity which might involve a possible conflict of interest without first
obtaining approval in accordance with this Agreement and the Company's policies
and procedures.
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ARTICLE
2: COMPENSATION AND BENEFITS:
2.1
During the Employment Period, the Employee shall receive a base salary ("Base
Salary") of One Hundred and Fifty Thousand Dollars ($150,000) per annum, less
all required deductions, including but not limited federal withholding, social
security and other taxes, and payable bi-weekly on the Company's regular payroll
schedule. During the Employment Period, the Base Salary may be reviewed
periodically by the Compensation Committee of the Board (the "Compensation
Committee"). The Compensation Committee may make recommendations to the Board
to
revise the Employee's Base Salary, which may only be revised upon approval
by
the Board. Any increase in the Base Salary shall not serve to limit or reduce
any other obligation to the Employee under this Agreement. During the Term
(and
each mutual extension thereof), the Base Salary shall not be
reduced.
2.1 In
addition to the payment of Base Salary, the Company hereby grants to the
Employee, as an incentive to maximize the potential of the Company, two equity
incentive:
First,
the Company shall issue non-qualified stock options (the "Stock Options") to
purchase 225,000 shares of common stock from the Company. The Stock Options
shall be exerciseable at $ 0.78 per share [July 21, 2004 closing price] and
shall vest monthly in equal increments over a 24 month period starting with
the
date of this Agreement. The Stock Option Agreement pertaining to the Stock
Options shall contain a cashless conversion feature as well as standard
anti-dilution provisions. The Stock Option Agreement shall also provide that
the
Stock Options are non-transferable and expire at the close of business on June
30, 2009. The Stock Options and the stock issuable thereunder shall be
registered under a Form S-8 immediately upon issuance of the Stock
Options.
Second,
the Executive shall receive grants of shares of common stock of the Company
based on the attainment of four specific objectives, the first and second as
defined by the lead Independent Director or the majority vote of the Independent
Directors, as follows:
25,000
shares upon the development of procedures to meet compliance criterion required
under the Sarbanes Oxley Act.
25,000
shares upon the establishment and implementation of effective processes and
controls to ensure efficient and timely Board Administration.
25,000
shares when Eagle Broadband Inc. stock reaches $3.00 a share. 25,000 shares
when
Eagle Broadband, Inc. records a profitable quarter.
2.2
During the Employment Period, the Employee shall be entitled to participate
in
incentive, savings, and retirement plans, and other standard benefit plans
afforded to executive-level employees of the Company, including, without
limitation, all medical, dental, disability, group life, accidental death,
D&O indemnity, and travel accident insurance plans and programs of the
Company, to the extent Employee is otherwise eligible under the terms and
conditions of the applicable plan or policy, and as such plans or policies
may
be
from
time
to time be amended, modified or terminated by the Company without prior notice.
Dependents of Employee may participate in such plans to the extent allowed
for
other dependents of executive level Employees of the Company as allowed by
the
applicable plan. This Agreement shall not be construed to limit in any respect
the Company's right to establish, amend, modify, or terminate any benefit plan
or policy. Furthermore, the Company shall not by reason of this Article 2 be
obligated to institute, maintain, or refrain from changing, amending, or
discontinuing, any incentive compensation, employee benefit, or stock or stock
option program or plan, so long as such actions are similarly applicable to
covered employees generally.
2.3
During the Employment Period, the Company shall pay or reimburse Employee for
all actual, reasonable, and customary expenses incurred by Employee in the
course of his employment, including business-related travel expenses, subject
to
the terms of and Employee's compliance with the Company's Expense Policy, as
amended from time to time, and any other applicable Company policies related
to
business expenses.
2.4 During
the Employment Period, the Employee shall be entitled to four weeks of vacation,
fully paid, per calendar year.
2.5
The
Company may withhold from any compensation, benefits, or amounts payable under
this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
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ARTICLE
3: TERMINATION OF EMPLOYMENT
AND
EFFECTS OF SUCH TERMINATION:
3.1 (a) Employee's
employment shall be terminated during the Employment Period by reason of the
following circumstances:
(i) Death
of
Employee.
(ii)
Permanent Disability. "Permanent Disability" shall mean Employee's physical
or
mental incapacity to perform his usual duties, with such condition likely to
remain continuously and permanently as determined by the Board of Directors.
The
decisions as to whether and as of what date Employee has become permanently
disabled are delegated to the Board of Directors for determination, and any
dispute of Employee with any such decision shall be limited to whether the
Board
of Directors reached such decision in good faith.
(iii)
Voluntary Termination. "Voluntary Termination" shall mean a termination of
employment at the election of Employee. Employee will provide the Company with
30 days advance notice of his intent to terminate his employment voluntarily.
Employee shall continue to remain an employee of the Company through the 30-day
notice period and will perform such duties, if any, assigned to him by the
Company during the notice period. Notwithstanding the foregoing, the Company
may, at its option, waive the Employee's obligation to remain an employee during
all or any portion of the 30-day notice period, in which case Employee's
employment shall cease immediately.
(iv)
Termination by Company for Cause. "Termination for Cause" shall mean a
termination of employment immediately upon notice to the Employee from the
Company that an event constituting "Cause" has occurred. For purposes of this
Agreement, the term "Cause" shall be defined as: (a) a material act of
dishonesty or fraud; (b) a knowing and material violation of any written policy
of the Company or applicable to the Company's operations; (c) a knowing and
material violation of an applicable law, rule, or regulation that exposes the
Company to damages or liability; (d) a material breach of fiduciary duty; or
(e)
conviction of a felony. In the event that Employee is terminated for Cause,
Employee shall be provided
with
notice of such termination in accordance with Section 5.1 below.
(b)
In
the event Employee's employment terminates as a result of any of the
circumstances described in 3.l(a)(i) through (iv) above, all future compensation
to which Employee would otherwise be entitled and all future benefits for which
Employee is eligible shall cease and terminate as of the Termination Date,
except as specifically provided in this Section 3.1 or the terms of any of
the
Company's health or welfare plans, and Employee shall receive payment, if any,
for accrued and unused vacation days according to the Company's current policy
applicable to payment for unused vacation.
(c)
Notwithstanding anything contained in 3.1(b), in the event that Employee's
employment terminates as a result of death or permanent disability resulting
from any accident or incident beyond Employee's control that occurs while
Employee is traveling on Company business or is in the course and scope of
employment (excluding any accident or incident occurring when Employee is
traveling within Houston and to or from his normal place of business or his
residence), the preceding paragraph shall not apply, and instead Employee (or
his Estate, as the case may be) shall be entitled to receive payment subject
to
and calculated in accordance with the provisions of Sections 3.2(a) and
3.2(a)(i) through (iii) below.
3.2
The
Company reserves the right to terminate Employee's employment for any reason
other than the circumstances described in Sections 3. l (a)(i) through
3.1(a)(iv) above, or to end Employee's employment upon the expiration of the
Term. Should the Company terminate the Employee's employment or elect to not
renew the Agreement, it shall provide him with written notice ("Notice of
Termination" or "Notice of Non-Renewal"). The Notice of Termination shall
specify the Termination Date.
(a)
If
the Termination Date occurs during the Term (or any mutual extension thereof),
Company shall pay Employee, within thirty (30) days after the Termination Date,
and after Employee's execution of a full release of all claims against the
Company (excluding only claims for benefits and payments to be payable after
Termination Date under any of the Company's health or welfare plans, a
"Termination Payment," in lump sum cash (subject to required
taxes and withholdings) consisting of the following:
(i) pro
rata
Base Salary through the Termination Date
(ii)
payment, if any, for accrued and unused vacation days according to the Company's
current policy applicable to payment for unused vacation; and
(iii) the
Employee's Base Salary for a one (1) year period.
(b)
Termination of the employment relationship as a result of expiration of the
Term
of this Agreement following a Notice of Non-renewal shall not entitle Employee
to a "Termination Payment." Employee shall receive payment, if any, for accrued
and unused vacation days according to the Company's current policy applicable
to
payment for unused vacation and payment of any claims under the Company's health
and welfare plans that are due and payable on the Expiration Date.
3.3
Any
Termination Payment paid to Employee pursuant to Section 3.2 shall be in
consideration of Employee's continuing obligations under Article 4. Nothing
contained in this Article 3 shall be construed to be a waiver by Employee of
any
benefits accrued for or due Employee under any employee benefit plan (as such
term is defined in the Employee Retirement Income Security Act of 1974, as
amended), maintained by the Company except that Employee shall not be entitled
to any severance benefits pursuant to any severance plan or program of the
Company.
3.4
Termination of the employment relationship does not terminate those obligations
imposed by this Agreement which are continuing obligations, including Employee's
obligations under Article 4.
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ARTICLE
4: OWNERSHIP AND PROTECTION OF INTELLECTUAL
PROPERTY
AND CONFIDENTIAL INFORMATION; NONCOMPETITION
AGREEMENT:
4.1
All
information, ideas, concepts, improvements, discoveries, and inventions, whether
patentable or not, which are conceived, made, developed or acquired by Employee,
individually or in conjunction with others, during Employee's employment by
the
Company (whether during business hours or otherwise and whether on the Company's
premises or otherwise) which relate to the business, products or services of
the
Company (including, without limitation, all such information relating to
corporate opportunities, confidential financial information, research and
development activities, sales data, pricing and trading terms, evaluations,
opinions, interpretations, acquisition prospects, the identity of customers
or
potential customers and their requirements, the identity of key contacts within
the customers' organizations or within the organizations of acquisition
prospects, marketing and merchandising techniques, prospective names, and
marks), and all writings or material of any
type
embodying
any of such items, shall be the sole and exclusive property of the Company.
4.2
Employee acknowledges that the businesses of the Company are highly competitive
and that their strategies, methods, books, records, and documents, their
technical information concerning their products, equipment, services, and
processes, procurement procedures and pricing techniques, the names of and
other
information (such as credit and financial data) concerning their customers
and
business affiliates (including but not limited to the products and/or services
marketed, advertised, and/or sold to customers and prospective customers, and
the prices charged or quoted to them for such products and/or services, and
the
business activities, needs, and requirements for products and/or services of
such customers or prospective customers) all comprise confidential business
information and trade secrets which are valuable, special, and unique assets
which the Company use in their business to obtain a competitive advantage over
their competitors. Employee further acknowledges that protection of such
confidential business information and trade secrets against unauthorized
disclosure and use is of critical importance to the Company in maintaining
their
competitive position. Employee hereby agrees that Employee will not, at any
time
during or after the Employment Period, make any unauthorized disclosure of
any
confidential business information or trade secrets of the Company, or make
any
use thereof, except in the carrying out of his employment responsibilities
hereunder. Confidential business information shall not include information
that
is now in, or hereafter becomes part of, the public domain, whether by
publication, patenting or otherwise than as a result of the Employee's breach
of
this Agreement; information that the Employee can show, through documentary
evidence, already was in its possession prior to its receipt from the Company
hereunder; information which, subsequent to its receipt hereunder, is disclosed,
without obligation or confidence, to the Employee hereunder by a third party
not
known to be under an obligation of confidence to Company hereunder; or
information that the Company authorizes for public release. The above
notwithstanding a disclosure shall not be unauthorized if (i) it is required
by
law or by a court of competent jurisdiction or (ii) it is in connection with
any
judicial arbitration, dispute resolution or other legal proceeding in which
Employee's legal rights and obligations as an Employee or under this Agreement
are at issue; provided, however, that Employee shall, to the extent practicable
and lawful in any such events, give prior notice to the Company of his intent
to
disclose any such confidential business information in such context so as to
allow the Company or the applicable an opportunity (which Employee will
cooperate with and will not oppose) to obtain such protective orders or similar
relief with respect thereto as may be deemed appropriate.
4.3
All
written materials, records, and other documents made by, or coming into the
possession of, Employee during the Employment Period which contain or disclose
confidential business information or trade secrets of the Company shall be
and
remain the property of the Company, as the case may be. Upon termination of
Employee's employment with the Company, for any reason, Employee promptly shall
deliver the same and all copies thereof to the Company.
4.4
To
enable Employee to perform the duties contemplated by this Agreement, the
Company promises that it will disclose confidential information, including
confidential business information and trade secrets of the nature described
or
referenced in Sections 4.1-4.3 above, during the Employment Period and before
termination of the employment relationship established by this Agreement. In
return for and ancillary to the promise made by the Company to make such
disclosure, Employee hereby makes a reciprocal promise designed to enforce
the
Company's interest in protecting its confidential information and its goodwill.
Accordingly, Employee promises to comply with the obligations set forth in
Sections 4.1 through 4.3 above, and furthermore, Employee agrees that, during
Employee's employment with the Company and for two years following the end
of
employment with the Employee will not, directly or through any other person,
firm, or corporation, in any country in
which
the Company does business:
(a) perform
services as an employee, officer, director or independent contractor for any
Competing Enterprise (as defined below);
(b)
be an
owner, shareholder (except for the ownership by Employee of less than Five
Percent (5%) of the equity securities of any publicly-traded company), agent,
or
partner of, or serve in an executive position with, any Competing
Enterprise;
(c)
call
on or otherwise communicate with any customer or prior customer of the Company
including any respective successors and assigns, for the purpose of soliciting
business for a Competing Enterprise or for someone other than the Company;
or
(d)
do
anything to interfere with the normal operation of the businesses of the Company
including, without limitation, make any effort personally or through others
to
recruit, hire, or solicit any employee or independent contractor of the Company
to leave the Company, or to interfere in any way with the Company's
relationships with its customers or suppliers.
For
purposes of this Section, the term "Competing Enterprise" shall mean: any person
or any business organization of whatever form, excluding the Company, engaged
directly or indirectly in any business or enterprise whose business activities
specifically relate to or involve the lines of business described in the
Company's most recent Form 1 OK filed with the Securities & Exchange
Commission.
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ARTICLE
5: MISCELLANEOUS:
5.1
For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been duly given when
received by or tendered to Employee or the Company, as applicable, by pre-paid
courier or by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If
to the
Company, to
Eagle
Broadband, Inc.
000
Xxxxxxxxxx Xxxxx
Xxxxxx
Xxxx, Xxxxx 00000
If
to
Employee, to his last known personal residence.
or
to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee Notwithstanding the foregoing, any Notice
of
Termination pursuant to Article 3 may be delivered to the Employee in accordance
with the above sentences in this Section 5.1, or by e-mail to the Employee's
Company e-mail address, and in the event of such delivery by e-mail, the
Delivery Date shall be conclusively determined to be the date when such e-mail
was received on the Company's server regardless of the date when such e-mail
was
opened by the
Employee.
5.2
This
Agreement shall be governed by and construed and enforced, in all respects
in
accordance with the law of the State of Texas, without regard to principles
of
conflicts of law, unless preempted by federal law, in which case federal law
shall govern; provided, however, that the dispute resolution process in Section
5.5 shall govern in all respects with regard to the resolution of disputes
hereunder.
5.3
No
failure by either party hereto at any time to give notice of any breach by
the
other party of, or to require compliance with, any condition or provision of
this Agreement shall be deemed a waiver of similar or dissimilar provisions
or
conditions at the same or at any prior or subsequent time.
5.4
It is
a desire and intent of the parties that the terms, provisions, covenants, and
remedies contained in this Agreement shall be enforceable to the fullest extent
permitted by law. If any such term, provision, covenant, or remedy of this
Agreement or the application thereof to any person, association, or entity
or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant, or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to any person,
association, or entity or circumstances other than those to which they have
been
held invalid or unenforceable, shall remain in full force and
effect.
5.5
It is
the mutual intention of the parties to have any dispute concerning this
Agreement resolved out of court. Accordingly, the parties agree that any claim
or controversy of whatever nature arising from or relating in any way to this
Agreement or the employment of the Employee by the Company, and any continuing
obligations under this Agreement, including disputes arising under the common
law or federal or state statutes, laws or regulations and disputes with respect
to the arbitrability of any claim or controversy, shall be resolved exclusively
by final and binding arbitration before a single experienced employment
arbitrator selected by the parties and conducted in accordance with the
agreement of the parties or as determined by the arbitrator. If the parties
are
unable to agree to an arbitrator, an arbitrator will be selected in accordance
with the Employment Dispute Resolution ("EDR") Rules of the American Arbitration
Association ("AAA"). The arbitration will be conducted in Houston, Texas,
pursuant to the EDR Rules of the AAA., and the arbitrator shall have full
authority to award or grant all remedies provided by law. The judgment upon
the
award may be enforced by any court having jurisdiction thereof. Each party
shall
pay the fees of their respective attorneys, the expenses of their witnesses,
and
any other expenses incurred by such party in connection with the arbitration;
provided, however, that the Company shall pay for the fees of the arbitrator
or
the administrative and filing fees charged by the AAA. However, either party,
on
its own behalf, shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to prevent any breach
or the continuation of any breach of the provisions of herein.
5.6
This
Agreement shall be binding upon and inure to the benefit of the Company, and
any
other person, association, or entity which may hereafter acquire or succeed
to all or substantially all of the business or
assets
of the Company by any means
whether
direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's
rights and obligations under this Agreement are personal and such rights,
benefits, and obligations of Employee shall not be voluntarily or involuntarily
assigned, alienated, or
transferred,
whether by operation of law or otherwise, without the prior written consent
of
the Company.
5.7
This
Agreement replaces and extinguishes any previous agreements and discussions
pertaining to the subject matter covered herein. This Agreement constitutes
the
entire agreement of the parties with regard to the terms of Employee's
employment, termination of employment and severance benefits, and contains
all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect to such matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral
or
written, has been made by either party with respect to the foregoing matters
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by the Company that is not contained
in
this Agreement shall be valid or binding, except as set forth in any applicable
Employee benefit plan. It is understood that, by signing below, Employee
acknowledges that this Agreement supersedes any agreements or understandings
regarding the subject matter covered herein made prior to the Employee signing
this document. Any modification of this Agreement will be effective only if
it
is in writing and signed by each party whose rights hereunder are affected
thereby, provided that any such modification must be authorized or approved
by
the Board of Directors or its delegate, as appropriate.
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IN
WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
in
multiple originals to be effective on the Effective Date.
Eagle
Broadband, Inc.
By:
/s/Xxxxx Xxxxxxx
Printed
Name:Xxxxx Xxxxxxx
Title:
CEO
Date:
9-14-04
Employee
/s/Xxxxxxx
Xxxxxx, Xx
Xxxxxxx
Xxxxxx, Xx
Date:
9-14-04
Page
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