EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered
into as of the 1st day of November, 1998 between Xxxx X. Xxxxxxxxx, (the
"Executive"), whose address is 0000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000, and
SecurFone America, Inc., a Delaware corporation ("SecurFone" or "Company")
whose address is 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, XX 00000.
RECITALS:
WHEREAS, SecurFone wishes to obtain the services of the Executive;
and
WHEREAS, the Executive desires to obtain employment with SecurFone
pursuant to the terms of this Agreement;
NOW THEREFORE, in consideration of the mutual promises contained
herein and other consideration the receipt and sufficiency of which is hereby
acknowledged, the Executive and SecurFone agree as follows:
1. EMPLOYMENT. As of November 1, 1998, SecurFone will employ the
Executive as Chief Executive Officer of SecurFone. The Executive will also
continue to serve as Chief Executive Officer of SCIES, Inc. which will be
established as a wholly owned subsidiary of SecurFone upon completion of a
merger agreement now being finalized. SecurFone will also use its best
efforts to cause its stockholders to elect Executive to the Board of
Directors of SecurFone.
2. DUTIES. The Executive will devote his full time efforts to the
business of SecurFone and its related organizations performing such duties as
are customary to his position and as may be reasonably requested by the
Chairman or Board of Directors of SecurFone. The Executive will at all times
conduct himself in conformity with the policies of SecurFone. The Executive
is required to perform the following duties and responsibilities:
a. Develop and manage relationships with financial
institutions and funding sources to meet company's
funding needs and maximize shareholder value;
b. Develop and implement SecurFone's strategic plan for
securing a leadership position in the market for
wireless and related communications services;
c. Assume overall management and fiduciary
responsibility for SecurFone's consolidated business
operations;
d. Identify and pursue new acquisition targets which are
consistent with SecurFone's strategic plan and
maximize shareholder value;
e. Develop an overall management and organizational plan
to meet the company's business needs;
f. Provide overall operational direction to the
SecurFone business on a daily basis.
3. COMPENSATION. For the performance of his duties during the term
of this Agreement, the Executive will earn an annual salary of $150,000 of
which the annualized salary will be payable on a weekly basis. The parties
agree that after the Company receives additional new funding of not less than
$750,000, secured from external sources, the Executive will earn an annual
salary of $180,000 of which the annualized salary will be payable on a weekly
basis. The Executive will also receive an allowance of up to $600 per month
for a company car.
4. STOCK OPTION BENEFIT. The Company will grant both Qualified and
Non-Qualified Stock Options which will be granted based upon the Executive's
successful performance, and the ability of the Company to meet specified
objectives. The option schedule is set forth below.
a. The Company shall grant to the Executive a
Non-Qualified Stock Option for 100,000 Shares of the
Company's Common Stock. The Option shall be granted
pursuant to a Plan adopted by the Company's Board of
Directors and approved by the Company's Shareholders.
The exercise price of the Option shall be $0.10 per
Share. The Option shall be issued to Executive on
December 1, 1998. This Option shall vest immediately
and is exercisable anytime in the next five years.
b. Consistent with the terms and conditions of the
existing Director compensation plan, the Company
shall grant to the Executive, Options for 50,000
shares of the Company's Common Stock upon the
Executive's election to serve as a Director. The
exercise price of the Option shall be $1.00 per
Share.
c. The Company shall grant to the Executive Qualified
Incentive Option for 100,000 Shares of the Company's
Common Stock. The Option shall be granted pursuant to
a Plan adopted by the Company's Board of Directors
and approved by the Company's Shareholders. The
exercise price of the Option per Share is to be
determined, but in no case more than current market
price upon the effective date of this agreement. The
Option shall be issued to Executive upon closing a
minimum total funding commitment of $1.0 million in
cash, debt or equity funding from external sources.
This Option is exercisable anytime in the next five
years.
d. The Company shall grant to the Executive Qualified
Incentive Option for 100,000 shares of the Company's
Common Stock. The Option shall be granted pursuant to
a Plan adopted by the Company's Board of Directors
and approved by the Company's Shareholders. The
exercise price of the Option per Share is to be
determined, but in no case more than current market
price upon the effective date of this agreement. The
Option shall be issued to Executive upon SecurFone
achieving a minimal market capitalization of $30
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million based on the closing market prices for a five
day period. This Option is exercisable anytime in the
next five years.
e. The Company shall grant to the Executive Qualified
Incentive Option for 100,000 Shares of the Company's
Common Stock. The Option shall be granted pursuant to
a Plan adopted by the Company's Board of Directors
and approved by the Company's Shareholders. The
exercise price of the Option per Share is to be
determined, but in no case more than current market
price upon the effective date of this agreement. The
Option shall be issued to Executive within seven days
after the Company reports positive cash flow from
operations for a minimum 60 day period. This Option
is exercisable anytime in the next five years.
5. BENEFIT PLANS. During the term of this Agreement, Executive shall
be entitled to participate in all employee benefit plans which are maintained
or established by the Company from time to time and which cover SecurFone's
senior executives, provided he satisfies any applicable eligibility
requirements therefor. Executive shall be entitled to participate in other
cash and stock incentives as granted at the discretion of the Board of
Directors based on achieving selected milestones. Executive acknowledges the
right of the Company to amend or terminate such plans at any time in the
exercise of its discretion. Executive further acknowledges that the Company
may wish to maintain insurance on his life for its benefit and agrees to
submit to any physical examination which may be required in order to obtain
such insurance. SecurFone has no current employee benefit plan in existence.
Executive shall receive four (4) weeks paid vacation per year, commencing
upon execution date of this Agreement.
6. EXPENSES. The Executive will be reimbursed for all reasonable
expenses incurred by him in performing his duties hereunder, provided that
such expenses are incurred and accounted for in accordance with the policies
and procedures established by SecurFone.
7. TERMINATION OF EMPLOYMENT.
a. DEATH; DISABILITY. In the event of Executive's death or
Disability (as hereinafter defined), his employment with the Company
shall be deemed terminated as of the end of the month in which such
death or Disability occurs, and all rights, duties and obligations of
the parties hereunder shall thereupon cease, except that in the case of
the termination due to Disability, Executive's obligations under
Section 11 shall continue. For purpose of this Section, Disability
shall be deemed to have occurred if (a) Executive shall be unable to
perform his duties on an active full-time basis by reason of disability
or impairment of health for a period of at least one hundred eighty
(180) consecutive calendar days or (b) the Company shall have received
a certificate from a physician reasonably acceptable to both the
Company and the Executive (or his representative) to the effect that
Executive is incapable of reasonably performing services under this
Agreement in accordance with past practices.
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b. BY COMPANY FOR GOOD CAUSE. Executive's employment
with the Company may be terminated at the option of
and by written notice from the Company if the Board
of Directors of the Company shall find Good Cause for
termination. For purposes of this Agreement, Good
Cause shall mean only (i) Executive's willful failure
to perform his duties under this Agreement within a
reasonable period of time after receipt of written
notice from the Company setting forth in reasonable
detail the duties which Executive has failed to
perform and the corrective actions expected of him;
(ii) a breach of Executive's duty of loyalty to the
Company, including but not limited to a breach of
Executive's obligations under Sections 10 or 11
below; (iii) indictment for, conviction of, or
written confession to a crime against the Company or
a crime which otherwise materially adversely affects
Executive's ability to perform his obligations under
this Agreement, any business relationship which the
Company maintains or the general reputation and good
will of the Company; or (iv) Executive shall have
been found by the Board of Directors of the Company
to have been repeatedly and excessively using
alcohol, drugs and/or any other intoxicating or
controlled substance. Upon any such termination all
rights, obligations and duties of the parties
hereunder shall immediately cease, except that the
Company shall fulfill its obligations to Executive
under Section 8 hereof, and except for Executive's
obligations under Sections 10 and 11 hereof.
c. BY COMPANY WITHOUT GOOD CAUSE. The Company may also
terminate Executive's employment at any time by written
notice without Good Cause, whereupon all rights,
obligations and duties of the parties hereunder shall
immediately cease, except that the Company shall
fulfill its obligations to Executive under Section 8
hereof, and except for Executive's obligations under
Section 11 hereof.
d. BY EXECUTIVE FOR GOOD REASON. Executive may terminate
his employment with the Company upon not less than
sixty (60) days advance written notice for "Good
Reason." Upon the effective date of any such
termination all rights, obligations and duties of the
parties hereunder shall immediately cease, except
that (i) the Company shall fulfill its obligations to
Executive under Section 8(a) hereof, (ii) the Company
shall fulfill its obligations to Executive under
Section 8(b) hereof, and (iii) Executive's
obligations under Section 11 hereof shall remain
effective. For purposes of this Agreement, the
Executive will have "Good Reason" if (iv) the Board
of Directors of SecurFone shall fail to reelect, or
shall remove Executive from the office of Chief
Executive Officer of SecurFone, or, upon completion
of the planned SCIES merger, shall fail to reelect,
or shall remove Executive Chief Executive Officer of
SCIES, Inc., (v) the Board of Directors of SecurFone
shall make a significant negative change in the
nature of scope of the authorities, powers, functions
or duties of Executive hereunder, (vi) the Company
shall fail to pay when due any compensation provided
for in this
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Agreement and such failure is not corrected within
ninety (90) days after notice thereof to the Company
by the Executive, or (vii) any pattern of conduct done
with the approval of the Board of Directors of the
Company which impedes the Executive in the exercise of
his authorities, powers, functions or duties,
hereunder in the manner in which they would normally
be exercised by the Chief Executive Officer.
e. BY EXECUTIVE WITHOUT GOOD REASON. Executive may
terminate his employment with the Company upon not
less than sixty (60) days advance written notice.
Upon the effective date of any such termination all
rights, obligations and duties of the parties
hereunder shall immediately cease, except for
Executive's obligations under Sections 10 and 11
hereof, provided, however, that the Company shall not
be prohibited from terminating Executive under
Section 7(c) above following receipt of a notice of
termination from Executive, subject to its
obligations thereunder.
8. TERMINATION COMPENSATION: SEVERANCE PAY. If Executive's employment
is terminated pursuant to Section 7(c) or 7(d), Executive shall be entitled to
the continued payment of the annual salary described in Section 3 above for a
period of six (6) months following such termination. If Executive's employment
is terminated pursuant to Section 7(b) or 7(e), Executive shall be entitled to
the continued payment of the annual salary described in Section 3 above for a
period of three (3) months following such termination.
9. TERM. This Agreement will continue in effect from the date hereof
until October 1, 1999 unless sooner terminated under Section 7 hereof. The
Agreement shall automatically renew from year to year unless either party gives
no less than thirty (30) days and no more than ninety (90) days of its/his
intent not to renew this Agreement.
10. NON-COMPETITION.
a. RESTRICTIONS. As consideration for the compensation
and benefits to be provided to the Executive under
this Agreement, and as an additional incentive for
Executive to enter into this Agreement, the Executive
will not during the term of this Agreement and for a
period of twelve (12) months thereafter if
Executive's employment is terminated pursuant to
Section 7(b) through 7(e), directly or indirectly,
for himself or for others, in any state of the United
States or in any foreign country where SecurFone or
any of its Affiliates (as defined below) is then
conducting the Business (as defined below) or has,
during the previous twelve (12) months, conducted the
business:
(1) engage in the Business;
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(2) render advice, consultation, or services to
or otherwise assist any other person or
entity who competes, directly or indirectly,
with SecurFone or any of its Affiliates;
(3) transact any business in any manner
pertaining to suppliers or customers of
SecurFone or any of its Affiliates which, in
any manner, would have, or is likely to
have, an adverse effect upon the conduct of
the Business of SecurFone or any of its
Affiliates; or
(4) induce any employee, agent or representative
of SecurFone or any of its Affiliates to
terminate his or her employment with
SecurFone or such Affiliate.
b. DEFINITIONS. For purposes of this Section 10, the
"Business" will mean the business activities of
SecurFone and its Affiliates in sales and marketing
of prepaid cellular telephone and related services
using a prepaid telephone card or related wireless
communications technology providing access to a
national or local prepaid cellular network with
advance switching and voice processing services
carried on within a 100 mile radius of any facility
or office operated or maintained by SecurFone or any
of its Affiliates. The term "Affiliates" shall mean
any entity controlling, controlled by or under common
control with SecurFone, including, but not limited
to, SecurFone divisions and subsidiaries, and any
licensee, franchisee or agent of SecurFone products
or services.
c. REASONABLENESS; ENFORCEMENT. The Executive
understands that the foregoing restrictions may limit
his ability to engage in certain business pursuits
during the period provided for above, but
acknowledges that he will receive sufficiently higher
remuneration and other benefits from SecurFone
hereunder than he would otherwise receive to justify
such restriction. The Executive acknowledges that he
understands the effect of the provisions of the
provisions of this Section 10, and that he was
encouraged to and had an opportunity to consult an
attorney with respect to these provisions. SecurFone
and the Executive consider the restrictions contained
in this Section 10 to be reasonable and necessary.
Nevertheless, if any aspect of these restrictions is
found to be unreasonable or otherwise unenforceable
by a Court of competent jurisdiction, the parties
intend for such restrictions to be modified by such
Court so as to be reasonable and enforceable and, so
as modified by the Court, to be fully enforced. In
the event of a breach or threatened breach of this
Section 10 by Executive, SecurFone will be entitled
to preliminary and permanent injunctive relief,
without bond or security, sufficient to enforce the
provisions thereof and SecurFone will be entitled to
pursue such other remedies at law or in equity which
it deems appropriate.
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11. CONFIDENTIAL INFORMATION.
a. PROHIBITION ON DISCLOSURE OR USE OF CONFIDENTIAL
INFORMATION. The Executive will at all times keep and
maintain Confidential Information (as defined below)
confidential and will not, at any time, either during
or subsequent to his employment with SecurFone,
either directly or indirectly, use any Confidential
Information for his own benefit, or otherwise
divulge, disclose, or communicate any Confidential
Information to any person or entity in any manner
whatsoever, other than employees or agents of
SecurFone or its Affiliates who have a need to know
such information, and then only to the extent
necessary to perform their responsibilities on behalf
of SecurFone or its Affiliates.
b. DEFINITION OF CONFIDENTIAL INFORMATION. "Confidential
Information" will mean any and all information
(excluding information in the public domain) relating
to the Business, including, without limitation, all
patents and patent applications; copyrights (whether
registered or to be registered in the United States
or elsewhere) which are applied for, issued to or
owned by SecurFone or any of its Affiliates;
inventions; trade secrets; computer programs;
engineering and technical data; drawings or designs;
manufacturing techniques; information concerning
pricing and pricing policies; marketing techniques;
suppliers; methods and manner of operations; and
information relating to the identity and location of
all past, present and prospective customers.
c. ENFORCEMENT. The Executive's obligations contained in
this Section 11 are of a special and unique character
which gives him a peculiar value to SecurFone. The
parties recognize that SecurFone cannot be reasonably
or adequately compensated in damages alone in an
action at law should the Executive breach such
obligations. The Executive therefore expressly agrees
that, in addition to any other rights or remedies
which SecurFone may possess, it will be entitled to
injunctive and other equitable relief in the form of
preliminary and permanent injunctions, without bond
or other security, in the event of any actual or
threatened breach of such obligations by the
Executive, in order to enforce this Section 11.
12. SUCCESSOR. This Agreement is personal to the Executive and will not
be assignable by him without the prior written consent of SecurFone, except that
Executive's right to receive compensation may be assigned by Executive, in
writing. Any amounts payable after the death of the Executive shall be paid to
the executor or administrator of his estate. This Agreement will inure to the
benefit of and be binding upon SecurFone, its Affiliates and their successors
and assigns.
13. INDEMNIFICATION. The Certificate of Incorporation of the Company
provides, in Article VII thereof, captioned "Indemnification," that the Company
shall indemnify certain persons under certain conditions. A copy of said Article
VII is attached hereto as Exhibit A. The Company
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agrees that the Executive shall be a person covered by the attached Article
VII, that the Executive shall be entitled to the benefit of all of the
provisions of Article VII, and that such provisions shall remain in full
force and effect with respect to the Executive throughout the term of this
Agreement, without regard to any amendment to Article VII which might be
adopted after the date hereof. The Company agrees that to the extent the
Company's obligations under this paragraph are insurable, the Company agrees
to purchase insurance, in the amount of $2,500,000 to secure the Company's
obligations hereunder.
14. TIME. The parties acknowledge that time is of the essence in the
performance of the obligations of each party hereto, and that the timely
performance of such obligations is a precondition to the continuation of the
obligations of the other party.
15. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws. Any action brought to enforce this Agreement or
to seek relief based upon any provision of it will be brought in a court of
competent jurisdiction in the State of Delaware.
16. MERGER. This Agreement supersedes any and all prior agreements,
whether written or oral, with respect to the Executive's employment by SecurFone
or any of its Affiliates and contains all of the promises, representations,
warranties and agreements between the parties with respect to such employment.
17. MODIFICATION. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties or their
respective successors.
18. NOTICE. All notices or other communications hereunder will be in
writing and will be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, to the following:
If to the Executive:
Xxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
If to SecurFone:
SecurFone America, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
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With a copy to:
Xxxxxx Xxxxx, Esq.
Piper & Marbury L.L.P.
0000 00xx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Xxxxx Xxxxxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
00xx Xxxxx, Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Any party may from time to time change its address for purposes of this
Agreement by giving notice of such change to the other party, but no such change
will be deemed effective until actually received by the party to whom it is
directed. Notice and communications under this Agreement will be effective when
actually received by the party to whom they are directed.
IN WITNESS WHEREOF the parties have executed this Agreement the day and
year written above.
SECURFONE AMERICA, INC.
a Delaware Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Its: Secretary
-----------------------------------
/s/ Xxxx X. Xxxxxxxxx
--------------------------------------
XXXX X. XXXXXXXXX
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