1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of the
3rd day of June, 1997, by and between SSE TELECOM, INC. ("Telecom"), a Delaware
corporation (as used herein, Telecom and its affiliates and subsidiaries are
collectively referred to as the "Company", unless the context requires otherwise
or it is otherwise specifically provided) and XXXXX X. XXXXXX, residing at the
address set forth after his signature (the "Executive").
WHEREAS, the Executive has accepted a position of employment with the
Company and the parties wish by this Agreement to provide for the employment of
the Executive, upon the terms and conditions and for the compensation as
hereafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and intending to be legally bound the parties hereto agree as
follows:
1. Term. The Executive's employment commenced on March 3, 1997 and subject
to the provisions of Section 5 hereof, the Company hereby agrees to employ
Executive and the Executive hereby accepts such employment with the Company upon
the terms and conditions herein provided.
2. Duties. The Executive, subject to the direction and control of the
Chief Executive Officer and Telecom's Board of Directors, shall devote his full
time, attention and energies to the business and affairs of Telecom and promote
the interests and welfare of Telecom. The Executive shall also provide services
to and for the benefit of the subsidiaries and affiliates of Telecom as such
further duties may, from time to time, be specified by the Board of Directors of
Telecom. If the Executive is elected or appointed a director or an officer of
the Company, the Executive will serve in such capacity or capacities without
further compensation; but nothing in this Agreement shall be construed as
requiring the election or appointment of the Executive as such director or
officer. The Executive agrees to perform his duties in an efficient, trustworthy
and business-like manner, consistent with the policies set by the Board of
Directors of Telecom who shall have the power to alter or change the general
practices of the business as such Board deems necessary to the best interests of
the Company. The Executive shall not, during the term hereof, be interested
directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any other capacity in any other business,
without Telecom's written consent; provided, however, that nothing herein
contained shall be deemed to prevent or limit the right of Executive to
participate as an investor in any business venture which is not competitive with
the Company's business.
3. Compensation.
(a) Compensation Plan. As compensation for the Executive's services under
this Agreement, Executive shall be entitled to receive during his employment the
base salary, bonuses and fringe benefits in accordance with this Section 3 and
in accordance with the compensation plan fixed for each fiscal year of the
Company, commencing with the current fiscal year.
(b) Compensation for Current Fiscal Year. The compensation and fringe
benefits for the current fiscal year are as follows:
(i) Base Salary. For all services rendered by the Executive under
this Agreement, the Executive shall be paid an annual base salary. The
annual base salary is One Hundred Fifty Thousand Dollars ($150,000) through
June 3, 1997 and effective June 8, 1997 the annual base salary shall be one
Hundred Sixty Thousand Dollars ($160,000). The annual base salary may be
increased from time to time during the term of this Agreement and shall be
payable to the Executive by Telecom, or by a subsidiary of Telecom, in
accordance with the practice adopted by such company for payment of wages
to its employees.
(ii) Bonuses. Bonus compensation shall be payable in cash and/or
stock options in accordance with a bonus compensation plan, if any, put
into effect by the Company for each fiscal year.
2
(iii) Stock Options. Executive shall, prior to the end of the current
fiscal year, be granted stock options under Telecom's 1997 Equity
Participation Plan (the "Plan") so that the aggregate of all stock options
granted to the Executive as of September 30, 1997 will be for 45,000
shares.
(iv) Fringe Benefits. The Company has adopted policies in respect to
fringe benefits for employees in the nature of health and life insurance,
holidays, vacation, sick leave policies and disability. A copy of the
Company's present policies in respect to fringe benefits has been delivered
by the Company to Executive. The Company may from time to time amend its
present policies and adopt other fringe benefits to be generally available
to all employees. The Company covenants and agrees that Executive shall be
entitled to participate in any such fringe benefit policies adopted by the
Company to the same extent that such fringe benefits shall be available to
and for the benefit of executive level employees.
(c) Annual Review. The Company will review the compensation payable by the
Company to the Executive not less frequently than once annually, with the
purpose of adjusting the Executive's compensation in such manner as the Company
shall deem appropriate. Any such adjustment may modify the Executive's base
salary, establish provisions for the obtaining of bonus compensation, provide
for the granting of stock options and fix the fringe benefits to be made
available to Executive. Nothing herein shall be deemed to obligate the Company
to adjust the Executive's compensation, the parties hereby acknowledging that,
except as otherwise provided in Section 5, this is an at will employment
agreement.
4. Expenses. The Executive may incur reasonable expenses in connection
with promoting and operating the Company's business, including expenses for
entertainment, travel and similar items. If Executive has complied with the
Company policy regarding business expenses, the Company will reimburse the
Executive for all such expenses upon the Executive's periodic presentation of an
itemized account of such expenditures. However, in no event shall said
Executive's business expenses exceed the Company's policy.
5. Termination of Employment.
(a) Termination With Cause. The Company may terminate this Agreement
without any further compensation to Executive beyond the date of termination for
breach of this Agreement, willful or gross misconduct in performance of duties,
dishonesty, fraud, theft, embezzlement or any criminal act.
(b) Termination Without Cause.
(i) Without cause, the Company may terminate this Agreement at any
time upon fifteen (15) days' written notice to Executive. In such event,
the Executive, if requested by the Company, shall continue to render his
services and shall be paid his regular compensation up to the date of
termination. In addition, for the six (6) month period following the
effective date of termination of employment, the Executive shall be
entitled to receive, and shall receive, "Continuing Compensation" as
hereafter in subsection (iii) defined.
(ii) Without cause, the Executive may terminate this Agreement upon
thirty (30) days written notice to the Company. In such event, Executive
shall continue to render his services and shall be paid his regular
compensation up to the date of termination. Bonus compensation that has
been earned by the Executive through the date of his termination shall be
paid to Executive.
(iii) "Continuing Compensation" means and includes the following: (x)
the Executive's base salary as in effect as of the effective date of
termination, (y) any bonus compensation that would have been earned by
Executive based on the factors or elements of the bonus compensation plan
which had been achieved by Executive through the effective date of
termination, and (z) the fringe benefits customarily being made available
by the Company to Executive for health, life and disability insurance, but
excluding the accrual of holidays, vacation and sick leave, and further
excluding any participatory contributions by the Company to 401k or stock
purchase or similar plans. If the Company is obligated to make payment of
any continuing compensation, such payments shall be made during the
applicable period at the same time that the Company would make such
payments on behalf of its regular employees.
2
3
(c) Termination Upon Sale of Business.
(i) If the Executive's employment is terminated by the Company as a
condition to the Sale of Business (as defined below), the Executive shall
be entitled to receive Continuing Compensation as defined in subsection
(b)(iii) above for a period of twelve (12) months from the effective date
of the termination of the Executive's employment.
(ii) For purposes of this Section 5(c), "Sale of Business" shall mean
the sale of all or substantially all of the assets of the Company as a
going concern to a single purchaser or to a group of associated purchasers,
the sale of all or substantially all of the outstanding stock of the
Company or the sale of all or substantially all of the outstanding stock of
SSE Telecom, Inc., or any similar transaction, as a result of which at
least eighty percent (80%) voting control the Company becomes vested in
persons other than those presently having such voting control. For the
foregoing provisions to be applicable, the transaction must be one in which
the Board of Directors of SSE Telecom and a majority of its shareholders
have voted in favor of the proposed transaction and the transaction must be
consummated.
(iii) In the event of the Sale of Business all outstanding options
held by Executive to acquire SSE Telecom stock shall be deemed vested as
provided in the Plan.
(d) Death During Employment. If the Executive dies during the term of
employment, the Company shall pay to the estate of the Executive the
compensation which would otherwise be payable to the Executive through the end
of the month in which his death occurs, including payments for accrued vacation
and accrued bonus.
6. Protective Covenants; Remedies.
(a) Non-Disclosure of Confidential Information. Executive will not, during
the term of this Agreement, or at any time during the five year period
thereafter, divulge, furnish or make accessible to anyone other than the
Company, the directors and officers of the Company, unless otherwise in the
regular course of the business of the Company, any knowledge or information with
respect to (i) confidential or secret documents, processes, plans, models, sales
data, contracts, financial costs, product prices, devices, business
opportunities or any other material relating to the business and activities of
Telecom or its subsidiaries or affiliates, or (ii) any other confidential or
secret aspect of the business of Telecom or its subsidiaries or affiliates,
including without limitation any lists or other information with respect to any
clients or customers of Telecom or its subsidiaries or affiliates (the foregoing
being hereinafter collectively referred to as the "Confidential Information").
The Executive acknowledges that such Confidential Information is of special and
peculiar value to the Company; is the property of the Company, the product of
years of experience and trial and error; is not generally known to the Company's
competitors; and is regularly used in the operation of the Company's business.
(b) Non-Competition. The Executive agrees that during the term of this
Agreement and for the twelve month period following termination of Executive's
employment, and without regard to the reason for such termination, the Executive
will not, directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with ownership, management,
operation or control of any business, directly in competition with the business
conducted by Telecom, its subsidiaries or affiliates, at the time of the
termination of this Agreement.
(c) Suspension of Time. Notwithstanding any provision of this Agreement to
the contrary, the time periods for the protective covenants set forth herein
shall be suspended during the period of any breach or violation of such
protective covenant, and likewise shall be suspended for the time in which there
shall be pending in any court of competent jurisdiction, any action or
proceeding to enforce such covenant where temporary or injunctive relief has not
been granted.
(d) Acknowledgment Regarding Protective Covenants. The Executive
acknowledges and understands that the covenants provided for in this Section 6
are limited to the covenants set forth herein and do not preclude the Executive
upon the termination of this Agreement from obtaining gainful employment or
utilizing the Executive's general business skills, and that numerous
opportunities exist for the Executive to utilize such skills. Although the
Executive agrees that the time and area restraints set forth herein are
3
4
reasonable; nevertheless, if for any reason now unforeseen, a court of competent
jurisdiction finds that the time and/or area restraints agreed to herein by the
parties are unreasonable then the time and/or area restraints agreed to herein
shall be reduced to an area and/or duration deemed reasonable by such court. The
Executive acknowledges that he has read and understands the terms of this
Agreement, that same was specifically negotiated, and that the protective
covenants agreed upon herein are necessary for the protection of the Company's
business as a result of the business secrets that will be disclosed during the
employment.
(e) Remedies. In addition to any other rights and remedies which are
available to the Company, with respect to any breach or violation of the
protective covenants set forth herein, it is recognized and agreed that the
Company shall be entitled to obtain injunctive relief which would prohibit the
Executive from continuing any breach or violation of such protective covenants.
The Company may pursue any of the remedies allowed by this Agreement
concurrently or consecutively in any order as to any breach or violation of the
protective covenants, and the pursuit of any such remedies at any time will not
be deemed an election of remedies or waiver of the right to pursue the other of
such remedies as to that breach or violation, or as to any other breach or
violation of this Agreement. Pursuit of one or more remedies shall not preclude
pursuit of any other remedies herein provided or any other remedy that may be
available to the Company.
7. Disputes. In the event of any litigation between the Company and the
Executive arising out of this Agreement, and the rights and obligations of the
parties hereunder, the prevailing party shall be entitled to seek an award from
the court to recover his or its reasonable attorney's fees and court costs. The
court shall not award attorney's fees if the court determines that the
litigation arose from a bona fide good faith dispute.
8. Notices. Any notice required or permitted to be given under this
Agreement shall be deemed sufficient if in writing, and sent by registered or
certified mail to his residence, in the case of the Executive or to its
principal office, in the case of the Company.
9. Waiver of Breach. The failure of either party to insist in any one or
more instances upon performance of any terms or conditions of this Agreement
shall not be construed as a waiver of future performance of any such term,
covenant, or condition, but the obligations of either party with respect thereto
shall continue in full force and effect.
10. Assignment. Executive acknowledges that said services to be rendered
by him are unique and personal. Accordingly, the Executive may not assign any of
his rights or delegate any of his duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.
11. Entire Agreement. This Agreement supersedes all previous agreements
between the Company and Executive and contains the entire understanding and
agreement between the parties with respect to the subject matter hereof, and
cannot be amended, modified or supplemented in any respect except by a
subsequent written agreement entered into by both parties.
12. Applicable Law. The validity, enforceability and interpretation of
this Agreement shall be determined and governed by the laws of the State of
Delaware. Any action brought pursuant to this Agreement may, however, be brought
in the state or federal courts in the State of California.
13. Number of Agreements. This Agreement may be executed in any number of
counterparts, any one of which may be deemed original.
14. Severability. If any of the provisions of this Agreement are held to
be invalid or unenforceable, all other provisions hereof shall nevertheless
continue in full force and effect.
15. Pronouns. The use of any word in any gender shall be deemed to include
any other gender and the use of any word in the singular shall be deemed to
include the plural where the context requires.
16. Headings. The section headings used in this Agreement are for
convenience only and are not to be controlling with respect to the contents
thereof.
4
5
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date set forth above.
COMPANY:
SSE TELECOM, INC.
By: /s/ XXXXXX X. XXXXX
------------------------------------
Its: CEO
Date: July 25, 1997
EXECUTIVE:
By: /s/ XXXXX X. XXXXXX
------------------------------------
Xxxxx X. Xxxxxx
Date: July 25, 1997
Address:
---------------------------------
---------------------------------
---------------------------------
5
