Exhibit 10.34
AMBIENT CORPORATION
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 16th day of November, 2001 and
effective as of September 5, 2001, by and between AMBIENT CORPORATION, a
Delaware corporation, having an office at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000 (hereinafter referred to as "Employer"), and Xxxx X. Xxxxx,
an individual residing at 000 X. Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, XX 00000
(hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as Chief Executive Officer
("CEO") of Employer effective as of September 5, 2001; and
WHEREAS, Employee is willing to be employed as the CEO of Employer in the
manner provided for herein, and to perform the duties of the CEO of Employer
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of the CEO. Employer hereby employs Employee as CEO of
Employer.
2. Term.
a. Subject to Section 10 below and further subject to Section 2(b)
below, the term of this Agreement shall commence as of September 5, 2001 and end
on December 31, 2003. Each 12 month period from January 1 through December 31
during the term hereof shall be referred to as an "Annual Period." During the
term hereof, Employee shall devote substantially all of his business time and
efforts to Employer and its subsidiaries and affiliates.
b. Subject to Section 10 below, unless the Board of Directors of the
Company (the "Board") of Employer shall determine to the contrary and shall so
notify Employee in writing on or before the end of any Annual Period, then at
the end of each Annual Period, the term of this Agreement shall be automatically
extended for one (1) additional Annual Period to be added at the end of the then
current term of this Agreement.
3. Duties. The Employee shall perform those functions generally performed
by persons of such title and position, shall attend all meetings of the
stockholders and the Board,
shall perform any and all related duties and shall have any and all powers as
may be prescribed by resolution of the Board, and shall be available to confer
and consult with and advise the officers and directors of Employer at such times
that may be required by Employer. Employee shall report directly and solely to
the Board.
4. Compensation.
a. (i) Employee shall be paid a minimum annual salary at the
following annual rates: September 1, 2001 through December 31, 2001 - $190,000;
January 1, 2002 through May 31, 2002 - $225,000; and June 1, 2002 through
December 31, 2002 - $275,000. For each Annual Period thereafter Employee's
salary shall be increased annually at the beginning of each Annual Period
commencing January 1, 2003 by an amount equal to the amount of his annual salary
for the immediately preceding Annual Period times the percentage increase in the
CPIW (New York) then in effect as compared to the previous period for which the
CPIW (New York) is available. Employee shall be paid periodically in accordance
with the policies of the Employer during the term of this Agreement, but not
less than monthly.
(ii) In addition to his salary set forth above, CEO shall be
entitled to an additional one-time payment of $36,000 upon execution of this
Agreement.
b. (i) Employee acknowledges that all options to purchase shares of
Common Stock of Employer granted to him prior to September 1, 2001 are hereby
terminated and are of no further force and effect. Upon execution of this
agreement, Employer shall grant to Employee options pursuant to the 2000 Equity
Incentive Plan as approved by the Board of Directors and stockholders in
November 2000, to purchase shares of the Common Stock of Employer ("Options") as
follows: 125,000 Options immediately exercisable at $0.50 per share; 250,000
Options vesting on January 1, 2002 with an exercise price of $0.50 per share;
208,333 Options vesting on September 5, 2002 with an exercise price of $0.50 per
share; 208,333 Options vesting on September 5, 2003 with an exercise price of
$0.50 per share; and 208,334 Options vesting on September 5, 2004 with an
exercise price of $0.50 per share . The Options shall be evidenced by a written
stock option agreement, in form satisfactory to the Employer, executed by the
Employer and the Employee. Upon payment of the applicable exercise price, the
shares underlying the Options (the "Shares") shall be fully paid and
non-assessable. Employee agrees that he will not sell any Shares prior to
September 5, 2002; provided, however, that (i) if Employee's employment is
terminated by Employer on or prior to September 5, 2002 for any reason other
than pursuant to Section 10(a)(i) hereof, or (ii) if Employee terminates his
employment on or prior to September 5, 2002 pursuant to Section 10(b) hereof,
then there shall be no restrictions on Employee from selling any Shares
underlying the 125,000 options granted simultaneously with the execution of this
Agreement.
(ii) The Options, once vested, may be exercised during the
term in which this agreement remains in effect and for a period of six (6)
months thereafter by written notice delivered to the Employer at its principal
executive office stating the number of Shares with respect to which the Options
is being exercised, together with:
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(A) a check or money order made payable to the Employer
in the amount of the exercise price and any applicable federal, state and local
withholding tax; or
(B) the tender to the Employer of shares of Common Stock
owned by Employee having a fair market value not less than the exercise price,
plus the amount of applicable federal, state and local withholding tax; or
(C) the surrender of shares of Common Stock then
issuable upon the exercise of the Options, provided the fair market value of
such shares of Common Stock is equal on the date to the exercise price, or such
portion thereof as Optionee elects to pay by surrender of such stock, plus the
amount of applicable federal, state and local withholding taxes;
c. (i) In the event of a "Change of Control" subsequent to January
1, 2002 whereby:
(A) A person (other than a person who is an officer or a
Director of Employer on the effective date hereof), including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes, or
obtains the right to become, the beneficial owner of Employer securities having
50% or more of the combined voting power of then outstanding securities of the
Employer that may be cast for the election of directors of the Employer;
(B) At any time, a majority of the Board-nominated slate
of candidates for the Board is not elected;
(C) Employer consummates a merger in which it is not the
surviving entity;
(D) Substantially all Employer's assets are sold; or
(E) Employer's stockholders approve the dissolution or
liquidation of Employer; then
(ii) (A) All stock options, warrants and stock
appreciation rights ("Rights") granted by Employer to Employee under any plan or
otherwise prior to the effective date of the Change of Control, shall become
vested, accelerate and become immediately exercisable. In the event Employee
owns or is entitled to receive any unregistered securities of Employer, then
Employer shall use its best efforts to effect the registration of all such
securities as soon as practicable, but no later than 240 days after the
effective date of the registration statement; provided, however, that such
period may be extended or delayed by Employer for one period of up to 60 days
if, upon the advice of counsel at the time such registration is required to be
filed, or at the time Employer is required to exercise its best efforts
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to cause such registration statement to become effective, such delay is
advisable and in the best interests of Employer because of the existence of
non-public material information, or to allow Employer to complete any pending
audit of its financial statements;
(B) If upon said Change of Control, Employee
is not retained as CEO or a substantially similar position of Employer or the
surviving entity, as applicable, under terms and conditions substantially
similar to those herein, Employee shall receive a one-time bonus, in an amount
equal to one year of his then current salary, in lieu of any termination payment
otherwise due Employee hereunder. Said bonus shall be payable over twelve months
in twenty four (24) equal bi-monthly installments commencing on the pay period
that the Employer normally pays all its employees, following the effective date
of the Change of Control.
d. Employer shall include Employee in its health insurance program
available to Employer's employees .
e. Employer shall maintain a life, accidental death and
dismemberment insurance policy on Employee for the benefit of a beneficiary
named by Employee in an amount not less than $750,000. Ownership of the policy
shall be assigned to Employee upon termination of Employee's employment under
this Agreement.
f. Employer and Employee shall negotiate Employee's annual bonus on
or about January 1, 2002 and each January 1st thereafter.
g. Employee shall have the right to participate in any other
employee benefit plans established by Employer.
5. Board of Directors. Employer agrees that so long as this Agreement is
in effect, Employee will be nominated to the Board as part of management's slate
of Directors.
6. Expenses. (a) Employee shall be reimbursed for all of his actual
out-of-pocket expenses incurred in the performance of his duties hereunder,
provided such expenses are acceptable to Employer, which approval shall not be
unreasonably withheld, for business related travel and entertainment expenses,
and that Employee shall submit to Employer reasonably detailed receipts with
respect thereto. Employer shall also reimburse Employee for his legal fees in
connection with the negotiation and preparation of this Agreement.
(b) Employee shall receive an additional $700 per month as an
automobile allowance.
7. Vacation. Employee shall be entitled to receive four (4) weeks paid
vacation time for each year of employment upon dates agreed upon by Employer
(including holidays when the Employer's offices are closed). The Employee shall
not be entitled to accumulate unused vacation from year to year without the
written consent of the Company.
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8. Secrecy. At no time shall Employee disclose to anyone any confidential
or secret information (not already constituting information available to the
public) concerning (a) internal affairs or proprietary business operations of
Employer or (b) any trade secrets, new product devlopments, patents, programs or
programming, especially unique processes or methods.
9. Covenant Not to Compete. Employee will not, at any time, anywhere in
the world, during the term of this Agreement, and for one (1) year thereafter,
either directly or indirectly, engage in, with or for any enterprise,
institution, whether or not for profit, business, or company, competitive with
the business of Employer as such business may be conducted on the date of any
such termination of Employee or during the one year period thereafter, as a
creditor, guarantor, or financial backer, stockholder, director, officer,
consultant, advisor, employee, member, inventor, producer, director, or
otherwise of or through any corporation, partnership, association, sole
proprietorship or other entity; provided, that an investment by Employee, his
spouse or his children is permitted if such investment is not more than four
percent (4%) of the total debt or equity capital of any such competitive
enterprise or business and further provided that said competitive enterprise or
business is a publicly held entity whose stock is listed and traded on a
national stock exchange or through the NASDAQ Stock Market.
10. Termination.
a. Termination by Employer
(i) Employer may terminate this Agreement upon written notice
for Cause. For purposes hereof, "Cause" shall mean: (a) A failure by the
Employee substantially to perform his duties hereunder, or (b) a failure by the
Employee to substantially comply with the lawful and proper instructions of the
the Board, or (c) Employee's illegal or unethical acts or conduct which causes
material harm or loss to the Employer or otherwise brings notoriety to the
Employer or has a material adverse effect on the name or public image of the
Employer; provided, however that with respect to clauses (a), (b) and (c) the
foregoing shall not constitute "Cause" if Employee, after being notified in
writing by the Employer of the particular acts or circumstances of such material
breach, cures such failure within 30 days after receipt of such notice (if such
failure is reasonably susceptible to cure)..
(ii) Employer may terminate Employee's employment under this
Agreement if, as a result of any physical or mental disability, Employee shall
fail or be unable to perform his duties under this Agreement for any consecutive
period of 90 days or a total of 180 days during any twelve-month period. If
Employee's employment is terminated under this Section 10(a)(ii): (A) for the
first ninety (90) days after termination, Employee shall be entitled to receive
$1,000 per week and thereafter Employee shall be paid $6,000 per month; for a
further 270 days, such payments to be paid either directly by the Employer or
through an insurance policy of the Employer at Employer's discretion; (B)
Employer's obligation to pay life insurance premiums on the policy referred to
in Section 4(e) shall continue in effect until five years after the date of
termination; and (C) Employee shall continue to be entitled, insofar as is
permitted
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under applicable insurance policies or plans, to such general medical and
employee benefit plans (including profit sharing or pension plans) as Employee
had been entitled to on the date of termination. Any amounts payable by Employer
to Employee under this paragraph shall be reduced by the amount of any
disability payments payable by or pursuant to plans provided by Employer and
actually paid to Employee. All taxes payable in respect of any payments to
Employee pursuant to this sub-section shall be borne by the Employee and the
Employee hereby authorizes Employer to effect any applicable withholding
deductions.
(iii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and the pro-rata amount payable under
Section 4(f) for the period prior to Employee's death and any other amount to
which Employee was entitled of the time of his death.
(iv) Employer shall have the right to terminate Employee at
any time other than for Cause or Employee's death or disability, subject to
Employee's right to receive payment as set forth in Section 10(c).
b. Termination by Employee
(i) Employee shall have the right to terminate his employment
under this Agreement upon 30 days' notice to Employer given within 90 days
following the occurrence of any of the following events (A) through (G):
(A) Employee is not elected or retained as CEO of
Employer.
(B) Employer acts to materially reduce Employee's duties
and responsibilities hereunder. Employee's duties and responsibilities shall not
be deemed materially reduced for purposes hereof solely by virtue of the fact
that Employer is (or substantially all of its assets are) sold to, or is
combined with, another entity, provided that Employee shall continue to have the
same duties and responsibilities with respect to Employer's business and
Employee shall report directly to the chief executive officer and/or board of
directors of the entity (or individual) that acquires Employer or its assets.
(C) Employer acts to change the geographic location of
the performance of Employee's duties from the Boston or New York City
Metropolitan area. For purposes of this Agreement, the Boston Metropolitan area
shall be deemed to be the area within 30 miles of the Boston City limits and the
New York Metropolitan Area shall be deemed to be the area within 30 miles of
Manhattan.
(D) A Material Reduction (as hereinafter defined) in
Employee's rate of base compensation, or Employee's other benefits. "Material
Reduction" shall mean a ten percent (10%) differential;
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(E) A failure by Employer to obtain the assumption of
this Agreement by any successor;
(F) A material breach of this Agreement by Employer,
which is not cured within thirty (30) days of written notice of such breach by
Employer;
(G) A Change of Control.
(ii) Anything herein to the contrary notwithstanding, Employee
may terminate this Agreement upon thirty (30) days written notice.
c. The Employer is entitled to terminate Employee's employment for
any reason whatsoever on or before December 31, 2001 whereupon all obligations
of Employer hereunder shall cease and Employee shall not be entitled to any
payment in respect of such termination other than accrued salary through the
termination date.
d. If Employer shall terminate Employee's employment after December
31, 2001 other than due to his death or disability or for Cause (as defined in
Section 10(a)(i) of this Agreement), or if Employee shall terminate this
Agreement under Section 10(b)(i), Employee shall be entitled to one year's
salary at his then current annual salary rate payable over twelve months in
twenty four (24) equal bi-monthly installments commencing on the pay period that
the Employer normally pays all its employees, following the effective date of
termination.
11. Remedies. Employer recognizes that because of Employee's special
talents and stature, in the event of termination by Employer hereunder (except
under Section 10(a)(i) or (iii), or in the event of termination by Employee
under Section 10(b)(i) before the end of the agreed term), Company acknowledges
and agrees that the provisions of this Agreement regarding further payments of
base salary, bonuses and the exercisability of Rights constitute fair and
reasonable provisions for the consequences of such termination, do not
constitute a penalty, and such payments and benefits shall not be limited or
reduced by amounts' Employee might earn or be able to earn from any other
employment or ventures during the remainder of the agreed term of this
Agreement.
12. Intentionally Omitted.
13. Arbitration. Any controversies between Employer and Employee involving
the construction or application of any of the terms, provisions or conditions of
this Agreement, save and except for any breaches arising out of Sections 8 and 9
hereof, shall on the written request of either party served on the other be
submitted to arbitration. Such arbitration shall take place in Nassau County,
New York and shall comply with and be governed by the rules of the American
Arbitration Association. An arbitration demand must be made within one (1) year
of the date on which the party demanding arbitration first had notice of the
existence of the claim to be arbitrated, or the right to arbitration along with
such claim shall be considered to have been waived. An arbitrator shall be
selected according to the procedures of the American Arbitration
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Association. The cost of arbitration shall be born by the losing party or in
such proportions as the arbitrator shall decide. The arbitrator shall have no
authority to add to, subtract from or otherwise modify the provisions of this
Agreement, or to award punitive damages to either party.
14. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, including without
limitation pursuant to Section 13 hereof, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition to
any other relief to which he may be entitled.
15. Entire Agreement; Survival.
a. This Agreement contains the entire agreement between the parties
with respect to the transactions contemplated herein and supersedes, effective
as of the date hereof any prior agreement or understanding between Employer and
Employee with respect to Employee's employment by Employer. The unenforceability
of any provision of this Agreement shall not effect the enforceability of any
other provision. This Agreement may not be amended except by an agreement in
writing signed by the Employee and the Employer, or any waiver, change,
discharge or modification as sought. Waiver of or failure to exercise any rights
provided by this Agreement and in any respect shall not be deemed a waiver of
any further or future rights.
b. The provisions of Sections 8, 9, 13, 14, 15, 18, 19 and 20 shall
survive the termination of this Agreement.
16. Assignment. This Agreement shall not be assigned to other parties.
17. Governing Law. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the state of Massachusetts , without regard to the conflicts of laws
principles thereof.
18. Notices. All notices, responses, demands or other communications under
this Agreement shall be in writing and shall be deemed to have been given when
a. delivered by hand;
b. sent be telex or telefax (with receipt confirmed), provided that
a copy is mailed by registered or certified mail, return receipt requested; or
c. received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as the party may designate to itself by notice to the other
parties:
(i) if to the Employer:
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Ambient Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Board of Directors
Telefax: (000) 000-0000
Telephone: (000) 000-0000
(ii) if to the Employee:
Xxxx X. Xxxxx
000 X. Xxxxxxx Xxx.
Xxxxxxxxx Xxxxxx, Xxx Xxxx 00000
20. Severability of Agreement. Should any part of this Agreement for any
reason be declared invalid by a court of competent jurisdiction, such decision
shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written.
AMBIENT CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------------------
EMPLOYEE
/s/ Xxxx X. Xxxxx
----------------------------------------
Xxxx X. Xxxxx
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