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EXHIBIT 10.33
PERSONAL AND CONFIDENTIAL
EMPLOYMENT AGREEMENT
This Agreement is made April 13, 1999, by and between Digital Transmission
Systems, Inc., a Delaware corporation with offices at 0000 Xxxxxxxxxx Xxxxxxx,
Xxxx 000, Xxxxxxxx, XX 00000, ("DTS") and Xxxxxxx Xxxxxx (the "Employee") who
resides at 000 Xxxxxxx Xxxx Xxxx, Xxxxxxx, XX 00000.
WITNESSETH
WHEREAS, the Employee desires to be employed by DTS ("the Employer") and the
Employer desire(s) to employ the Employee upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises,
covenants and agreements hereinafter contained the parties hereto agree as
follows:
I. EMPLOYMENT
1.1 Employment. Subject to the provisions for termination as hereinafter
provided, the terms of this Agreement shall begin on the date first
written above and shall terminate on April 12, 2001 (the "Employment
Period"). The date of termination of employment whether initiated by
Employee or Employer is hereinafter designated "Date of Termination." The
time between the Date of Termination and the point at which the terminated
Employee receives no more compensation, aside from vacation pay or other
insurance or medical benefits, from the Employer as provided herein is
hereinafter designated the "Severance Period". Compensation payments
during the Severance Period will be referred to herein as "Severance
Payments."
1.2 Renewal. Subject to the provisions for termination as hereinafter
provided, this Agreement shall be automatically renewed for two (2)
successive one (1) year terms commencing on April 13, 2001 (the "Renewal
Periods") unless, during the following periods, either party to this
Agreement shall notify the other party, the Employee being one of the
parties, in writing of its desire not to renew this Agreement; provided,
however, any action required to be taken with respect to this Employment
Agreement by the Employer shall only be taken after the Compensation
Committee(s) of the Employer approves such action, and provided that a
notice period of sixty (60) days is required in order to prevent an
automatic renewal of this Agreement.
1.3 Duties.
Subject to Section 1.4, the Employee hereby promises to perform and
discharge well and favorably the duties of DTS PRESIDENT & CHIEF OPERATING
OFFICER ("President") and to perform services in such additional
capacities as may be directed by the DTS CEO and/or the DTS Board of
Directors. As DTS President, the Employee's duties shall consist of the
usual and customary duties of his position and he shall be subject to the
direction of the DTS
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CEO or the DTS Board of Directors, and shall at all times have the
authority as shall reasonably be required to enable him to discharge
such duties in an efficient manner.
1.4 Redesignation. The Employer may, in its discretion, elect or appoint the
Employee to offices or positions at DTS other than, or in addition to DTS
President, (hereinafter the "Redesignation") by providing the Employee with
prompt written notice of the Redesignation. If any Redesignation and
related addition to and/or reduction of Employee's duties results in a
substantial net change in the scope of the Employee's responsibilities, the
Employee may elect, in his sole discretion, not to accept such
Redesignation and to resign upon providing written notice of his
resignation to the Employer not less than thirty (30) days after the
Employee has been provided with written notice of the Redesignation. In
such event, if such termination of employment occurs following a
Redesignation during the Employment Period, the Employer shall pay the
Employee his total monthly compensation rate, as provided herein, for
twelve (12) months following the effective date of such resignation or
until March 1, 2001, whichever is longer. In the event that the
Redesignation shall occur at any time after the Employment Period, and
during one of the Renewal Periods, the Employer shall pay the Employee his
total monthly compensation rate, as provided herein, for twelve (12) months
following the effective date of such resignation. All sums owing hereunder
in the event of a Redesignation and a subsequent resignation by the
Employee shall be paid on regular payroll periods of the Employer following
the effective date of such resignation.
1.5 Other Business Activities. The Employee shall devote his full time
attention and energies to the business of the Employer and shall not, so
long as he remains in the employ of the Employer, be engaged in any other
employment or business of substantial nature, whether or not such business
activity is pursued for gain and profit, without the written consent of the
Employer. Nothing contained herein, however, shall be construed as
preventing the Employee from (i) making passive investments of his assets
in such form or manner as he desires, providing such investments: (a) do
not require the Employee to render services in the operations or affairs of
the firms, corporations or other entities in which such investments are
made, and (b) are not made in any business directly or indirectly competing
with the Employer or its (their) subsidiaries or affiliated corporations,
if any, unless the stock of such company is listed on a national stock
exchange and the Employee owns less than three percent (3%) of the
outstanding voting securities, or (ii) becoming a member of the Board of
Directors of any other corporation that the Employee desires, provided that
the corporation upon whose Board the Employee is a member of is not, in the
sole discretion of the Employer's Board of Directors, in competition with
the business of the Employer.
II. COMPENSATION
2.1 Annual Salary. The Employer shall pay to the Employee in compensation for
Employee's services hereunder to Employer, in aggregate, a Base Salary for
the Employment Period at an annualized rate of One Hundred and Sixty
Thousand Dollars ($160,000) payable in equal periodic installments in
accordance with the customary payroll policy of the Employer.
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Should this Agreement be renewed per Section 1.2, the Employee will have a
performance review and a compensation review on an annual basis. On the
basis of these reviews, the Employee's total compensation package - base
salary, bonus amount and stock option grants - will be revised, if
warranted, to provide continuing incentives and recognize and reward
performance in leadership commensurate with the position held by the
Employee. In addition, the Employee will also be eligible for an Executive
Bonus under the Management Bonus Program approved annually by the Employer
whereby both the Employer and the Employee meet mutually agreeable goals.
An accelerator of 2X, i.e., twice the bonus for achieving the same goals
again, will apply for performance "above plan" or above the mutually
agreeable goals. The Compensation Committee of the Employer will review
the amount of the Employee's bonus for each fiscal year and may increase
the bonus amount. The sum of the annual base salary plus the sum of the
last four quarters of Executive Bonus earned divided by twelve are defined
as the total "monthly compensation rate" in this Agreement.
2.2 Expenses. The Employer agrees to promptly reimburse the Employee against
his receipts for all reasonable business expenses incurred by him during
the Employment Period or Renewal Periods in connection with the
performances of his services hereunder.
2.3 Stock Options and Other Incentive Plans. As part of this Agreement the
Employee will be granted options on an additional One Hundred Thousand DTS
common shares at the market price of the date of this Agreement and which
shall vest quarterly over a period of three years. The Employee shall also
continue to be eligible to participate in any Incentive Stock Option or
Non-Qualified Stock Option Plan or other incentive plans duly approved by
the Board of Directors for implementation within DTS and based on mutually
agreeable goals.
2.5 Additional Benefits. In accordance with DTS Policy while an employee of
DTS, the Employee shall continue to be entitled to four weeks vacation
annually, medical insurance, and other fringe benefits made available to
the respective Employer's employees generally.
III. TERMINATION OF EMPLOYMENT
3.1 Termination Due To Death. If during the Employment Period or Renewals
thereof, Employee shall die, this Agreement shall terminate, except that
the monthly compensation rate or other amounts payable hereunder, to or for
the benefit of Employee shall be paid for one (1) year following the death
of the Employee to such person or persons as Employee may designate by
notice to the Employer from time to time or, in the absence of such
designation, to his legal representatives.
3.2 Termination Due To Disability. If during the Employment Period, or
Renewals thereof, Employee shall become physically or mentally disabled,
whether totally or partially, so that he is unable substantially to
perform his services hereunder (i) for a period of 120
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consecutive days, or (ii) for shorter periods aggregating 180 days during
any period of twelve consecutive months, the Employer may at any time after
the last day of the 120 consecutive days of disability or the day on which
the shorter periods of disability shall have equaled an aggregate of 180
days, by 10 days written notice to Employee (but before Employee has
recovered from such disability), terminate this Agreement. Notwithstanding
such disability, the Employer shall continue to pay Employee compensation
or other amounts payable hereunder, to or for the benefit of Employee up to
and including the date twelve months after the effective date of such
termination.
3.3 Termination for Cause. The Employer may at any time during the Employment
Period and any Renewals thereof, by notice, terminate this Agreement and
discharge the Employee for cause, whereupon the Employer's obligation to
pay any compensation, severance allowance, or other amounts payable
hereunder to or for the benefit of Employee shall terminate on the date of
such discharge, notwithstanding anything herein contained to the contrary.
As used herein, the term "for cause" shall be deemed to mean and include
chronic substance abuse; misappropriation of any money or other assets or
properties of the Employer or its subsidiaries; willful violation of
specific and lawful written directions from his superiors or from the Board
of Directors of the Employer; willful failure or refusal to perform the
services required of Employee under this Agreement; other breaches of the
covenants contained herein; willful disclosure of trade secrets or other
confidential information resulting in substantial detriment to the Employer
as documented by the Employer under oath or affirmation; conviction in a
court of competent jurisdiction of any crime involving the funds or assets
of the Employer including, but not limited to, embezzlement and larceny;
any civil or criminal conduct or personal misbehavior including sexual
harassment which is detrimental to the image, reputation, welfare or
security of the Employer where such misconduct or misbehavior and judgment
have been documented by the Employer under oath or affirmation; and any
other acts or omissions that constitute grounds for cause under the laws of
the states of Georgia, Delaware, California, Massachusetts or Illinois, or
such other states or locations wherein the Employer may have operations.
3.4 Termination Without Cause. The Employer may terminate this Agreement
"without cause" at any time upon sixty (60) days written notice to the
Employee. In the event the Employer does terminate this Agreement without
it being for cause, the Employee, if requested in writing by the Employer,
shall continue to render services at full compensation until the effective
date of such termination; but in no case shorter than sixty (60) and longer
than ninety (90) days. Thereafter, during the Employment Period, Employee
shall be paid at his total monthly compensation rate for twelve (12) months
following the effective date of such termination, or until April 12, 2001,
whichever is the longer period, constituting the Severance Period under
this Section. In the event such termination pursuant to this Section 3.4
occurs during any of the Renewal Periods after April 12, 2001, the Employee
shall be paid his total monthly compensation rate for twelve (12) months
following the date of termination, constituting the Severance Period under
this Section, as well as all other amounts payable hereunder. Termination
"without cause" shall include: the ceasing of
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operations due to bankruptcy, and/or the general inability of the Employer
to meet the Employer's obligations as they become due, or upon non-renewal
of this Agreement.
3.5 Termination Without Cause Following a Change in Control. This Agreement
may be terminated by Employer, or successor to Employer, upon sixty (60)
days written notice to Employee upon the happening of any of the following
events:
a. Sale by Employer of substantially all of its assets;
b. Sale, exchange or other disposition of two-thirds or more of the
outstanding capital stock of the Employer;
c. Merger or reorganization in which shareholders of the Employer
immediately prior to such merger or reorganization receive less than
fifty percent (50%) of the outstanding voting shares of the successor
corporation.
d. Change in Employer Board of Directors membership of more than fifty
percent.
In the event that the Employee's employment is terminated without cause
within two years following a change of control, the Employer or successor
to Employer shall:
a. Pay to Employee, in installments, the Employee's total compensation
rate for twelve (12) months and all other amounts payable hereunder
following the effective date of such termination or until April 12,
2001, whichever is the longer period, constituting the Severance Period
under this Section.
b. In the event such termination occurs during any of the Renewal Periods,
pay to Employee his monthly compensation rate for twelve (12) months or
until the end of the renewal period, whichever is longer plus all other
amounts payable hereunder, constituting the Severance Period under this
Section.
c. Pay to Employee any Executive Bonus awarded but not yet paid.
d. Continue Employee's coverage in all benefit programs in which he was
participating on the date of his termination of employment until the
earlier of (a) the date he receives equivalent coverage and benefits
under plans and programs of a subsequent employer, or (b) if
termination occurs during the term of this Agreement, a date twelve
months after the date of termination.
e. Accelerate vesting of stock options by two (2) years.
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3.6. Employee Resignation. The Employee has the right at any time to
voluntarily resign his employment, by giving sixty (60) days written
notice to the Employer. All compensation payable under this Agreement can
be paid in a lump sum within thirty (30) days of the Date of Termination,
solely at the option of the Employee. In the event of voluntary
resignation, the Employee will be bound by Section IV and Section V of
this Agreement.
3.7. Status during Severance Period. If the Employee is terminated without
cause as defined in Section 3.4 or 3.5, whatever vacation compensation due
Employee on the Date of Termination will be added to compensation due
Employee during the Severance Period. If Employee breaches any covenant
contained in this Agreement, inclusive of those contained in Section IV
and V, any benefits (including stock option vesting) and payments
otherwise due under the terms of this Agreement shall cease and Employer
shall have no further liability for such payments. Stock Options held by
Employee at Date of Termination will continue to vest during the Severance
Period. All compensation payable during the Severance Period may be paid
in a lump sum within thirty (30) days of the Date of Termination, solely
at the option of the Employee by giving written notice to Employer within
ten (10) days of the Date of Termination.
3.8. Waiver and Mutual Release upon Termination. Should Employee receive
compensation and/or benefits, during a Severance Period, for termination
without cause as defined in Section 3.4 or 3.5, and excepting for the set
of benefits and compensation stated herein due Employee during such
Severance Period, effective as of the Date of Termination the Employer and
the Employee will otherwise completely, mutually and reciprocally release,
discharge, acquit each other from all other claims, contracts, actions,
suits, demands, agreements, liabilities, and proceedings of every nature
and description both at law and in equity that either party has or may
have against the other, arising from the beginning of time to the date of
termination, including but not necessarily limited to any incident or
claim resulting from employment with Employer.
IV. COVENANTS NOT TO COMPETE
4.1 The Employee agrees that (i) during the term of this Agreement, or in the
event of a termination pursuant to Section 3.3 and, thereafter for a
period of twelve (12) months or (ii) in the event of a termination
pursuant to Sections 3.4 or 3.5 or 3.6 or upon resignation upon
Redesignation for the Interim Period as defined in Section 1.4, and for
the period from the effective date of such termination until the
expiration of a period of twelve months following the termination of
employment, he will not act as a principal, agent, Employee, employer,
consultant, control person, stockholder, director or co-partner of any
person, firm, business entity other than the Employer, or in any
individual representative capacity whatsoever, directly or indirectly,
with up to five companies, including their wholly owned subsidiaries or
divisions, specified by the Employer in Schedule A and may be modified
from time to time at the option of the Employer. The employee will not:
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a) engage or participate or be employed in any of these five companies
whose products or services are competitive with those of the
Employer anywhere in the United States of America; provided,
however, that the ownership by the Employee of not more than three
percent (3%) of a corporation or similar business venture shall not
be deemed to be a violation of this covenant as long as the Employee
does not become a controlling person or actively involved in the
management of such corporation or business venture;
b) approach, solicit business from, or otherwise do business or deal
with any customer of the Employer in connection with any product or
service from one of these five companies competitive with any
provided by the Employer; provided, however, the Employee may
approach, solicit business from, or otherwise do business or deal
with any subsidiary or division of any customer of the Employer
provided that such customer's division or subsidiary does not
provide a product or service competitive with any provided by the
Employer.
c) approach, counsel, solicit, assist to solicit or attempt to induce
any person who is then in the employ of the Employer, its affiliates
or subsidiaries to leave the employ of the Employer, or employ, or
attempt to employ on behalf of any person or entity any such person
or persons who at any time during the preceding six months was in
the employ of the Employer;
d) aid or counsel any other person, firm, corporation or business
entity to do any of the above.
e) For purposes of this Section 4.1, the term "customer" shall mean (i)
any person or entity who was a customer of the Employer at any time
during the last two months of the Employee's employment by the
Employer; (ii) any prospective customer to whom the Employer had
made a presentation, or similar offering of product(s) during the
last year of the Employee's employment by the Employer.
f) The Employee acknowledges (i) that his position with the Employer
requires performance of services which are special, unique,
extraordinary and intellectual in character and places him in a
position of confidence and trust with the customers and employees of
the Employer, through which, among other things, he shall obtain
knowledge of such organization's "technical information" and "know
how" and become acquainted with their customers, in which matters
such organizations have substantial proprietary interests, (ii) that
the restrictive covenants set forth above are necessary in order to
protect and maintain such proprietary interests and other legitimate
business interests of the Employer, and (iii) that the Employer
would not have entered into this Agreement unless such covenants
were included herein.
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g) The Employee also acknowledges that the business of the Employer
presently extends throughout the world, that he has personally
supervised or engaged in such business on behalf of the Employer, or
will do so pursuant to the terms of this Agreement, and,
accordingly, it is reasonable that the restrictive covenants set
forth above are not more limited as to geographic area than is set
forth therein. The Employee also represents to the Employer that the
enforcement of such covenants will not prevent the Employee from
earning a livelihood.
If any of the provisions of this Section, or any part thereof, is
hereinafter construed to be invalid or unenforceable, the same shall not
affect the remainder of such provision or provisions, which shall be given
full effect, without regard to the invalid portions. If any of the
provisions of this Section, or any part thereof, is held to be
unenforceable because of the duration of such provision, the area covered
thereby or the type of conduct restricted therein, the parties agree that
the court making such determination shall have the power to modify the
duration, geographic area and/or other terms of such provision and, as so
modified, said provision shall then be enforceable. In the event that the
courts of any one or more jurisdictions shall hold such provisions wholly
or partially unenforceable by reason of the scope thereof or otherwise, it
is the intention of the parties hereto that such determination not bar or
in any way affect the Employer's right to the relief provided for herein
in the courts of any other jurisdictions as to breaches or threatened
breaches of such provisions in such other jurisdictions, the above
provisions as they relate to each jurisdiction being, for this purpose,
separable into diverse and independent covenants.
V. CONFIDENTIAL INFORMATION
5.1 Disclosure of Information. The Employee recognizes and acknowledges that
the financial information, trade secrets, technical information, and
confidential or proprietary information of the Employer, including such
information as may exist from time to time, and information as to the
identity of customers or prospective customers of the Employer and other
similar items, are valuable, special and unique assets of the Employer's
business, access to and knowledge of which are essential to the
performance of the duties of the Employee hereunder. Unless compelled by
court order or other legal process including legal claims by Employee of
breach of this Agreement by Employer, the Employee will not, during or
after the term hereof, in whole or in part, disclose such secrets or
confidential, technical or proprietary information to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever, nor shall the Employee make use of any such property or
information for his own purpose or for the benefit of any person, firm,
corporation or other entity (except the Employer) under any circumstances,
during or after the term hereof, provided that after the term hereof these
restrictions shall not apply to such secrets or information which are then
in the public domain (provided that the Employee was not responsible,
directly or indirectly, for such secrets or information entering the
public domain without the consent of the Employer).
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5.2 Ownership of Inventions. All of the Employee's right, title and interest
in all developments or improvements devised or conceived by the Employee,
alone or with others, during his working hours, as well as in all
developments or improvements devised or conceived by the Employee, alone
or with others, which relate to any business in which the Employer is then
engaged or contemplating engaging in, regardless of when devised or
conceived, is the exclusive property of the Employer. The Employee shall
promptly disclose all such developments and improvements to the Employer.
The Employee shall not use or disclose any such developments or
improvements, other than in furtherance of the Employer's business,
without the Employer's prior written consent
5.3 Return Memoranda. Employee hereby agrees to deliver to the Employer within
five days of the date of termination of his employment, or at any other
time the Employer may so request, all keys, credit cards issued by the
Employer to the Employee, equipment including calculators, personal
computers, organizers, cellular telephones, memoranda, notes, records,
reports, manuals, drawings and other documents (and all copies thereof)
relating to the Employer's business and all property associated therewith,
which he may then possess or have under his control.
5.4 Confidentiality of this Agreement. Employee hereby agrees to not disclose,
directly or indirectly, either the amount or terms of this Agreement to
any person other than Employee's immediate family, attorney and
accountant, unless compelled to do so by court order or other lawful
process including claims by Employee of breach of contract by Employer.
5.5 Non-disparagement. Except in legal claims by Employee of breach of
contract by Employer, Employee agrees not to: (a) encourage, support, or
solicit claims against the Employer; (b)criticize, denigrate, or otherwise
speak adversely regarding the Employer, its policies and practices and/or
its personnel, officers, or directors.
VI. INJUNCTIVE RELIEF
6.1 The Employee acknowledges that the remedy at law for any breach or
threatened breach of Articles IV and V hereof by the Employee will be
inadequate, and that, accordingly, the Employer shall, in addition to all
other available remedies (including the immediate termination of any
compensation and/or benefits during the Severance Period and without
limitation , seeking such damages as it can be shown it has sustained by
reason of such breach), be entitled to injunctive relief without being
required to post bond or other security, and without having to prove the
inadequacy of the available remedies at law. The Employee agrees not to
plead or defend on grounds of adequate remedy at law or any similar
defense in any action by the Employer against him, or injunctive relief,
or for specific performance of any of his obligations pursuant to Articles
IV and V hereof. Nothing herein shall be construed as prohibiting the
Employer from pursuing any other remedies for such breach or threatened
breach.
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VII. MISCELLANEOUS PROVISIONS
7.1 Notices and Communications. All notices and communications hereunder shall
be in writing and shall be hand-delivered or sent postage prepaid by
registered or certified mail, return receipt requested, to the address
first above written or to such other address of which notice shall have
been given in the manner herein provided.
7.2 Entire Agreement. All prior or contemporaneous agreements and
understandings between the parties with respect to the subject matter of
this Agreement are superseded by this Agreement, and this Agreement
constitutes the entire understanding between the parties. This Agreement
may not be modified, amended, changed or discharged except when executed
in writing and signed by both parties hereto, and then only to the extent
therein set forth.
7.3 Assignment. This Agreement may be assigned by the Employer and shall be
binding upon and inure to the benefit of the Employer's assigns and
successors. The services to be performed by the Employee pursuant to this
Agreement may not be assigned by the Employee.
7.4 Waiver. No waiver of any breach of this Agreement or of any objection to
any act or omission connected herewith shall be implied or claimed by any
party, or be deemed to constitute a consent to any continuation of such
breach, act or omission, unless in a writing signed by the party against
whom enforcement of such waiver or consent is sought, and then only to the
extent therein set forth.
7.5 Indemnification. The Employer will indemnify Employee, to the maximum
extent permitted by applicable law and the By-laws of the Employer,
against all costs, charges and expenses incurred or sustained by him in
connection with any action, suit or other reason of his being an officer,
director or employee of the Employer or any subsidiary or affiliate
thereof subject to applicable law.
7.6 Section Headings. The Section headings of this Agreement are solely for
the purpose of convenience and shall neither be deemed a part of this
Agreement nor used in any interpretation thereof.
7.7 Governing Law. This Agreement and the relationship of the parties shall be
governed by, and construed in accordance with, the laws of the state of
Delaware, or until such time as the Employer's state of incorporation may
be changed to another state within the United States, at which point the
relationship of the parties would then be governed by, and construed in
accordance with, the laws of the new state of incorporation.
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7.8 Cooperating In Pending or Future Litigation. Except in legal claims by
Employee of breach of contract by Employer, Employee, as a former employee
and/or officer, agrees and warrants that he shall cooperate fully in the
defense of the Employer, its parent, subsidiary, or affiliated companies,
or its present or former directors, officers, employees, or agents in any
litigation or controversy now existing or which may arise in the future in
which Employee has knowledge of the facts or circumstances. Employee
agrees and warrants that his cooperation concerning pending, future, or
threatened litigation is not the result of any payments made to the
Employee pursuant to this Agreement and release.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the day and year first above written.
DIGITAL TRANSMISSION SYSTEMS, INC.
Dated: Dated:
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Xxxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
President and COO CEO
Dated
-----------------------
---------------------------
Xxxxxxx Xxxxx
DTS Chairman of the Board
Seal:
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SCHEDULE A
Competitors to DTS
ADC
Premisys Communications
CAC (Carrier Access Corporation)
Paragon Networks, International
Verilink
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