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EXECUTIVE COMPENSATION AGREEMENT
This Executive Compensation Agreement (this "Agreement"), is
entered into as of the day of November, 1996 ("Effective Date"),
between PHOTOCOMM, INC., an Arizona corporation (the "Company"),
and XXXXXX X. XXXXXXXX ("Executive"). The Company and Executive
are collectively referred to herein as the "Parties." This
Agreement automatically shall supersede any agreement between the
Company and Executive concerning Executive's employment by the
Company.
SECTION I. AGREEMENT OF THE PARTIES
The Company agrees to employ Executive and Executive agrees to
serve in the employ of Company as follows:
(a) Executive agrees to serve the Company as President and Chief
Executive Officer during the term of this Agreement. Executive
further agrees to use his best efforts, and apply his skill and
experience, to the proper performance of his duties hereunder and
to the business and affairs of the Company. Executive agrees to
serve the Company faithfully, diligently and to the best of his
ability.
(b) The principal location from which Executive will serve the
Company and perform his duties hereunder shall be Scottsdale,
Arizona.
The Company shall compensate Executive for his, services as
provided herein.
SECTION II. TERM OF EMPLOYMENT
Executive's employment shall commence under the terms of this
Agreement on the Effective Date, and shall continue hereunder
until December 31, 2001, unless this Agreement is terminated in
accordance with Section VII. Notwithstanding the foregoing, the
term of this Agreement shall automatically renew and extend for
one additional year as of January I of each year, commencing
January 1, 2002, unless either party gives written notice to the
other party at least six (6) months prior to January 1 of any
such year to the effect that this Agreement should not be further
extended, in which event the term of this Agreement shall
terminate upon the next succeeding December 31.
SECTION III. COMPENSATION; BENEFITS
A. Base Compensation. Continuing from the Effective Date, the
Company shall pay Executive a base annual salary of $210,000.
Commencing upon January 1, 1997, the Company shall pay Executive
a base annual salary of $230,000. Executive's base annual salary
may be increased by the Company during the term of this Agreement
based upon the Executive's and the Company's performance.
Notwithstanding the foregoing, in the case of substantial and
persistent deterioration of the Company's performance, the
Company may reduce Executive's base annual salary consistent with
similar salary reductions of other Company officers until the
Company's performance improves. Executive's base annual salary
shall be paid by the Company in semi-monthly installments
commensurate with the Company's normal employee pay days.
B. Incentive Compensation. The Company shall also provide
Executive incentive compensation as follows:
1. Annual Cash Bonus. Executive shall be awarded an annual cash
bonus based upon Company performance in an amount to be
determined by the Board of Directors of the Company pursuant to
this subparagraph. Prior to or shortly after the beginning of
each fiscal year of the Company, Executive shall submit for Board
approval the Company's fiscal year performance goals, including
an operating plan and financial budget. Following the end of the
fiscal year the Board shall determine the extent to which said
goals have been achieved and the amount of the cash bonus based
upon such performance. The target amount of such cash bonus
shall be in the range of from thirty (30%) percent to fifty (50%)
percent of Executive's annual base salary and shall be payable
within thirty (30) days following public release of the Company's
fiscal year results.
2. Annual Stock Option Grant. For the Company's 1996 Employee
Stock Option Award Program Executive shall be granted. non-
qualified stock options to purchase 400,000 shares of the
Company's common stock pursuant to the 1996 Stock Option Plan.
The vesting of said option shares shall occur as follows. 50,000
shares as of January 1, 1997, an additional 100,000 shares as of
January 1, 1998, an additional 150,000 shares as of January 1,
1999, and the final 100,000 shares as of January 1, 2000. The
number of options for subsequent years of the term hereof shall
be determined annually by the Board of Directors giving primary
consideration to the number of options granted each prior year
and Executive's contribution to Company performance. All of the
options shall be at the then existing market price as determined
by the Board, or an appropriate committee thereof, with an
exercise term of 10 years. Executive's options shall have all
rights and benefits related to stock options of the Company
contemplated by the Employee Stock Option Plan of the Company.
C. Supplemental Benefits. Nothing contained in this Section III
shall affect or in any way limit Executive's rights as an
employee of the Company to participate in any profit sharing
plan, supplemental compensation arrangements or any other fringe
benefits offered by the Company to its employees as set forth in
the Company's employee handbook, and compensation received by
Executive hereunder shall be in addition to the foregoing except
that the severance benefits set forth in this Agreement shall be
exclusive. Without limiting the generality of the foregoing, the
Company shall additionally provide the following supplemental
benefits to Executive:
1. Life and Disability Insurance. The Company shall maintain in
force (i) a Five Hundred Thousand Dollar ($500,000) term life
insurance policy with Executive's designated beneficiary, and
(ii) a disability insurance policy with a total monthly benefit
of at least 50% of Executive's monthly base salary.
2. Financial, Legal and Tax Services Reimbursement. The Company
shall reimburse Executive for expenses incurred by him for
personal financial, legal and tax services, up to a maximum of
$5,000.00 in any calendar year. The foregoing reimbursement
limit shall increase by five (5%) percent each calendar year
commencing January 1, 1997.
3. Supplemental Medical Expense Reimbursement, The Company shall
directly pay or reimburse to Executive, medical expenses of
Executive and Executive's immediate family members which are
incurred in excess of the Company's group medical insurance
coverage to a limit of $7,500 each calendar year ("Supplemental
Medical Expense Reimbursement Plan"). The foregoing Supplemental
Medical Expense Reimbursement limit shall increase by five (5%)
percent each calendar year commencing January 1, 1997.
SECTION IV. SALARY CONTINUATION UPON DISABILITY
In the event Executive shall, by reason of illness or other
incapacity, become unable to perform the services agreed upon
herein ("Disability" or "Disabled"), the Company shall continue
to compensate Executive for twelve (12) months commencing from
the date of such Disability at his base monthly salary less any
amounts actually received by Executive from the disability
insurance policies carried by the Company for the benefit: of
Executive pursuant to Section III.C above.
SECTION V. STOCK PUT OPTION
If Executive's employment terminates, Executive, or Executive's
estate, shall have the right and option ("Put Option") to have
ACX Technologies, Inc. ("ACX") purchase up to 500,000 shares of
the Company's common stock owned by Executive for a net purchase
price per share equal to the applicable amount indicated below:
Year of Put Exercise Purchase Price Per Share
1997 $2.75
1998 $3.25
1999 $3.75
2000 $4.25
2001 $4.75
Thereafter By mutual agreement, but not
less than $4.75 per share
The Put Option may be exercised by Executive giving written
notice thereof to the Company within thirty (30) days following
the date of termination, except that if Executive's employment is
terminated pursuant to Section VII.C, then such notice may be
given by Executive within six (6) months following the date of
termination ("Notice of Exercise"). Thereafter, the Executive's
Put Option shall expire. The closing of the share purchase shall
occur within thirty (30) days following Notice of Exercise, at
which time Executive shall deliver the appropriate number of
unencumbered shares to ACX and ACX shall deliver the purchase
price to the Executive.
The number of shares to be sold by the Executive to ACX under the
Put Option shall be adjusted in the event of any change in the
Company's capital stock on or before the closing by reason of the
declaration or payment of stock dividends or the declaration or
conclusion of split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or
the like, such that, in each case the number or class of shares
or other securities or property to be put by the Executive for
the prices above indicated are the equivalent number into which
500,000 of the Executive's shares of the Company's common stock
has been converted.
SECTION VI. ADDITIONAL COMPENSATION TO EXECUTIVE
The Company shall pay Executive the sum of $40,000.00 on January
2, 1997. The parties acknowledge that said payment may be
deferred pursuant to a deferred compensation agreement to be
mutually agreed between the parties. In the event that the
parties fail to negotiate said deferred compensation agreement
prior to December 31, 1996, then said said payment shall be made
as above indicated.
SECTION VII. TERMINATION
A. Definitions. For purposes of this Agreement the following
terms shall have the meanings set forth below.
1. Termination by the Company of Executive's Employment for
"cause" shall mean termination by affirmative vote of the Board
at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive
to be heard before the Board), finding that in the good faith
opinion of the Board, the Executive has: (1) engaged in
misconduct involving a material violation of established Company
rules or policies for the conduct of its employees including, but
not limited to, theft, gross negligence, discriminatory conduct
prohibited by Company policies, sexual harassment of an employee
or a subordinate, or such other similar offense or offenses that
would be grounds for discharge of an employee under Company rules
or policies; (2) financial misconduct, including illegal xxxxxxx
xxxxxxx of the Company's stock, embezzlement, using Company
assets for unauthorized personal use resulting in a material loss
to the Company; or material misrepresentation by Executive in
reporting the financial affairs of the Company to outside
authorities or to the Board; (3) willful and continued failure to
substantially perform Executive's duties with the Company (other
than due to physical or mental illness), if such failure is
materially damaging or materially detrimental to the business and
operations of the Company, provided that Executive shall have
received written notice of such failure and have a reasonable
opportunity to correct the alleged failure before termination for
cause; or (4) Executive's conviction of a crime constituting a
felony.
2. "Good Reason" shall mean, without Executive's express written
consent, the occurrence of any of the following circumstances
unless, in the case of Subsections (a) or (e), such circumstances
are fully corrected prior to the Date of Termination specified in
the Notice of Termination, as defined in Section VIII, given in
respect thereof:
(a) The failure of the Board of Directors of the Company to
elect Executive as Chief Executive Officer of the Company or the
assignment to Executive of any duties inconsistent with
Executive's status as an executive officer of the Company or a
substantial adverse alteration in the nature or status of
Executive's responsibilities from those in effect upon the
Effective Date;
(b) reduction by the Company in Executive's annual base salary
as in effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary reductions
similarly affecting all executives of the Company;
(c) The relocation of the Company's principal executive offices
where Executive is working upon the Effective Date to a location
more than 50 miles therefrom or the Company's requiring Executive
to be based anywhere other than the location of the Company's
principal executive offices where Executive was working upon the
Effective Date except for required travel on the Company's
business to an extent substantially consistent with Executive's
present business travel obligations;
(d) The failure by the Company, without Executive's consent, to
pay to Executive any portion of Executive's current compensation
except pursuant to an across-the-board compensation deferral
similarly affecting all executives of the Company;
(e) The failure by the Company to continue to provide Executive
with benefits or arrangements (including, without limitation,
life insurance, health, medical, dental, accident and disability
plans or programs, income tax services, car allowances, and other
fringe benefits) at least as favorable to those enjoyed by
Executive upon the Effective Date, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits or deprive Executive of any material fringe
benefit enjoyed by Executive upon the Effective Date, or the
failure by the Company to provide Executive with the number of
paid vacation days to which Executive is entitled on the basis of
years of service with the Company in accordance with the
Company's normal vacation policy in effect upon the Effective
Date;
Upon occurrence of any of the foregoing events which Executive
believes constitutes "good reason," Executive must notify the
Company in writing within ten (10) days and give the Company
thirty (30) days to cure or correct the alleged action or
failure. After the expiration of thirty (30) days, Executive may
quit for "good reason" by giving written notice within an
additional thirty (30) days.
3. "Disability' shall mean if, as a result of Executive's
incapacity due to physical or mental illness, Executive shall
have been absent from the full-time performance of Executive's
duties with the Company for six consecutive months, and within
thirty days after written notice of termination is given
Executive shall not have returned to the full-time performance of
Executive's duties. Any issue concerning the existence of
Executive's Disability upon which Executive and the Company
cannot agree shall be determined by a qualified physician
selected jointly by the company and Executive and, if they cannot
agree, each shall appoint a qualified physician and the two
physicians shall meet and agree on a third qualified physician to
determine the issue of Disability. Such physician shall consult
with Executive and representatives of the Company designated by
the Board to determine Executive's duties and then decide whether
or not Executive is physically capable of or mentally competent
to perform the essential functions of the position which he holds
at the time. The determination of such physician made in writing
to the Company and Executive shall be final and conclusive for
purposes of this Agreement.
B. Termination of Executive for Cause or by Executive Without
Good Reason. If the Company terminates Executive for Cause, or
if Executive voluntarily terminates his performance of services
to the Company without Good Reason, then the Company's
obligations to make any payments or provide any benefits to
Executive, in respect of periods after such termination,
automatically shall terminate and be forfeited, provided,
however, the Executive shall be entitled to any and all vested
rights under any profit sharing, pension or other employee
benefit plan of the Company in accordance with the terms and
provisions of such plans, and all deferred compensation payments
previously agreed upon by Executive and the Company, if any.
C. Termination With Good Reason or Without Cause. By action of
its Board of Directors, the Company shall have the right to
terminate Executive's employment with the Company at its sole
discretion without any cause whatsoever, provided only that
Executive shall receive the severance payments and benefits which
he is entitled to under this Agreement for termination without
cause (subject to the Executive's signing a legal release as
provided herein). Upon the termination of Executive's employment
if such termination is (i) by the Company other than for Cause or
Disability, or (ii) by Executive for Good Reason by voluntary
resignation, then Executive shall be entitled to the benefits
provided below:
1. The Company shall pay Executive's full base salary through
the date of termination ("Termination Date") at the rate in
effect at the time Notice of Termination is given, plus all other
amounts to which Executive is entitled under any compensation or
benefit plan of the Company, at the time such payments are due,
including a lump sum cash payment for all unused vacation time
which Executive has accrued as of the Termination Date;
2. In lieu of any further salary payments to Executive for
periods subsequent to the Termination Date, the Company shall pay
to Executive as severance pay a lump sum severance payment (the
"Severance Payment") equal to two and one-half (2-1/2) times
either (i) the Annual Compensation (as defined below) which was
payable to Executive by the Company for the year immediately
preceding the Termination Date, or (ii) the average of the Annual
Compensation which was payable to Executive by the Company for
the three (3) years preceding the Termination Date, whichever is
greater. Annual Compensation is Executive's base salary and any
annual bonus that was paid to Executive by the Company,
determined without any reduction for any deferrals of such salary
or such bonus under any deferred compensation plan (qualified or
unqualified) and without any reduction for any salary reductions
used for making contributions to any group insurance plan of the
Company or its affiliates.
The payments provided for in this subparagraph 2 shall be made
not later than the tenth (10th) day following the Termination
Date, provided, however, that if the amount of such payment
cannot be finally determined on or before such day, the Company
shall pay to Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments
and shall pay the remainder of such payments as soon as the
amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to Executive payable on the
tenth (10th) day after demand by the Company.
3. All of Executive's stock options for the purchase of the
Company's stock not otherwise vested, or as many of the options
as Executive elects, shall become immediately vested and shall be
exercisable by Executive at any time during the term which ends
thirty (30) months after the Termination Date, subject to
Executive's execution of the legal release as provided in
paragraph 7 below.
4. If Executive's employment shall be terminated as above set
forth, then for a thirty-six (36) month period after such
termination, the Company shall arrange to provide Executive with
life, disability, and Supplemental Medical Expense Reimbursement
substantially similar to those which Executive is receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by Executive pursuant to the previous
sentence shall be reduced to the extent comparable benefits are
actually received by Executive during the thirty-six (36) month
period following Executive's termination, and any such benefits
actually received by Executive shall be reported to the Company.
5. Executive shall not be required to mitigate the amount of any
payment provided for in this Section by seeking other employment
or otherwise, nor shall the amount of any payment or benefit
provided for in this Section (other than Subsection 4) be reduced
by any compensation earned by Executive as the result of
employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by Executive to the
Company, or otherwise (except as specifically provided in this
Section).
6. Notwithstanding anything contained in this Section to the
contrary, in no event shall payments or benefits be made pursuant
to subparagraphs 2 through 4 in an amount which shall result in
such payments and benefits in the aggregate being deemed an
"excess parachute payment" pursuant to Section 280G of the
Internal Revenue Code of 1986, as amended. In the event such
payments and benefits in the aggregate are deemed to be an excess
parachute payment by the independent auditors of the Company for
the fiscal year immediately proceeding the Termination Date, then
Executive shall have the right to identify which of such payments
or benefits (or parts thereof) are to be eliminated so that those
remaining in the aggregate do not constitute an excess parachute
payment.
7. As a condition precedent of receiving any severance payments
or benefits under this Agreement in connection with a termination
for good reason or without cause, Executive shall sign an
appropriate legal release agreeing not to bring any legal claims
against the Company of whatever nature or kind in connection with
Ws employment and separation from employment, except for benefits
of employment, such as profit-sharing, pension or other employee
benefit plans that by their terms have vested . The legal release
shall surrender all of Executive's rights to bring any legal
claim against the Company, other than for such vested rights,
under any federal or state law, statute, or ordinance. Executive
also agrees that he shall not be entitled to any termination
payments or benefits if he exercises his right to revoke the
legal release as provided by the Older Workers Benefit Protection
act.
SECTION VIII. TERMINATION NOTICE
Any purported termination of Executive's employment by the
Company or by Executive shall be communicated by written Notice
of Termination to the other party hereto in accordance with
Section XII hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's
employment under the provision so indicated, except if the
Agreement is terminated by the Company without cause.
SECTION IX. CONFIDENTIALITY
Executive agrees that, during the continuance of this Agreement
and thereafter, he shall not (otherwise than pursuant to his
duties hereunder) disclose without the written consent of the
Company, any material or substantial, confidential or proprietary
know-how, data or information pertaining to the Company, or its
business, personnel or plans, to any person, firm, corporation or
other entity, for any reason or purpose whatsoever. Executive
acknowledges and agrees that all memoranda, notes, records and
other documents made or compiled by Executive or made available
to Executive concerning the Company's business shall be the
Company's exclusive property and shall be delivered by Executive
to the Company upon expiration or termination of this Agreement
or at any other time upon the request of the Company.
The provisions of this Section IX shall survive the expiration or
termination of this Agreement or any part thereof, without regard
to the reason therefor.
SECTION X. COVENANT NOT TO COMPETE
The Parties acknowledge that Executive's willingness to enter
into this Agreement and to continue as an employee of the Company
constitutes a material inducement to the Company's agreement to
make payments to Executive as set forth herein including those to
be made upon termination. The Parties further acknowledge that
Executive's performance of all terms of this Agreement is
necessary to protect the Company's legitimate business interests.
Executive agrees, that, during the continuance of this Agreement
and for a period of one (1) year following termination of
Executive's employment with the Company under circumstances
described in Section VIII.C resulting in the payment to him of
severance benefits as provided therein, he will not, on behalf of
himself, or on behalf of any other person, company, corporation,
partnership or other entity or enterprise, directly or
indirectly, as an employee, proprietor, stockholder, partner,
consultant, or otherwise, engage in any business or activity
competitive with the business activities of the Company as they
are now or hereafter undertaken by the Company during the term
hereof anywhere that the Company then does business, or solicit,
recruit or hire any employee of the Company.
SECTION XI. DEDUCTIONS AND WITHHOLDING
Executive agrees that the Company and its affiliated companies
shall withhold from any and all payments required to be made to
Executive in accordance with this Agreement all federal, state,
local and other taxes that the Company or any such affiliates
determine are required to be withheld in accordance with
applicable statutes and regulations from time to time in effect.
SECTION XII. NOTICES
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed given when delivered
personally or when deposited in the U.S. Mail if sent by
registered or certified mail, prepaid and return receipt
requested, to the other party hereto at his or its mailing
address as set forth on the signature page of this Agreement, and
in the case of the Company, marked to the attention of Secretary.
Either party may change the address which such communications
hereunder shall be sent by sending notice of such change to the
other party as herein provided.
SECTION XIII. SEVERABILITY
If any provision of this Agreement or any part hereof is invalid,
unlawful or incapable of being enforced by reason of any rule of
law or public policy, all conditions and provisions of this
Agreement which can be given effect without such invalid,
unlawful or unenforceable provision shall, nevertheless, remain
in full force and effect.
SECTION XIV. BOARD APPROVAL
By execution of this Agreement, the Company acknowledges that
this Agreement has been reviewed and adopted by a resolution
approved by a majority of the members of the Board of Directors
of the Company.
SECTION XV. COMPLETED UNDERSTANDING; PRIOR AGREEMENTS
This Agreement (which includes all employee benefit plans of
Company referenced herein) constitute the complete understanding
between the Parties with respect to the undertaking of Executive
hereunder, and no statement, representation, warranty or covenant
has been made by either party with respect thereto except as
expressly set forth herein. Unless otherwise specifically
referred to herein, this Agreement shall, from and after the
Effective Date, supersede, in all respects, all previous
agreements in regard to employment between Executive and the
Company. This Agreement shall not be altered, modified, amended
or terminated except by written instrument signed by each of the
Parties hereto.
SECTION XIV. GOVERNING LAW
This Employment Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Arizona.
SECTION XVII. SUCCESSORS; BINDING AGREEMENT
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same
terms as Executive would be entitled to hereunder if Executive
terminated Executive's employment voluntarily for Good Reason,
except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed
the Date of Termination. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devises and legatees. If Executive should die while any amount
would still be payable to Executive hereunder if Executive
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or,
if there is no such designee, to Executive's estate.
SECTION XVIII. ARBITRATION
All claims, disputes and other matters in question between the
parties, or between Executive and ACX, arising under this
Agreement shall, unless otherwise provided herein, be decided by
arbitration in Phoenix, Arizona, in accordance with the Model
Employment Arbitration Procedures of the American Arbitration
Association (including such procedures governing selection of the
specific arbitrator or arbitrators), unless the parties mutually
agree otherwise. The Company shall pay the administrative costs
of the arbitration, but each party shall pay his and its own
attorney's fees and costs. The award by the arbitrator or
arbitrators shall be final, and judgment may be entered upon it
in accordance with applicable law in any state or Federal court
having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
PHOTOCOMM, INC. ______________________________
an Arizona corporation XXXXXX X. XXXXXXXX
00000 X. 00xx Xxxxx
By:__________________________ Xxxxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxx
Chairman of the Board
0000 X. Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
ACX Technologies, Inc. executes this Agreement only for the
purpose of obligating itself to purchase shares of common stock
of the Company upon the Executive's exercise of his Put Option
pursuant to Section V of the Agreement.
ACX TECHNOLOGIES, INC.
a Colorado corporation
By:__________________________
Its:_______________________
