EMPLOYMENT AGREEMENT
This Agreement is entered into as of July 17, 1996, between CELLULAR
TECHNICAL SERVICES COMPANY, INC., a Delaware corporation ("CTS"), and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (the "Executive"). In consideration of the mutual promises, covenants and
obligations contained herein, the parties agree as follows:
1. Employment and Term. Company hereby employs Executive as the
Vice President--Engineering of Company on the terms and conditions set forth
in this Agreement, and Executive hereby accepts and agrees to such employment
with Company, for an original term beginning on the date of this Agreement
and ending on the second (2nd) anniversary of this Agreement, subject to
continuation set forth below. The Chief Executive Officer of Company and
Executive shall meet and discuss in good faith the terms of a new or extended
contract of Executive's employment with Company at least three (3) months
prior to the end of the original term and each extended term thereafter.
Unless otherwise extended, replaced, or terminated as set forth herein, this
Agreement shall, after the original term, continue thereafter on a
month-to-month basis terminable by either party upon written notice of
termination to the other party in accordance with Subsection 9.1, below, at
least thirty (30) days before the termination date.
2. Duties. Executive is employed to perform the duties of
Vice President -Engineering of Company and shall have such authority and
perform such duties consistent with such position as may be assigned to
Executive by the President, Chief Executive Officer, and/or the Board of
Directors of Company from time to time. Executive shall perform such duties
faithfully, diligently, to the best of his ability, and in a manner
consistent with the best interests of Company. Executive shall devote his
full time, skills, and efforts to the performance of such duties and to the
furtherance of the best interests of Company. All of the foregoing duties and
responsibilities will be subject to the terms of this Agreement, the
supervision of the President, Chief Executive Officer, and the Board of
Directors of Company, and the then-current plans, practices, policies, and
procedures established by Company and generally applicable to comparable
executives of Company.
3. Compensation, Benefits, Vacation, and Expenses. In
consideration for Executive's services under this Agreement, Executive shall
receive the following compensation and benefits during the term of this
Agreement:
3.1 Base Salary. Executive shall receive an initial annual
base salary of $105,000.00, which shall be paid in accordance with Company's
usual payroll policies for comparable executives of Company. Company shall
consider increases to such base salary at least annually. Such base salary
shall not be subject to reduction except for Cause (as defined in Section 6,
below). Any change in such base salary: (i) shall not serve to cancel this
Agreement or otherwise limit or reduce any other right or obligation to
Executive under this Agreement; and (ii) shall merely serve to amend this
Subsection with respect to such change in base salary, and all of the other
terms of this Agreement shall continue in full force and effect.
3.2 Incentive Compensation and Bonuses. Executive shall
receive annual incentive compensation and bonuses in accordance with the
terms of the Executive Incentive Compensation Plan attached hereto as Exhibit
A, subject to Company's then-current plans, practices, policies, and
procedures with respect to incentive compensation established by the Board of
Directors of Company (or a committee thereof) and generally applicable to
comparable executives of Company.
1
3.3 Stock Options. Company will grant to Executive options to
purchase shares of voting common stock of Company pursuant to the terms of
that certain Officer Stock Option Agreement dated as of July 17, 1996 between
Executive and Company attached hereto as Exhibit B. Such options shall be in
such amounts, exercisable at such per-share exercise price, and vested under
such vesting schedule as set forth in such Officer Stock Option Agreement.
Such Officer Stock Option Agreement shall be subject to all of the terms and
conditions of Company's 1996 Stock Option Plan.
3.4 Benefits. Executive and his family shall be entitled to
participate in and shall receive all benefits under all welfare benefit
plans, practices, policies, and programs generally provided by Company
(including without limitation all health, medical, dental, prescription,
disability, salary continuance, life insurance, 401(k) retirement savings,
and other benefit plans and programs) to comparable executives of Company.
3.5 Annual Vacation. Executive shall be entitled to a
minimum of three (3) weeks paid annual vacation, which shall be in addition
to Company holidays and sick leave. Such vacation may be scheduled in
Executive's reasonable discretion, subject to reasonable oversight by the
President, Chief Executive Officer, and/or the Board of Directors of Company.
Annual vacation increases, accruals, and the like will be provided pursuant
to the vacation and leave policies, practices, and procedures established by
Company and generally applicable to comparable executives of Company.
3.6 Expenses. Executive shall be entitled to reimbursement for
reasonable business expenses incurred by Executive for the benefit of
Company. Executive shall present from time to time itemized accounts or
receipts for such expenses in accordance with the plans, practices, policies,
and procedures established by Company and generally applicable to comparable
executives of Company.
4. Proprietary Rights. Upon the execution of this Agreement,
Executive and Company shall enter into that certain Agreement Regarding
Confidential Information and Property Rights attached hereto as Exhibit C,
and Executive shall fully comply with the provisions of such agreement.
5. Restrictive Covenants.
5.1 Nonsolicitation. During the term of Executive's employment
with Company and for a period of twelve (12) months after the termination
thereof, however caused, Executive shall not directly or indirectly do any of
the following without Company's prior written approval: (i) communicate with
or solicit any person or entity which was a customer of Company or which
Company was actively soliciting to be a customer during the twelve (12) month
period preceding termination of Executive's employment with Company (each
being a "Customer") for the purpose of marketing services or products in
competition with any services or products of Company, whether or not
communication is initiated by the Customer, Executive, or any other party;
(ii) in any manner interfere with Company's business relationship with any
Customer or potential customer or otherwise urge any Customer or potential
customer to discontinue business or not to do business with Company; or (iii)
hire, offer to hire, solicit, or endeavor to entice away any employee, agent,
or consultant of Company or any of its affiliates, or otherwise urge any such
person to discontinue his or her relationship with Company, whether or not
communication is initiated by such person, Executive, or any other party.
5.2 Noncompetition. During the term of Executive's employment with Company
and for a period of twelve (12) months after the termination thereof, however
caused (except by Executive with Good Reason or by either party following a
Change of Control, in which case the
2
terms of this Subsection shall not apply), Executive shall not directly or
indirectly do any of the following without Company's prior written approval:
(i) engage as owner, employee, consultant, or otherwise, within the United
States, in any facet of the business activities of Company or any of its
affiliates, except as required in the ordinary course of Executive's
employment with Company, or (ii) otherwise compete, within the United States,
with the business activities of Company or any of its affiliates; provided,
that Executive shall have the right to make passive investments in any entity
so long as Executive does not participate in the business of such entity in
violation of this Subsection.
5.3 Nondisparagement. During the term of Executive's
employment with Company and for a period of twelve (12) months after the
termination thereof, however caused, Executive shall not make any disparaging
remarks about Company or its products or services to any person or entity,
provided that the terms of this Subsection will not limit Executive's right
to give non-malicious and truthful testimony in the event that Executive is
required to testify pursuant to a court order or applicable law.
5.4 Injunctive Relief. Executive agrees that if he violates
the provisions of this Section 5 or otherwise threatens to do so, Company, in
addition to any other rights and remedies available under this Agreement or
otherwise, shall be entitled to obtain an injunction issued (without the
necessity of a bond) by any court of competent jurisdiction restricting
Executive from committing or continuing any such violation.
6. Termination of Employment.
6.1 Definitions. For purposes of this Agreement, the
following terms shall have the following definitions: 6.1.1 "Cause" shall
mean and be deemed to exist if any of the following events occur: (i) a
material breach by Executive of his obligations under this Agreement (other
than as a result of incapacity due to Disability or death) caused by (a)
Executive's willful misconduct committed in bad faith without reasonable
belief that the conduct causing such breach is in the best interests of
Company, or (b) Executive's gross negligence; (ii) actual fraud or
embezzlement on the part of Executive; or (iii) the conviction of Executive
of, or a plea of guilty or no contest by Executive to, a felony involving
moral turpitude.
6.1.2 "Disability" shall mean the definition of the term
"Disability" in Company's disability benefit plan covering executives of
Company as in effect from time to time, or, if no such disability benefit
plan exists, then such term shall mean the inability, by reason of any
medically-determined physical or mental impairment, of Executive to
satisfactorily perform his duties hereunder for a period of more than ninety
(90) consecutive days or an aggregate of more than ninety (90) days in any
rolling twelve-month period.
6.1.3 "Good Reason" shall mean and be deemed to exist if any
of the following events occur without the written approval of Executive: (i)
Company reduces, in any material respect, Executive's position, title, or
responsibilities contemplated by this Agreement without Cause or assigns
Executive duties which are inconsistent, in any material respect, with such
position, title, or responsibilities without Cause; (ii) Company fails to pay
any amount when due to Executive hereunder or materially breaches any other
obligation hereunder which is not remedied within thirty (30) days after
receipt of written notice from Executive specifying such breach; or (iii) any
failure by Company or any of its successors or assigns to comply with and
satisfy Subsection 9.2, below.
3
6.1.4 "Change of Control" shall mean and be deemed to
exist if any of the following events occur:
(i) the occurrence of a change of "control" of Company (as such quoted term
is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934,
as amended from time to time (the "Act")) or any change in the "ownership or
effective control" or in the "ownership of a substantial portion of the assets"
of Company (as such quoted phrases are used in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")); or
(ii) any "person" (as such quoted term is used in Sections 3(a)(9), 13(d),
and/or 14(d)(2) of the Act), except for an employee benefit plan (or trust)
sponsored or maintained by Company or any entity controlled by Company, becomes
the "beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated
under the Act), directly or indirectly, of 30% or more of either: (A) Company's
then-outstanding shares of voting common stock ("Outstanding Company Common
Stock"); or (B) the combined voting power of the then-outstanding voting
securities of Company entitled to vote generally in the election of directors
("Outstanding Company Voting Securities"); or
(iii) the following persons cease for any reason to constitute a majority of
the Board of Directors of Company: (A) individuals who, as of the date hereof,
constitute the Board of Directors; and (B) individuals who become members of the
Board of Directors after the date hereof whose election, or nomination for
election by Company's shareholders, was approved by a vote of at least
two-thirds of the directors then comprising the Board of Directors, but
excluding, for this purpose, any director designated by a person who has entered
into an agreement with Company to effect a transaction described in this
Subsection 6.1.4 or whose initial election or appointment to the Board of
Directors occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 promulgated under the Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the directors then comprising the incumbent Board of
Directors; or
(iv) the approval by Company's shareholders of any merger, consolidation, or
other business combination involving Company, other than a merger,
consolidation, or other business combination which would result in all or
substantially all of the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities outstanding
immediately prior thereto being the beneficial owners of at least 60% of,
respectively, the shares of voting common stock and the combined
voting power of the voting securities of the surviving entity outstanding
immediately after such merger, consolidation, or other business combination; or
(v) the approval by Company's shareholders of any sale, exchange, or other
disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of Company; or
(vi) the approval by the shareholders of Company of any plan or proposal for
liquidation or dissolution of Company.
Notwithstanding anything to the contrary, if a Change of Control occurs and
if Executive's employment with Company is terminated prior to the date on which
the Change of Control occurs, then a "Change of Control" shall be deemed to have
occurred on the date immediately prior to the date of such termination, so long
as Executive can reasonably demonstrate that such termination (A) was at the
request of a third party who had taken steps reasonably calculated to effect the
Change of Control, or (B) otherwise arose in connection with or anticipation of
the Change of Control.
4
6.2 Termination Upon Death Of Executive. In the event
of the death of Executive during the term of this Agreement, Executive's
employment shall automatically terminate without further obligation to
Executive's estate under this Agreement, except that Executive's estate shall
be entitled to receive all monies and other rights to which Executive
otherwise would have been entitled hereunder through the end of the calendar
month after the month in which death occurred, plus all accrued and unpaid
monies owing through such date under this Agreement, all of which shall be
paid to Executive's estate or beneficiary, as applicable, in a lump sum in
cash within thirty (30) days after the month in which death occurred.
6.3 Termination Upon Disability of Executive. If
Company determines in good faith that the Disability of Executive has
occurred during the term hereof, Company may provide to Executive written
notice in accordance with Subsection 9.1, below, of its intention to
terminate Executive's employment. In such event, Executive's employment with
Company shall terminate effective at the end of six (6) months after
Executive's receipt of such notice, provided that within the six (6) month
period after such receipt the Executive shall not have returned to full-time
performance of Executive's duties hereunder. Until the termination of
employment at the expiration of the six (6) month period, Executive shall
receive his regular compensation and benefits as specified in Section 3,
above. If Executive's employment is so terminated, Company shall have no
further obligation to Executive under this Agreement, except that Executive
shall be entitled to receive upon the effective date of such termination all
such monies and rights to which Executive is entitled hereunder through the
effective date of such termination, plus all accrued and unpaid monies owing
hereunder through such date, all of which shall be paid to Executive in cash
within thirty (30) days after such date.
6.4 Termination For Cause, Etc. Company may terminate
Executive's employment with Company for Cause by providing Executive with
prior written notice of termination in accordance with Subsection 9.1, below.
If Company terminates Executive's employment for Cause in accordance with
this Subsection or terminates Executive's employment in the manner specified
in Section 1, above, or if Executive terminates his employment other than as
provided under Subsection 6.5, below, Company shall have no further
obligation to Executive under this Agreement, except that Executive shall be
entitled to receive upon the effective date of such termination only such
monies and rights to which Executive is entitled hereunder through the
effective date of such termination, plus all accrued and unpaid monies owing
hereunder through such date, all of which shall be paid to Executive in cash
within thirty (30) days after such date.
6.5 Termination For Good Reason, Related to Change of
Control, Etc. Executive may terminate his employment with Company for Good
Reason or at any time on or after a Change of Control by providing Company
with prior written notice of termination in accordance with Subsection 9.1,
below. In the event that (i) Executive terminates his employment for Good
Reason, (ii) Executive terminates his employment on or after a Change of
Control of Company (by providing to Company the written notice described
above within sixty (60) days after such Change of Control), (iii) Company
terminates this Agreement on or after a Change of Control of Company or the
date that any party announces (or is required to announce) any prospective
Change in Control transaction involving Company, or (iv) Company terminates
Executive's employment in any manner other than as expressly permitted under
Subsections 6.2, 6.3, or 6.4, above, then: (A) Company shall make a lump sum
payment equal to a multiple of one (1) times the highest annual compensation
(as reportable on Executive's IRS W-2 form) received by Executive from
Company during any of the most recent two (2) years ending on or prior to the
date on which the termination occurs; (B) all stock options granted to
Executive shall become fully vested and immediately exercisable at
Executive's election; (C) all welfare benefit plans, practices, policies, and
programs applicable to Executive hereunder and in existence during the ninety
5
(90) day period prior to the effective date of termination, or if more
favorable to Executive those in effect generally at any time thereafter with
respect to other comparable executives of Company, shall continue as to
Executive for an additional one (1) year after the effective date of
termination, provided, however, that if Executive becomes re-employed with
another employer and is eligible to receive medical and other welfare
benefits under another employer provided plan, the medical and other welfare
benefits described herein shall not apply to the extent duplicative to those
provided under such other plan during such applicable period of eligibility;
and (D) Executive shall be entitled to receive upon the effective date of
such termination all such monies and rights to which Executive is entitled
hereunder through the effective date of such termination, plus all accrued
and unpaid monies owing hereunder through such date. The payments described
in clauses (A) and (D) above shall be paid to Executive in cash within sixty
(60) days after the effective date of termination.
6.6 Effect Of Termination. Upon the termination of Executive's employment
with Company, this Agreement shall terminate and the obligations of the parties
hereunder shall cease, except the terms of Sections 4 through 9 hereof shall
survive the termination of this Agreement for any reason.
7. Change of Control.
7.1 Acceleration Of Vesting Of Options. Upon the occurrence of a Change of
Control of Company, all stock options granted to Executive shall become fully
vested and immediately exercisable at Executive's election, regardless of
whether Executive exercises any other rights afforded Executive under this
Agreement.
7.2 Transition Period. Notwithstanding the terms of Subsection 6.5, above,
if a Change of Control occurs and Company advises Executive in writing no later
than twenty (20) days after the occurrence of the Change of Control that it
desires Executive to continue his employment with Company for a transition
period, which shall not exceed six (6) months from the occurrence of the Change
of Control except as the parties otherwise agree in writing (the "Transition
Period"), then: (i) during the Transition Period, Executive will continue his
employment with Company and will continue to receive all compensation including
salary and other benefits as he was receiving prior to the Change of Control;
(ii) Executive's services will be performed substantially at Company's offices
in Seattle, Washington; (iii) Executive shall have the right to terminate his
employment under Subsection 6.5, above, on or within thirty (30) days after
expiration of the Transition Period by providing notice to Company, in which
event the obligations of Company shall be as provided in Subsection 6.5, above.
7.3 Compensation Reduction. Notwithstanding any other provision of this
Agreement to the contrary, if any payments or benefits made by Company to
Executive hereunder or otherwise would be subject to the excise tax or taxes
imposed by Section 4999 of the Code (collectively, the "Change of Control
Amount"), such Change of Control Amount shall be reduced so that Executive
shall be entitled to receive a Change of Control Amount with a "present
value" (as determined for purposes of Section 280G of the Code) of not more
in the aggregate than 2.99 times the Executive's applicable "base amount"
under Section 280G of the Code (collectively, the "Limited Amount");
provided, however, that if the entire Change of Control Amount, when reduced
by such excise tax or taxes, is greater than the Limited Amount, then no
reduction shall be made under this Subsection. Unless the parties otherwise
agree to in writing, any reduction under this Subsection shall be
conclusively determined by the independent certified public accounting firm
regularly employed by Company during the ninety (90) day period prior to the
effective date of the event triggering the payment of the Change of
6
Control Amount to Executive, and the determination of such independent
certified public accounting firm shall be final and binding on all parties.
8. Indemnification. Company shall indemnify and hold harmless Executive and
his family, heirs, estate, and legal representatives from and against any and
all claims, damages, losses, liabilities, and expenses (including without
limitation all reasonable attorneys' fees) arising out of or in connection with
Executive's performance of his duties and responsibilities hereunder in his
capacity as an officer or employee of Company or any of its affiliates to the
maximum extent permitted by law. Executive shall notify Company of any
indemnifiable claim coming to his attention which may result in any
indemnification obligation on Company's part hereunder. Company shall have the
right to conduct the defense against any such claim brought by a third party
with counsel of its selection. The obligations of Company under this Section
shall continue following the termination of this Agreement and/or the
termination of Executive's employment with Company. After a Change of Control of
Company, Company shall pay promptly as incurred all reasonable attorneys' fees
and related expenses which Executive may incur as a result of any dispute or
contest (regardless of the outcome thereof) by Company, Executive, or others
with respect to the validity or enforceability of, or the rights and/or
obligations under, any provision of this Agreement.
9. Miscellaneous.
9.1 Notices.
9.1.1 All notices hereunder by either party shall
be given by personal delivery, by sending such notice by U.S. certified mail,
postage prepaid, or by a reputable courier service, fees prepaid, to the
other party at its address set forth on the signature page below. Any notice
given in accordance with this Subsection shall be effective as of the date of
receipt or attempted delivery (if receipt is refused), as the case may be.
Each party may change its address for notice purposes upon written
notification thereof to the other party in accordance with this Subsection.
9.1.2 All notices of termination described in Sections 1, 6.3, 6.4,
and 6.5 shall be provided in writing in accordance with Subsection 9.1.1 and
shall: (i) indicate the specific termination provision in this Agreement
relied upon; (ii) to the extend applicable, provide in reasonable detail the
facts and circumstances claimed to provide a basis for termination under the
provision so indicated; and (iii) indicate the applicable effective date of
termination. The failure by either party to set forth in the notice of
termination any fact or circumstance which contributes to a showing of
justification for termination shall not waive any right of such party
hereunder or preclude such party from subsequently asserting such fact or
circumstance in enforcing such party's rights hereunder.
9.2 Assignment; Binding Effect. This Agreement is personal
to Executive and, therefore neither this Agreement nor any of Executive's
rights, powers, duties or obligations hereunder may be assigned by Executive
without Company's prior written approval. This Agreement shall be binding
upon and inure to the benefit of Executive and his heirs, estate, and legal
representatives and Company and its successors and assigns. Company shall
require its successors and assigns to assume expressly and agree to perform
under this Agreement in the same manner and to the same extent that Company
would be required to perform if no such succession or assignment had take
place. For purposes of this Agreement, successors and assigns of Company
shall include without limitation all persons acquiring, directly or
indirectly, all or substantially all of the voting securities or assets of
Company, whether by merger, consolidation, stock or asset purchase, or
otherwise, and such successors shall thereafter be deemed "Company" for the
purposes hereof.
7
9.3 Taxes. Company may withhold from any amounts payable under this
Agreement such federal, state, or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
9.4 Headings. The headings in this Agreement are included for the
convenience of reference and will be given no effect in the construction of this
Agreement.
9.5 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. In the event that any provision of this Agreement
is deemed invalid or unenforceable by any court of competent jurisdiction, such
provision shall be deemed to be modified to the extent necessary for the
provision to be legally enforceable to the fullest extent permitted by
applicable law. Any court of competent jurisdiction may enforce or modify any
provision of this Agreement in order that the provision will be enforced by the
court to the fullest extent permitted by applicable law.
9.6 Waiver. Any waivers hereunder must be in writing. No consent or
waiver, express or implied, by any party to or of any breach or default by the
other in the performance by the other of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other party of the same or any other
obligations of such party hereunder.
9.7 Governing Law. This Agreement and the obligations of the parties
hereunder shall be interpreted, construed, and enforced in accordance with the
laws of the state of Washington applicable to contracts made and to be performed
in the state of Washington, without regard to conflict of laws principles.
9.8 Entire Agreement; Amendments; Conflicts. This Agreement and the
attached Exhibits (which are incorporated herein by this reference): (i) contain
the entire agreement and understanding between the parties with respect to the
subject matter hereof; and (ii) supersede all prior agreements, negotiations,
representations, and proposals, written and oral, relating to the subject matter
hereof. This Agreement may be modified, supplemented, and/or amended only by a
writing signed by both Executive and an authorized representative of Company. In
the event of any conflict between this Agreement and any other agreement between
Executive and Company, the terms of this Agreement shall control.
8
EXECUTED as of the date set forth above.
EXECUTIVE: CTS:
CELLULAR TECHNICAL SERVICES
COMPANY, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------- -----------------------------
Signature Print Name
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Chief Executive Officer
---------------------- -----------------------------
Print Name Title
Executive's Address for Notices: CTS's Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: Legal Department
Attachments:
Exhibit A-Executive Incentive Compensation Plan
Exhibit B-1996 Stock Option Agreement
ExhibitC-Agreement Regarding Confidential Information and Property Rights
9
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
EXECUTIVE INCENTIVE COMPENSATION PLAN
This Exhibit pertains to and is made a part of that certain letter of
Employment Agreement ("Employment Agreement") dated as of July 17, 1996, between
CELLULAR TECHNICAL SERVICES COMPANY, INC. ("CTS") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
("Executive").
1. Bonus Criteria.
1.1 For the calendar year ended December 31, 1997, Executive will be entitled
to a bonus of at least 25% of his base salary if CTS meets its budgetary
goals for such year, as approved by the Board of Directors of CTS (or the
Compensation and Stock Option Committee thereof).
1.2 Executive's bonus for each subsequent calendar year will be based on
corporate performance and other criteria specifically identified for the
Executive by the Chief Executive Officer and/or the Board of Directors of CTS
(or the Compensation and Stock Option Committee thereof).
2. Additional Stock Option Grants. In addition to the stock options
described in Section 3.3 of the Employment Agreement, the Board of Directors
of CTS (or the Compensation and Stock Option Committee thereof) may grant
additional stock options to Executive in such amounts, at such exercise
price, under such vesting schedule, and pursuant to such additional terms as
it may determine in its sole discretion.
EXHIBIT B
TO
EMPLOYMENT AGREEMENT
OFFICER INCENTIVE STOCK OPTION CONTRACT
(1996 STOCK OPTION PLAN)
THIS INCENTIVE STOCK OPTION CONTRACT entered into as of July 17, 1996
between CELLULAR TECHNICAL SERVICES COMPANY, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Optionee"). The Company and Optionee hereby
agree as follows:
1. The Company, in accordance with the allotment made by the
Compensation and Stock Option Committee of the Board of Directors of Company
(the "Committee") and subject to the terms and conditions of the 1996 Stock
Option Plan of the Company (the "Plan"), hereby grants to the Optionee an
option to purchase an aggregate of 20,000 shares of the common stock, $.001
par value per share, of the Company ("Common Stock") at an exercise price of
$15.00 per share, being at least equal to the fair market value of such
shares of Common Stock on the date hereof (except as otherwise required by
the Plan). This option is intended to constitute an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), although the Company makes no representation or
warranty as to such qualification.
2. The term of this option shall be ten (10) years, also note
limits on ISO term under Section 6 of the Plan, from the date hereof, subject
to earlier termination as provided in the Plan. However, this option shall
not be exercisable until the completion of one full year of Optionee's
employment with the Company after the date hereof, on which date this option
shall become exercisable as to 20 % of the total number of shares of Common
Stock subject hereto, and after which date this option shall become
exercisable as to an additional 20 % of such shares on each of the next four
(4) successive anniversaries of such date. The right to purchase shares of
Common Stock under this option shall be cumulative, so that if the full
number of shares purchasable in a period shall not be purchased, the balance
may be purchased at any time or from time to time thereafter, but not after
the expiration of the option. In addition, this option shall become
immediately exercisable in full upon a "Change of Control" (as defined below)
of the Company during the term of this option or as otherwise provided in any
employment agreement between the Optionee and the Company. Notwithstanding
any of the foregoing: (a) Optionee may not exercise this option beyond the
date that Optionee's employment relationship with the Company terminates,
except as otherwise provided in the Plan or in any employment agreement
between the Optionee and the Company, and (b) in no event may a fraction of a
share of Common Stock be purchased under this option. For purposes of this
Contract, a "Change of Control" shall mean and be deemed to exist if any of
the following events occur:
(i) the occurrence of a change of "control" of Company (as
such quoted term is defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended from time to time (the "Act")) or any change
in the "ownership or effective control" or in the "ownership of a substantial
portion of the assets" of Company (as such quoted phrases are used in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")); or
(ii) any "person" (as such quoted term is used in Sections 3(a)(9),
13(d), and/or 14(d)(2) of the Act) other than the Company, any entity
controlled by the Company, or any employee benefit plan (or trust) sponsored
or maintained by the Company, becomes the "beneficial
owner" (as such quoted term is used in Rule 13d-3 promulgated under the Act),
directly or indirectly, of 25% or more of either: (A) Company's
then-outstanding shares of voting common stock ("Outstanding Company Common
Stock"), or (B) the combined voting power of the then-outstanding voting
securities of Company entitled to vote generally in the election of directors
("Outstanding Company Voting Securities"); or
(iii) the following persons (collectively, the "Incumbent
Board") cease for any reason to constitute a majority of the Board of
Directors of Company: (A) individuals who, as of the date hereof,
constitute the Board of Directors, and (B) individuals who become members
of the Board of Directors after the date hereof whose election, or
nomination for election by Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Board of
Directors, but excluding, for this purpose, any director designated by a
person who has entered into an agreement with Company to effect a
transaction described in this definition of Change of Control or whose
initial election or appointment to the Board of Directors occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the directors then comprising the incumbent Board of
Directors; or
(iv) the approval by Company's shareholders of any merger,
consolidation, or other business combination involving Company, other than a
merger, consolidation, or other business combination with respect to which,
immediately following such business combination: (A) all or substantially all
of the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities outstanding immediately prior
thereto, are the beneficial owners of at least 60% of, respectively, the
shares of voting common stock of the surviving entity, and the combined
voting power of the voting securities of the surviving entity entitled to
vote generally in the election of directors, outstanding immediately after
such business combination in substantially the same proportion as their
ownership in the Company immediately prior to such business combination, (B)
no "person" (as such quoted term is used in Sections 3(a)(9), 13(d), and/or
14(d)(2) of the Act) other than the Company, any entity controlled by the
Company, or any employee benefit plan (or trust) sponsored or maintained by
the Company or the surviving entity, is the "beneficial owner" (as such
quoted term is used in Rule 13d-3 promulgated under the Act), directly or
indirectly, of 25% or more of either the then-outstanding shares of voting
common stock of the surviving entity or the combined voting power of the
then-outstanding voting securities of the surviving entity entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of the surviving entity were members of the
Incumbent Board at the time of the execution of the initial agreement
providing for such business combination; or
(v) the approval by Company's shareholders of any sale, exchange, or
other disposition (in one transaction or a series of related transactions)
of all or substantially all of the assets of Company, other than to a
corporation with respect to which, immediately following such disposition:
(A) all or substantially all of the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
outstanding immediately prior thereto, are the beneficial owners of at least
60% of, respectively, the shares of voting common stock of such corporation,
and the combined voting power of the voting securities of such corporation
entitled to vote generally in the election of directors, outstanding
immediately after such disposition in substantially the same proportion as
their ownership in the Company immediately prior to such disposition, (B) no
"person" (as such quoted term is
used in Sections 3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than the
Company, any entity controlled by the Company, or any employee benefit plan
(or trust) sponsored or maintained by the Company or such corporation, is the
"beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated
under the Act), directly or indirectly, of 25% or more of either the
then-outstanding shares of voting common stock of such corporation or the
combined voting power of the then-outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (C)
at least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such disposition; or
(vi) the approval by the shareholders of Company of any plan or proposal
for liquidation or dissolution of Company.
Notwithstanding anything to the contrary, if a Change of Control occurs and
if the Optionee's employment relationship with the Company is terminated prior
to the date on which the Change of Control occurs, then a "Change of Control"
shall be deemed to have occurred on the date immediately prior to the date of
such termination, so long as Optionee can reasonably demonstrate that such
termination: (A) was at the request of a third party who had taken steps
reasonably calculated to effect the Change of Control, or (B) otherwise arose in
connection with or anticipation of the Change of Control.
3. This option shall be exercised by giving written notice to
the Company, at its address identified on the signature page below, stating
that the Optionee is exercising the option hereunder, specifying the number
of shares being purchased, and accompanied by payment in full of the
aggregate purchase price therefor: (a) in cash or by certified check, (b)
with previously acquired shares of Common Stock which have been held by the
Optionee for at least six months, or (c) a combination of the foregoing.
4. The Company may withhold cash and/or shares of Common Stock
to be issued to the Optionee in the amount which the Company determines is
necessary to satisfy its obligation to withhold taxes or other amounts
incurred by reason of the grant or exercise of this option or the disposition
of the underlying shares of Common Stock. Alternatively, the Company may
require the Optionee to pay the Company such amount in cash promptly upon
demand.
5. In the event of any disposition of the shares of Common
Stock acquired pursuant to the exercise of this option within two years from
the date of hereof or one year from the date of transfer of such shares to
the Optionee, the Optionee shall notify the Company thereof in writing within
30 days after such disposition. In addition, the Optionee shall provide the
Company on demand with such information as the Company shall reasonably
request in connection with determining the amount and character of the
Optionee's income, the Company's deduction and its obligation to withhold
taxes or other amounts incurred by reason of such disqualifying disposition,
including the amount thereof. The Optionee shall pay the Company in cash on
demand the amount, if any, which the Company determines is necessary to
satisfy such withholding obligation.
6. Notwithstanding the foregoing, this option shall not be
exercisable by the Optionee unless (a) a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
shares of Common Stock to be received upon the exercise of this option shall
be effective and current at the time of exercise, or (b) there is an
exemption from registration under the Securities Act for the issuance of the
shares of Common Stock upon such exercise. The Optionee hereby represents and
warrants to the Company that, unless such a Registration Statement is
effective and current at the time of exercise of this option, the shares of
Common Stock to be issued upon the exercise of this option will be acquired
by the Optionee for his own account, for investment only, and
not with a view to the resale or distribution thereof. In any event, the
Optionee shall notify the Company of any proposed resale of the shares of
Common Stock issued to him upon exercise of this option. Any subsequent
resale or distribution of shares of Common Stock by the Optionee shall be
made only pursuant to (i) a Registration Statement under the Securities Act
which is effective and current with respect to the sale of shares of Common
Stock being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the
Optionee shall, prior to any offer of sale or sale of such shares of Common
Stock, provide the Company (unless waived by the Company) with a favorable
written opinion of counsel, in form and substance satisfactory to the
Company, as to the applicability of such exemption to the proposed sale or
distribution. Such representations and warranties shall also be deemed to be
made by the Optionee upon each exercise of this option. Nothing herein shall
be construed as requiring the Company to register the shares subject to this
option under the Securities Act.
7. Notwithstanding anything herein to the contrary, if at
any time the Committee shall determine, in its discretion, that the listing
or qualification of the shares of Common Stock subject to this option on any
securities exchange or under any applicable law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a condition
to, or in connection with, the granting of an option or the issue of shares
of Common Stock hereunder, this option may not be exercised in whole or in
part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
8. The Company may affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option
and may issue such "stop transfer" instructions to its transfer agent in
respect of such shares as it determines, in its discretion, to be necessary
or appropriate to: (a) prevent a violation of, or to perfect an exemption
from, the registration requirements of the Securities Act; (b) implement the
provisions of the Plan or this Contract or any other agreement between the
Company and the Optionee with respect to such shares of Common Stock; or (c)
permit the Company to determine the occurrence of a "disqualifying
disposition," as described in Section 421(b) of the Code, of the shares of
Common Stock transferred upon the exercise of this option.
9. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue in the employ of the Company, any Parent or
any of its Subsidiaries, or interfere in any way with any right of the
Company, any Parent or its Subsidiaries to terminate such employment at any
time for any reason whatsoever without liability to the Company, any Parent
or any of its Subsidiaries.
10. This option is not transferable by the Optionee
otherwise than by will or the laws of descent and distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee or the
Optionee's legal representatives.
11. All notices hereunder by either party shall be given
by personal delivery, by sending such notice by U.S. certified mail, postage
prepaid, or by a reputable courier service, fees prepaid, to the other party
at its address identified on the signature page below. Any notice given in
accordance with this section shall be effective as of the date of receipt or
attempted delivery (if receipt is refused), as the case may be. Each party
may change its address for notice purposes upon written notification thereof
to the other party in accordance with this section.
12. The Company and the Optionee agree that: (a) they will
both be subject to and bound by all of the terms and conditions of the Plan,
a copy of which is attached hereto and made a part hereof; (b) any undefined
capitalized term used herein shall have the meaning ascribed to it in the
Plan;
(c) in the event of a conflict between the terms of this Contract and
the terms of the Plan, the terms of the Plan shall govern; (d) the Company
may amend the Plan and the options granted to the Optionee under the Plan,
subject to the limitations contained in the Plan; and (e) Optionee shall
comply with all applicable laws relating to the Plan and the grant and
exercise of this option and the disposition of the shares of Common Stock
acquired upon exercise of the option, including without limitation, federal
and state securities and "blue sky" laws.
13. This Contract shall be: (a) governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without
regard to the conflicts of law rules thereof; and (b) binding upon and inure
to the benefit of any successor or assign of the Company and to any heir,
distributee, executor, administrator or legal representative entitled to the
Optionee's rights hereunder. The invalidity, illegality or unenforceability
of any provision herein shall not affect the validity, legality or
enforceability of any other provision.
EXECUTED as of the date first set forth above.
OPTIONEE: CTS:
CELLULAR TECHNICAL SERVICES
COMPANY, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------- ---------------------------
Signature
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------- --------------------
Print Name Print Name
585665620 Vice President and Chief Financial Officer
--------- ------------------------------------------
Social Security Number Title
Optionee's Address for Notices: CTS's Address for Notices:
▇▇▇▇ ▇▇▇ ▇▇▇. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Attachments:
1996 Stock Option Plan
EXHIBIT C
TO
EMPLOYMENT AGREEMENT
Employee Agreement Regarding
[logo] Intellectual Property and Proprietory Information
IN CONSIDERATION of my employment or my continued employment at will by
Cellular Technical Services Company, Inc. and/or any of its partners,
subsidiaries, or affiliated companies (hereinafter collectively referred to
as the "Company"), and in further consideration of the Company's award to me,
while employed by the Company, of an inventor's honorarium for the specific
assignment to the Company of each original U.S. Patent Application:
A. I hereby assign and agree to assign to the Company, all my right,
title and interest in and to all inventions, discoveries,
improvements, ideas, computer or other apparatus programs and related
documentation, and other works of authorship (hereinafter each and
collectively designated "Intellectual Property"), whether or not
capable of registration under applicable patent or copyright laws or
susceptible to other forms of protection, which during the period
of my employment by the Company I may make or create, solely or
jointly with others, in whole or in part, either:
1. in the course of such employment, or
2. relating to the business or research or development of the
Company, or
3. with the use of the time, material, equipment, supplies, or
facilities of the Company, or its private proprietary,
confidential or trade secret information.
This Agreement does not apply to an invention for which no equipment,
supplies, facilities, or private, proprietary, confidential or trade secret
information of the Company was used and which was developed entirely on my own
time, unless (a) the invention related (i) directly to the business of the
Company, or (ii) to the Company's actual or demonstrably anticipated research or
development, or (b) the invention results from any work performed by me for the
Company.
B. I further agree, without charge to the Company:
1. to disclose promptly to the Company all such Intellectual
Property,
2. to promptly, at the request of the Company, execute a specific
assignment to the Company of all right, title and interest to
such Intellectual Property, including without limitation
priority rights arising from patent applications, and
3. to do anything else reasonably necessary to enable the Company to
secure patents, copyrights or other forms of protection for such
Intellectual Property in the United States and in other
countries.
C. I acknowledge and agree that in performing my responsibilities as an
employee of the Company, I will have access to information regarding equipment,
devices, software, designs,
research know-how, processes, technical data and other technology, customrs,
marketing and production plans and strategies, payroll and other financial
information and administrative information, and other information
(collectively the "Information"), pertaining to the Company's business or its
actual or anticipated research or development (collectively the "Business"),
which the Company considers confidential and proprietary. Therefore, in order
to protect the legitimate business interests of the Company in such
Information, I agree as follows:
1. During the term of my employment with the Company and for a
period of five (5) years following the termination thereof, I will hold in
strictest confidence all Information of the Company of which I become aware
in the course of my employment, regardless of the form of such Information,
e.g., oral, written, electronic, or otherwise. During this period, I will
treat all such Information as secret and confidential, but in any event with
no less care than that which a reasonable person or business would utilize
with respect to trade secrets or highly confidential information. In
particular, I will:
a. restrict disclosure of the Information solely to those
employees of the Company with a "need to know" and not
disclose the Information to any other person or entity
without prior written authorization of the Company;
b. insure the proper safekeeping of the Information and
timely and complete disposition or destruction of
materials; and
c. not use the Information for my own benefit or the
benefit of others, or engage in conduct which is
competitive with the Business.
For purposes of this Agreement, a "need to know" means that the employee
requires access to the Information in order to perform his or her
responsibilities as an employee of the Company.
2. Notwithstanding the above, I will have no obligation to preserve the
confidentiality or honor the restriction on use in Paragraph 1, above,
as to any Information which becomes part of the public domain by other
than an unauthorized disclosure or through my fault. I agree that I
will have the burden of proving the existence of the exception to
confidentiality described in this Paragraph 2.
3. All information shall be deemed and remain the property of the Company.
4. If I am required to disclose the Information by a legal or regulatory
action, then I will immediately notify the Company in such time as to
permit the Company to intervene or contest such disclosure.
5. I agree to indemnify the Company and hold it harmless from any and all
claims, judgments, damages, losses, costs, and expenses, including
attorney's fees, resulting from any publication, disclosure, or use by
me in violation of this Agreement.
D. I further agree that the various provisions of this Agreement:
1. shall be interpreted in accordance with Washington law,
2. shall be binding upon my heirs, executors, administrators,
successors and assigns,
3. shall be deemed separable from each other, and the invalidity of one
provision shall not affect the validity of any other provision,
4. shall not be deemed to provide or imply the duration or other terms
and conditions of my employment, and
5. shall not be modified, supplemented, or altered except by a writing
signed by both parties to this Agreement.
E. In the event of a breach or threatened breach of this Agreement, the
parties shall be entitled to injunctive relief and all other remedies provided
by law. In the event of a dispute regarding this Agreement, the prevailing party
shall be entitled to recover all attorney's fees and related expenses incurred,
including those incurred on appeal.
F. The masculine, feminine, singular and plural of any word or words used in
this Agreement shall be deemed to include and refer to the gender and number
appropriate in the context.
G. I hereby acknowledge having on this day received a copy of this
Agreement.
EMPLOYEE:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D., Vice President of Engineering
-------------------------------------------------------
Employee name and title
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 7/1/96
------------------------
Employee signature and date
COMPANY:
Cellular Technical Services Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------
Its Human Resources Manager
Date 7/1/96
------