EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between
TELEMETRIX INC., a Delaware corporation (the "Company"), and JOSEPH G. SCHON,
("Executive"). The effective date of this Agreement shall be June 12, 2000 (the
"Effective Date").
R E C I T A L S:
WHEREAS, The Company desires to hire and employ Executive as its Chief
Operating Officer;
WHEREAS, Executive desires to become employed by the Company in such
capacity;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Employment. The Company agrees to employ Executive and Executive hereby
agrees to be employed by the Company on a full time basis as defined further in
paragraph 3. Executive represents and warrants to the Company that the execution
of this Agreement and his performance under this Agreement does not breach any
other agreement to which Executive is a party or under which Executive may be
bound and does not require the consent of any other person.
2. Duties. Executive shall be employed as the Company's Chief Operating
Officer ("COO") and in such capacity shall perform the duties and bear the
responsibilities commensurate with the office of COO, serve the Company
faithfully and to the best of his ability, strive to meet the objectives
established by his Supervisor as set forth in Exhibit A attached and perform,
without additional compensation, such other duties for the Company and/or for
its Affiliates (as such term is defined in Section 3 herein) as may be delegated
to Executive by his Supervisor (as defined below) and hold such other offices to
which he may be appointed or elected from time-to-time (collectively, the
"Position"). Mr. Michael J. Tracy, the Company's President and Chief Executive
Officer, or his designee, shall supervise Executive's activities ("Supervisor").
In its sole discretion the Company may assign Executive to a position of lesser
responsibility. Executive's conduct must promote the best interests of the
Company and its Affiliates and must not discredit the Company, its Affiliates,
its products or services.
3. Exclusivity. Executive shall devote his full business time, efforts,
attention, skill and energy to the Company's business, and shall effectively
perform his duties under this Agreement and strive to achieve the objectives
designated by his Supervisor. Executive has disclosed his involvement in current
business activities and enterprises unrelated to this employment and shall
disclose to the Supervisor his involvement in any other business activities
which may be related to the industries in which the Company or a person, firm or
corporation that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control of the Company
(collectively, "Affiliate") and Executive shall not engage in any business
activities not disclosed at the time of this agreement as set forth herein,
without prior notification to "supervisor" that would require significant
personal services by Executive or in any way diminish Executive's ability to
effectively perform his duties hereunder to the satisfaction of his Supervisor.
Notwithstanding the foregoing, after notifying the Supervisor, Executive may
take reasonable personal time for:
3.1. personal investments that do not require significant services by
Executive;
3.2. participation in volunteer or charitable activities;
3.3. participation in industry-related organizations;
3.4. with prior Supervisor approval, serving as a director for other
companies; and
<PAGE>
3.5. activities approved in advance by the Supervisor; except that
Executive shall cease any outside activity if the Supervisor
determines that such activity will interfere or conflict with the
Company's interests.
4. Conflicts of Interest. Executive shall not engage in any activity that,
in the Supervisor's judgment, may interfere or conflict with the proper
performance of Executive's duties or the Company's or its Affiliates' interests.
If Executive has any interest in a proposed transaction involving the Company,
that interest must be fully disclosed to the Company and the Supervisor must
approve the transaction.
5. Confidentiality. Executive acknowledges that the Company's products and
services are unique and have world-wide application, and that the Company has
expended significant sums and resources to develop its products and services.
The relationship between the Company and Executive is one of confidence and
trust. Executive agrees that the provisions of this Section 5 are fair and
reasonable because, as a result of his employment by the Company, he will have
access to proprietary information and intellectual property of the Company and
its Affiliates and Executive acknowledges that such information is a highly
valued asset of the Company.
5.1. Confidential Information. The term "Confidential Information"
means all information relating to the Company, its Affiliates, its customers and
suppliers considered by the Company to be confidential, including, without
limitation:
5.1.1. technology, plans, products, processes and personnel;
5.1.2. software, source codes and manuals;
5.1.3. the nature of the Company's and its Affiliates' services
and any area where such services are performed or planned to
be performed;
5.1.4. research, development, manufacturing, purchasing, and
engineering;
5.1.5. markets, marketing strategies, customer lists and prospect
lists;
5.1.6. merchandising, selling, pricing or contractual terms,
5.1.7. inventions, discoveries, concepts and ideas, whether
patentable or not, processes, methods, formulas, and
techniques, trade secrets, related improvements and
knowledge;
5.1.8. financial and accounting information;
5.1.9. business expertise; and
5.1.10.any component of Confidential Information or anything
derived from Confidential Information.
The Company's determination that specific information constitutes
Confidential Information shall be binding, except for information
already in the public domain other than placed therein by Executive's
act except in the reasonable performance of his duties and except for
information which is no longer a trade secret or patentable as defined
by applicable legislation or law.
5.2. Non-disclosure. Executive agrees that he shall at no time,
whether during his employment or at any time thereafter, disclose or use any
Confidential Information for any purpose other than the conduct of the Company's
business pursuant to this Agreement. Upon the breach or threatened breach of
this covenant by Executive, the Company shall be entitled without notice to
obtain relief pursuant to Section 11 below.
2
<PAGE>
5.3. Notice to Company. Executive will immediately notify the Company
if he learns that Confidential Information has been disclosed or is about to be
disclosed, whether by Executive's acts, acts of third parties, law, regulation
or court order. Executive will cooperate with the Company's efforts to prevent
or limit disclosure of Confidential Information.
5.4. Ownership. Any Confidential Information that is directly
originated, developed or perfected to any degree by Executive during his Company
employment shall be and remain the sole property of the Company and shall be
deemed trade secrets of the Company. To the extent that any Confidential
Information constitutes an original work of authorship by Executive which is
protectable by copyright, Executive acknowledges that such work is a "work for
hire" as defined by the U.S. Copyright Act (17 U.S.C. ss. 101 et seq.) and is
intended to be and is hereby agreed to be the sole and exclusive property of the
Company and the Executive does hereby quitclaim and release all right, title and
interest in and to the same to the Company.
5.5. Assignment. The Executive hereby assigns to the Company all of
his intellectual property rights (including copyrights, patents, and trademarks)
that may arise out of his employment with the Company or his involvement with
its Affiliates.
5.6. Return of Confidential Information. Upon termination of
Executive's employment or upon request by the Company, Executive or his legal
representative shall without delay deliver to the Company all original and
duplicates and/or copies of all documents, records, notebooks, computer records
or media, and similar materials containing Confidential Information then in his
possession.
5.7. Further Assurances. Executive agrees to execute such separate and
further confidentiality agreements and/or assignments embodying and enlarging
upon the provisions of this Section 5 as the Company may reasonably request.
6. Compensation and Benefits. In consideration of the services to be
rendered pursuant to this Agreement, commencing as of the Effective Date,
Executive shall receive the following compensation and benefits during the Term
(as defined in Section 7 herein) of his employment:
6.1. Salary. The Company shall pay Executive an annual salary of
Seventy-two Thousand and 00/100 U.S. Dollars ($72,000.00), payable semi-monthly
in arrears.
6.2. Benefits. The Company shall provide Executive with standard
benefits customary for Company employees of the nature, kind and status of
Executive.
6.3. Leave. Executive shall be entitled to Company-declared holidays,
sick leaves, personal days and other time off in accordance with Company
policies for Company employees of the nature, kind and status of Executive.
6.4. Reimbursement of Expenses. Upon receipt of an itemized accounting
of such expenses with reasonable supporting documentation, the Company shall
reimburse Executive for all reasonable and necessary out-of-pocket expenses
incurred by Executive in connection with the business of the Company and in
performance of Executive's duties under this Agreement.
6.5. Stock Options. Employee shall be eligible for participation in
the Company's Stock Option Plan 2000 (the "Plan") adopted by the Company's Board
of Directors (the "Board") as of February 15, 2000. Options to purchase Company
common stock ("Stock Options") pursuant the Plan shall be granted at the
discretion of the Board or its designated committee authorized to administer the
Plan (the "Committee"). The terms and conditions of any Stock Options granted by
3
<PAGE>
the Board or the Committee, including, without limitation, the number of shares,
exercise price, payment terms, grant date, vesting schedule and expiration date,
shall be determined at the discretion of the Board or the Committee. The Board
has granted employee stock options as described on Exhibit B.
7. Duration. Executive's employment pursuant to this Agreement shall
commence on the Effective Date and continue for a period of three (3) years or
until terminated in accordance with Section 8 herein (the "Term").
7.1 First Renewal Term. At the expiration of the Term, the Company
may, at its sole election, renew Executive's employment on the terms and
conditions contained in this Agreement unless different terms are agreed to by
the Company and evidenced in a writing signed by the Company and Executive, for
an additional term of one (1) year (the "First Renewal Term") by providing
written notice to Executive of its intent to renew not less than sixty (60)
calendar days prior to the expiration of the Term ("Renewal Notice").
7.2. Second Renewal Term. At the expiration of the First Renewal Term,
the Company may, at its sole election, renew Executive's employment on the terms
and conditions contained in this Agreement unless different terms are agreed to
by the Company and evidenced in a writing signed by the Company and Executive,
for another additional term of one (1) year (the "Second Renewal Term") by
providing Renewal Notice to Executive not less than sixty (60) calendar days
prior to the expiration of the First Renewal Term.
8. Termination. Executive's employment may be terminated prior to
expiration of the Term, or if renewed pursuant to subsections 7.1 and/or 7.2
above, prior to expiration of the First Renewal Term or the Second Renewal Term,
as the case may be, as follows:
8.1. Discretion. Either party, in its sole discretion, may terminate
Executive's employment at any time upon thirty (30) calendar days' prior written
notice to the other party.
8.2. Death. If Executive dies during the term of his employment, the
Company shall pay his estate the compensation that would otherwise be payable to
him for the month in which his death occurs, and his employment shall be deemed
terminated on the last day of such month.
8.3. Cause. The Company may immediately terminate Executive's
employment at any time for:
8.3.1. non-performance or gross negligent performance by
Executive of Executive's obligations under this Agreement or
of any material duties as an Executive of the Company; or
8.3.2. the commission of any theft, fraud, embezzlement or
similar crime involving the commission of any indictable
offense; for acts of dishonesty or moral turpitude; for
violation of applicable local, state or federal laws or
regulations, including anti-discrimination laws or
securities laws, which acts cause or could reasonably be
expected to cause material economic damage to the Company or
material damage to the business reputation of the Company.
8.4. Severance. If the Company terminates Executive's employment
pursuant to subsection 8.1 herein, subject to the conditions set forth in this
subsection 8.4, the Company agrees to maintain Executive on its payroll until
such time as Executive has received that amount equal to one-third of his annual
salary as set forth in subsection 6.1 herein, less applicable withholdings and
deductions ("Severance"). As a condition to the payment of Severance, Executive
agrees that he will (a) comply with the provisions of subsections 5.6 and 5.7
herein to the satisfaction of the Company and (b) execute and deliver to the
4
<PAGE>
Company in form satisfactory to the Company and its attorneys a release waiving
all claims against the Company. The Company shall have the right to delay
distribution to Executive of payroll disbursements comprising the Severance
until such time as the conditions specified in (a) and (b) of this subsection
8.4 have been satisfied by Executive, notwithstanding the continuing obligations
of Executive pursuant to Section 5 herein.
8.5 Surviving Provisions. After termination of Executive's employment
for any reason whatsoever, the applicable provisions of Sections 5 and 9 shall
remain in full force and effect until the time specified in each such section.
9. Covenant Not to Compete. Since Executive will be a key employee of the
Company, Executive will have access to Confidential Information, and in light of
the Company's and its Affiliates' substantial investment of resources in its
business, operations, technology, services, customers and customer prospects,
Executive acknowledges that certain of his future activities could cause
material harm to the Company and its Affiliates. Additionally, Executive
acknowledges that the Confidential Information was obtained through his
Employment with the Company and involvement with its Affiliates, that the
Company's and its Affiliates' business is of a world-wide scope, and that at the
time entering into this Agreement, Executive's covenant not to compete with the
Company and its Affiliates was a material part of the negotiated terms and
conditions of this Agreement. Accordingly, Executive agrees that in the event
his employment is terminated, the specific restrictions set forth in this
Section 9 are fair, reasonable and necessary and are not overly burdensome on
Executive's future activities. The covenants contained in this Section 9 shall
continue until one (1) year after termination of Executive's employment for any
reason whatsoever (the "Covenant Period").
9.1. Until the Covenant Period expires, Executive shall not without
the Company's prior written consent, which consent shall not be unreasonably
withheld, directly or indirectly, own, manage, operate, control, be employed by,
assist or participate in the ownership, management, operation or control of a
company operating in Canada or the United States engaged in any of the following
or related products, services and activities:
9.1.1. paging and communication services, personal
communications services ("PCS"), mobile
telecommunications services, wireless local loop
("WLL") products, polling, monitoring and controlling
remote devices such as electrical meters and burglar
alarms, data collection, acquisition and distribution,
and meter reading (collectively, the "Activities");
9.1.2. the provision of necessary infrastructure components
to deploy the Activities and/or WLL capabilities;
9.1.3. the utilization of the discoveries, concepts and
ideas, processes, methods, formulas, and techniques
underlying the technology known as the T3000 System,
including any updated versions thereto ("T3000 System")
and/or WLL for any application including, without
limitation, voice communications, data transmission,
automatic utility meter reading, home security, home
health, and vending replenishment;
9.1.4. marketing and sale of T3000 System-competitive
equipment and/or components.
9.2. Until the Covenant Period expires, Executive shall not directly
or indirectly:
9.2.1. induce any employee of the Company and its Affiliates
to leave the employ of the Company or its Affiliates;
9.2.2. interfere with the relationship between the Company
or its Affiliates and any employee of the Company or
its Affiliates;
5
<PAGE>
9.2.3. hire any Company employee or Affiliate employee to
work for any organization of which Executive is an
officer, director, employee, consultant, independent
contractor or owner of an equity or other financial
interest; or
9.2.4. interfere or attempt to interfere with any
transaction involving the Company or its Affiliates.
10. Securities Matters. Since the Executive will have access to
Confidential Information, his ability to engage in securities transactions will
be limited. Executive agrees to:
10.1. not engage in any transactions that violate all applicable
federal and state securities laws;
10.2. file all reports required by securities regulatory authorities;
10.3. provide information about securities transactions when requested
by the Company;
10.4. follow written Company policies concerning securities
transactions;
10.5. execute any "lock-up" agreements or other restrictions on
transactions when requested by the Company;
10.6. comply with applicable federal and state securities law
requirements for all transactions.
While Executive may request Board permission for proposed securities
transactions, Executive is still responsible for compliance with legal
requirements.
11. Injunctive Relief. Upon a material breach or threatened material breach
by Executive of any of the provisions of Sections 3, 4, 5, 9 and 10 of this
Agreement, the Company or its Affiliate, as the case may be, shall be entitled
to an injunction restraining Executive from such breach, together with any other
relief or remedy available, for such breach or threatened breach, including the
recovery of damages. Nothing herein shall be construed as prohibiting the
Company or its Affiliates from pursuing any other remedies for such breach or
threatened breach. If the Company or its Affiliate take legal action to enforce
the provisions of this Agreement or to enjoin Executive from violating this
Agreement, the prevailing party, as part of its damages, shall be entitled to
recover its legal fees and expenses incurred in such action from the losing
party.
12. Severability. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision or portion of
this Agreement shall be adjudicated to be invalid or unenforceable, this
Agreement shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such section in the particular jurisdiction in which
such adjudication is made.
13. Notices. All communications, requests, consents and other notices under
this Agreement shall be given in writing and delivered by facsimile, courier,
registered or certified mail (postage prepaid) to the receiving party at the
recipient's last known address. Notice shall be deemed given on the date of
delivery as shown by the facsimile confirmation or delivery receipt.
14. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nebraska.
6
<PAGE>
15. Arbitration of Disputes. Except for injunctive relief pursuant to
Section 11, all disputes concerning this Agreement will be submitted to binding
arbitration in Denver, Colorado in accordance with the American Arbitrations
Act. The Arbitrator's decisions must be delivered in writing accompanied by
written findings of fact and conclusions of law. Any competent court may enter
judgment upon the Arbitrator's awards. The prevailing party, as part of its
damages, shall be entitled to recover its legal fees and expenses incurred in
such action from the losing party.
16. Assignment. The Company may assign its rights and obligations under
this Agreement to any Affiliate, any successor corporation or to any acquirer of
substantially all of the business and assets of the Company, and all covenants
and agreements hereunder shall inure to the benefit of and be enforceable by or
against any such assignee. Neither this Agreement nor any rights or duties
hereunder may be assigned or delegated by Executive.
17. General Provisions. This Agreement may be executed in multiple
counterparts, no one of which needs to be executed by all of the parties;
provided, however, that this Agreement shall not become binding upon any of the
parties unless and until a counterpart is executed by all parties. Each such
counterpart shall be considered an original. Facsimile signatures will have the
same effect as original signatures. This Agreement only be modified by a written
amendment signed by the Company and Executive. A waiver by the Company of a
breach of any provision of this Agreement by Executive shall not operate or be
construed as a waiver of any subsequent or other breach by Executive. Except as
otherwise provided herein, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the subject matter herein and
supersedes all prior understandings, agreements or representations by or between
the parties, whether written or oral.
[Remainder of this page intentionally left blank.]
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Employment Agreement to
be effective as of the Effective Date.
COMPANY: TELEMETRIX INC.,
a Delaware corporation
By: /s/ Michael J. Tracy
-------------------------------------
Michael J. Tracy
President and Chief Executive Officer
EXECUTIVE: JOSEPH G. SCHON
By: /s/ Joseph G. Schon
-------------------------------------
Joseph G. Schon, an individual
8
<PAGE>
EXHIBIT A
DUTIES TO BE PERFORMED
Early Stage
o Understand call center - customer car service operations as they apply to
the support that we will need, so that can be either (a) contracted out or
(b) developed in house. This will deal with hardware software support as
well as NOC operations.
o Get products through test houses such as Microcell and Pac Bell Wireless
and PG&E
o Development migration - supervise the orderly determination of new design
features, development of updates to manufacturing design and software
design etc.
o Produce a staffing plan for different levels of operation.
o Development scheduling - In coordination with Marguarite determine a
schedule for R&D and manufacturing based on our current cash situation.
o Development of sales strategy - Identify prospects, research prospects
needs, make joint sales calls
o Coordinate Ericsson Contract - Design and implement operational strategies
required by the Ericsson and other contracts, coordinate manufacturing
scheduling with Ericsson and their required needs.
o Determine best source of assembly and shipping for product, involvement in
inventory management, manufacturing scheduling.
o Capital equipment planning - Assist in timing of the acquisition of
equipment.
Middle Stage
o Develop marketing strategy - Marketing strategy includes sales strategy,
advertising campaigns, trade shows, and public relations.
o Coordinate manufacturing scheduling - determine manufacturing volumes based
on sales forecast, determine inventory par levels.
o Create a department and appropriate staffing to coordinate product
installation and implementation - Responsible for timing of installations,
coordinating with customers on timing etc., development of NOC's to meet
customers demands, coordinate and implement customers data requirements.
<PAGE>
The four general areas of responsibility are:
1. Sales/Marketing Strategy
2. Manufacturing scheduling
3. (Ericsson) contract implementation and coordination
Development of customer installation and implementation strategy and plan.
<PAGE>
EXHIBIT B
STOCK OPTIONS
Stock options totaling 100,000 shares vested on the following schedule:
Year 1 - 15,000 shares
Year 2 - 15,000 shares
Year 3 - 20,000 shares
Year 4 - 25,000 shares
Year 5 - 25,000 shares
The exercise price will be the closing price of Telemetrix
shares on the date of execution of your employment contract.
The specific terms of the stock options are under the
Company's Stock Option Plan 2000, which would be granted to
you by the Company in a Certificate after you have executed
your employment agreement.
