EXHIBIT 10.40
EMPLOYEMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the 11th day of February 1999 by and between SSE TELECOM, INC. ("Telecom"), a
Delaware corporation (as used herein, Telecom and its affiliates and
subsidiaries are collectively referred to as the "Company", unless the context
requires otherwise or it is otherwise specifically provided) and GEORGE M.
WALLEY ( the "Executive").
WHEREAS, the Company wishes to retain the Executive as a full time
employee of the Company in an executive capacity; and
WHEREAS, the Executive wishes to maintain employment by the Company on
the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and intending to be legally bound the parties hereto
agree as follows:
1. Term. The Executive's employment commenced on July 7, 1998 and
subject to the provisions of Section 8 hereof, the Company hereby agrees to
continue such employment with the Company upon the terms and conditions herein
provided.
2. Duties. The Executive, subject to the directions and control of
Telecom's Board of Directors, shall devote his full time, attention and energies
to the business and affairs of Telecom and promote the interests and welfare of
Telecom. The Executive shall also provide services to and for the benefit of the
subsidiaries and affiliates of Telecom as such duties may, from time to time, be
specified by the Board of Directors of Telecom. The Executive shall serve as
Executive Vice President, Product Development, reporting to Telecom's Chief
Executive Officer. The Executive agrees to perform his duties in an efficient,
trustworthy and business-like manner, consistent with the policies set forth by
the Board of Directors of Telecom who shall have the power to alter or change
the general practices of the business as such Board deems necessary to the best
interests of the Company. The Executive shall not, during the term hereof, be
interested directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any capacity in any other business, without
Telecom's written consent; provided, however, that nothing herein contained
shall be deemed to prevent or limit the right of the Executive to participate as
a passive investor in any business venture which is not competitive with the
Company's business.
3. Compensation plan; Base Salary; Annual Review
(a) Compensation Plan. As compensation for the Executive's services under
this Agreement, Executive shall be entitled to receive during his employment the
base salary and fringe benefits in accordance with this Section 3 and in
accordance with the compensation plan fixed for each fiscal year of the Company,
commencing with the current fiscal year, and bonuses in accordance with Section
4 and stock options in accordance with Section 5.
(b) Annual Review. The Company will review the compensation payable by the
Company to the Executive not less frequently than annually, with the purpose of
adjusting the Executive's compensation in such a manner as the Company shall
deem appropriate. Any such adjustment may modify the Executive's base salary,
establish provisions for the obtaining of bonus compensation, provide for the
granting of stock options and fix the fringe benefits to be made available to
the Executive. Nothing herein shall be deemed to obligate the Company to adjust
the Executive's compensation, the parties hereby acknowledging that, except as
otherwise provided in Section 8, this is an at will employment agreement.
4. Bonuses. Bonus compensation shall be payable in cash and/or stock
options in accordance with the bonus compensation plan put into effect by
Telecom's Board of Directors for each fiscal year. The bonus compensation plan
will be administered by the Compensation Committee of Telecom's Board of
Directors. For the fiscal year beginning October 1, 1998, and each fiscal year
thereafter, the Executive shall have the opportunity to earn a bonus
compensation with a target range of forty percent (40%) of base salary upon the
Company's achieving certain pre-established goals in operating profit and cash
flow. For subsequent years, pre-established goals, which are subject to the
approval of the Compensation Committee
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of Telecom's Board of Directors, will be mutually determined by the Company and
the Executive for each fiscal year, prior to or within thirty (30) days of the
commencement of each fiscal year.
5. Expenses. The Executive any incur reasonable expenses in connection
with promoting and operating the Company's business, including expenses for
entertainment, travel and similar items. If Executive has complied with the
Company policy regarding business expenses, the Company will reimburse the
Executive for all such expenses upon the Executive's periodic presentation of an
itemized account of such expenditures. However, in no event shall said
Executive's business expenses exceed the Company's policy.
6. Fringe Benefits. The Company has adopted policies in respect to
fringe benefits for employees in the nature of health and life insurance,
holidays, vacation, sick leave policies and disability. A copy of the Company's
present policies in respect to fringe benefits has been delivered by the Company
to Executive. The company may from time to time amend its present policies and
adopt other fringe benefits to be generally available to all employees. The
Company covenants and agrees that Executive shall be entitled to participate in
any such fringe benefit policies adopted by the Company to the same extent that
such fringe benefits shall be available to and for the benefit of executive
level employees. The Company will give the Executive a vacation of fifteen (15)
days with pay each year during the term of this Agreement, the time for vacation
to be determined by mutual agreement between Company and Executive.
7. Termination of Employment.
(a) Termination With Cause. The Company may terminate this Agreement
without any further compensation to Executive beyond the date of termination for
breech of this Agreement, willful or gross misconduct in performance of duties,
dishonesty, fraud, theft, embezzlement or any criminal act.
(b) Termination Without Cause. (i) Without cause, the Company may terminate
this Agreement at any time upon fifteen (15) days written notice to Executive.
In such event, the Executive, if requested by the Company, shall continue to
render his services and shall be paid his regular compensation up to the date of
termination. In addition, if Executive is terminated without cause, (a) within
the first twelve (12) month period from the Effective Date, the Executive shall
be entitled to receive, and shall receive, "Continuing Compensation" as
hereafter defined in subsection (iii) for a period of twelve (12) months from
the date of termination, payable in monthly installments during the twelve (12)
months period following termination, (b) within the second twelve (12) month
period from the Effective Date, the Executive shall receive Continuing
Compensation for a period of nine (9) months from the date of termination,
payable in monthly installments during the nine (9) month period following
termination; and (c) at any time after twenty-four (24) months from the
Effective Date, the Executive shall receive Continuing Compensation for a period
of six (6) months form the date of termination, payable in monthly installments
during the six (6) month period following termination. (ii) Without cause, the
Executive may terminate this Agreement upon not less than sixty (60) days
written notice to the Company. In such event, unless otherwise directed by the
Company, Executive shall continue to render his services and shall continue to
be paid his regular compensation up to the date of termination of employment.
Bonus compensation that has been earned by the Executive through the date of his
termination shall be paid to the Executive. (iii) "Continuing Compensation"
means and includes the following: (x) the Executive's base salary as in effect
as of the effective date of termination, (y) any bonus compensation that would
have been earned by Executive based on the factors or elements of the bonus
compensation plan which would have been achieved by Executive through the
effective date of termination, and (z) the fringe benefits customarily being
made available by the Company to Executive for health, life and disability
insurance, but excluding the accrual of holidays, vacation and sick leave, and
further excluding any participitory contributions by the Company to 401k or
stock purchase or similar plans. If the Company is obligated to make payment of
any continuing compensation, such payments shall be made during the applicable
period at the same time that the Company would make such payments on behalf of
its regular employees.
(c) Termination Upon Change of Control.
(i) If the Executive's employment is terminated by the Company as a result
of a "Change of Control" (as defined below), such termination shall be a
termination without cause and Executive shall be entitled to
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receive Continuing Compensation as defined in subsection (b)(iii) above for the
period provided in subsection (b)(i). For purposes of this subsection (c)(i),
the following shall also be deemed a termination of Executive's employment
without cause if such occurs following a change in control: a material reduction
in Executive's position, responsibilities, title, salary or benefits, or as a
condition of continued employment, the Executive is required to relocate from
the San Francisco Bay area.
(ii) For purposes of this Section 8 (c), a "Change of Control" shall be
deemed to have taken place if (A) a third person, including a "Group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires
shares of Telecom having 50% or more of the total number of votes that may be
cast for the election of Directors of Telecom; or (B) as the result of any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election or any combination of the foregoing transactions ( a
"Transaction"), the persons who were Directors of Telecom before the Transaction
shall cease to constitute a majority of the Board of Telecom.
(d) Death During Employment. If the Executive dies during the term of
employment, the Company shall pay to the estate of the Executive the
compensation which would otherwise be payable to the Executive through the end
of the month in which his death occurs, including payments for accrued vacation
and accrued bonus
8. Protective Covenants; Remedies.
(a) Non-Disclosure of Confidential Information. Executive will not, during
the term of this Agreement, or at any time during the two (2) year period
thereafter, divulge, furnish or make accessible to anyone other than the
Company, the directors and officers of the Company, unless otherwise in the
regular course of business of the Company, any knowledge or information with
respect to (i) confidential or secret documents, processes, plans, models, sales
data, contracts, financial costs, product prices, devices, business
opportunities, or any other material relating to the business and activities of
Telecom or its subsidiaries or affiliates, or (ii) any other confidential or
secret aspect of the business of Telecom or its subsidiaries or affiliates,
including without limitation any lists or other information with respect to any
clients or customers of Telecom or its subsidiaries or affiliates ( the
foregoing being hereafter collectively referred to as the "Confidential
Information"). The Executive acknowledges that such Confidential Information is
of special and peculiar value to the Company; is the property of the Company,
the product of years of experience and trial and error; is not generally known
to the Company's competitors; and is regularly used in the operation of the
Company's business.
(b) Non-Competition. The Executive agrees that during the term of this
Agreement and for (i) the six (6) month period following termination of
Executive's employment, or (ii) the period of any Continuing Compensation
payable as provided in Section 8(b), whichever is longer, the Executive will
not, directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with ownership, management,
operation or control of any business, directly in competition with the business
conducted by Telecom, its subsidiaries or affiliates, at the time of the
termination of this Agreement.
(c) Suspension of Time. Notwithstanding any provision of this Agreement to
the contrary, the time periods for the protective covenants set forth herein
shall be suspended during the period of any breach or violation of such
protective covenant, and likewise shall be suspended for the time in which there
shall be pending in any court of competent jurisdiction, any action or
proceeding to enforce such covenant where temporary or injunctive relief has not
been granted.
(d) Acknowledgement Regarding Protective Covenants. The Executive
acknowledges and understands that the covenants provided for in this Section 9
are limited to the covenants set forth herein and do not preclude the Executive
upon the termination of this Agreement for obtaining gainful employment or
utilizing the Executive's general business skills, and that numerous
opportunities exist for the Executive to utilize such skills. Although the
Executive agrees that the time and area restraints set forth herein are
reasonable; nevertheless, if for any reason now unforeseen, a court of competent
jurisdiction finds that the time and/or area restraints agreed to herein by the
parties are unreasonable then the time and/or area restraints agreed to herein
shall be reduced to an area and/or duration deemed reasonable by the court. The
Executive acknowledges that he has read and understands the terms of this
Agreement, that same was specifically negotiated, and that the protective
covenants agreed upon herein are necessary for
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the protection of the Company's business as a result of the business secrets
that will be disclosed during employment.
(e) Remedies. In addition to any other rights and remedies which are
available to the Company, with respect to any breach or violation of the
protective covenants set forth herein, it is recognized and agreed that the
Company shall be entitled to obtain injunctive relief which would prohibit the
Executive from continuing any breach or violation of such protective covenants.
The Company may pursue any of the remedies allowed by this Agreement
concurrently or consecutively in and order as to any breach or violation of the
protective covenants, and the pursuit of any such remedies at any time will not
be deemed an election of remedies or waiver of the right to pursue the other of
such remedies as to that breach or violation, or as to any other breach or
violation of this Agreement. Pursuit of one or more remedies shall not preclude
pursuit of any other remedies herein provided or any other remedy that may be
available to the Company.
9. Disputes. In the event of any litigation between the Company and the
Executive arising out of this agreement, and the rights and obligations of the
parties hereunder, the prevailing party shall be entitled to seek an award from
the court to recover his or its reasonable attorney's fees and court costs.
10. Notices. Any notice required or permitted to be given under this
agreement shall be deemed sufficient if in writing, and sent by registered or
certified mail to his residence, in the case of the Executive, or to its
principle office, in the case of the Company.
11. Waiver of Breach. The failure of either party to insist in any one
or more instances upon performance of any terms or conditions of this Agreement
shall not be construed as a waiver of future performance of any such term,
covenant, or condition, but the obligations of either party with respect thereto
shall continue on full force and effect.
12. Assignment. Executive acknowledges that said services to be
rendered by him are unique and personal. Accordingly, the Executive may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon successors and assigns of the
Company.
13. Entire Agreement. This Agreement supercedes all previous agreements
between the Company and Executive and contains the entire understanding and
agreement between the parties with respect to the subject matter hereof, and
cannot be amended, modified or supplemented in any respect except by a
subsequent written agreement entered into by both parties.
14. Applicable Law. The validity, enforceability and interpretation of
this Agreement shall be determined and governed by the laws of the State of
Delaware.
15. Number of Agreements. This Agreement may be executed in any number
of counterparts, any one of which may be deemed original.
16. Severability. If any of the provisions of this Agreement are held
to be invalid or unenforceable, all other provisions hereof shall nevertheless
continue in full force and effect.
17. Pronouns. The use of any word in any gender shall be deemed to
include any other gender and the use of any word in the singular shall be deemed
to include the plural where the context requires.
18. Headings. The section headings used in this Agreement are for
convenience only and are not to be controlling with respect to the contents
thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth above.
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DATE: 2/11/99 COMPANY: SSE TELECOM, INC.
By: /s/ Leon F. Blachowicz
Leon F. Blachowicz, President and
Chief Executive Officer
DATE: 2/12/99 EXECUTIVE:
/s/ George M. Walley
George M. Walley
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