U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: March 29, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-17574
CODED COMMUNICATIONS CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 33-0580412
(State of Incorporation) (I.R.S. Employer Identification No.)
1939 Palomar Oaks Way, Carlsbad, California 92009
(Address of Principal Executive Offices)
(619) 431-1945
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of April 28, 1997, there were 76,022,212 shares of the Registrant's
common stock outstanding.
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
FORM 10-QSB QUARTERLY REPORT
QUARTER ENDED MARCH 29, 1997
INDEX
PART I. FINANCIAL INFORMATION
PAGE
ITEM 1. FINANCIAL STATEMENTS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
<S> <C> <C>
Net sales............................... $ 2,989,000 $ 2,696,000
Cost of sales........................... 1,495,000 1,614,000
Gross margin............................ 1,494,000 1,082,000
Operating expense:
Selling and administrative expense.... 971,000 637,000
Research and development expense...... 399,000 343,000
Total operating expense.................. 1,370,000 980,000
Operating income......................... 124,000 102,000
Interest expense......................... 20,000 204,000
Interest and other income................ (15,000) (1,000)
Provision for income taxes............... 6,000 6,000
Income (loss) before extraordinary item.. 113,000 (107,000)
Extraordinary item -- gain on extinguishment
of debt.................................. 8,000 52,000
Net income (loss)........................ $ 121,000 $ (55,000)
Net income (loss) per share:
Income (loss) before extraordinary item.. $ -- $ (.01)
Extraordinary item..................... -- --
Net income (loss) per share.............. $ -- $ (.01)
Average shares outstanding............... 76,963,000 14,688,000
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
<TABLE>
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 29, December 31,
1977 1996
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................. $ 2,673,000 $ 963,000
Accounts receivable......................... 1,276,000 1,776,000
Unbilled costs and earnings on contracts.... -- 180,000
Inventories ................................ 1,929,000 1,480,000
Prepaids and other current assets ......... 285,000 206,000
Total current assets ....................... 6,163,000 4,605,000
Property and equipment, net ................ 734,000 730,000
Other assets ............................... 78,000 186,000
$ 6,975,000 $ 5,521,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of debt and creditors' note... $ 1,383,000 $ 1,441,000
Accounts payable ............................. 774,000 979,000
Accrued payroll and related benefits.......... 399,000 489,000
Deferred revenue and customer payments........ 2,566,000 748,000
Other accrued liabilities. ................... 1,203,000 1,416,000
Total current liabilities................ 6,325,000 5,073,000
Commitments and contingencies.................. -- --
Shareholders' equity:
Preferred stock, $.01 par value, 2,000,000 shares
authorized; issued and outstanding 8,000 shares
Series A preferred stock, liquidation preference
$800,000; and 46,775 shares Series B preferred
stock, liquidation preference $4,678,000..... 1,000 1,000
Common stock, $.01 par value;
76,022,212 and 75,699,712 shares issued
and outstanding in 1997 and 1996, respectively 760,000 757,000
Additional paid-in capital ..................... 30,007,000 29,929,000
Accumulated deficit ........................... (30,118,000) (30,239,000)
Total shareholders' equity..................... 650,000 448,000
$ 6,975,000 $ 5,521,000
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
<TABLE>
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY (DEFICIT)
(UNAUDITED)
<CAPTION>
Total
Common Stock Preferred Stock Additional Accumulated Shareholders'
Shares Par Value Par Value Paid-in Capital Deficit Equity (Deficit)
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1995 14,566,201 $ 146,000 $ -- $ 23,330,000 $ (31,047,000) $ (7,571,000)
Issuance of common stock for services 122,000 1,000 -- 16,000 -- 17,000
Net loss for period -- -- -- -- (55,000) (55,000)
Balances, March 30, 1996 14,688,201 $ 147,000 -- $ 23,346,000 $ (31,102,000) $ (7,609,000)
Balances, December 31, 1996 75,699,712 $ 757,000 $ 1,000 $ 29,929,000 $ (30,239,000) $ 448,000
Issuance of common stock for service 312,500 3,000 -- 76,000 -- 79,000
Issuance of common stock for cash 10,000 -- -- 2,000 -- 2,000
Net income for period -- -- -- -- 121,000 121,000
Balances, March 29, 1997 76,022,212 $ 760,000 $ 1,000 $ 30,007,000 $ (30,118,000) $ 650,000
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
<TABLE>
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................. $ 121,000 $ (55,000)
Extraordinary item - gain on extinguishment of debt (8,000) (52,000)
Depreciation and amortization...................... 94,000 95,000
Other.............................................. 11,000 20,000
Change in assets and liabilities, net.............. 1,648,000 47,000
Net cash provided (used) by operating activities 1,866,000 55,000
Cash flows from investing activities:
Additions to property and equipment, net........... (98,000) (54,000)
Net cash used by investing activities........... (98,000) (54,000)
Cash flows from financing activities:
Additions to debt.................................. -- --
Payments on short-term and long-term debt.......... (58,000) (84,000)
Net cash used by financing activities........... (58,000) (84,000)
Net increase (decrease) in cash and equivalents 1,710,000 (83,000)
Cash and equivalents, beginning of period.......... 963,000 201,000
Cash and equivalents, end of period................ $ 2,673,000 $ 118,000
Supplemental cash flow information:
Cash paid for interest............................ $ 9,000 $ 45,000
Cash paid for income taxes........................ 8,000 16,000
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
CODED COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The Company and Summary of Significant Accounting Policies:
Company Operations Coded Communications Corporation and its wholly-owned
subsidiaries (the "Company") develop, manufacture and market wireless
communications equipment and systems, and mobile network connectivity
software. The Company's mobile data communications products and systems are
marketed to small and large operators of vehicle fleets and include public
safety agencies, emergency medical services, utility and service fleets. The
Company's aerospace telemetry products and systems are marketed to the United
States and foreign governments and agencies and to defense prime contractors
for use in research, development, test and evaluation programs for aircraft,
space and weapons systems.
In 1996, ISA Investments Corporation ("ISA") acquired 57,272,767 shares of
common stock or a 76% ownership interest in the Company. All of the common
stock of ISA is held by Mr. Hugo Camou and ISA Corporativo, S.A. de C.V. ("ISA
Corporativo"). Mr. Camou is the controlling shareholder of ISA Corporativo.
As a result of its common stock ownership interest and its ability to nominate
and elect a majority of the members of the Company's board of directors, the
Company is considered to be controlled by ISA.
The financial information of the Company included herein is unaudited;
however, such information reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of financial position and results of operations
for the interim periods.
The unaudited condensed consolidated financial statements do not include
footnotes and certain financial presentations normally required under
generally accepted accounting principles. It should be understood that
accounting measurement at interim dates inherently involves greater reliance
on estimates than at year-end. The results of operations for the three month
period ended March 29, 1997 are not necessarily indicative of results that can
be expected for the full year. The unaudited condensed consolidated balance
sheet at December 31, 1996 has been derived from the Company's audited
consolidated balance sheet as of December 31, 1996.
Accounts Receivable. The Company provides a reserve for doubtful accounts
where circumstances indicate that a reserve is necessary. As of March 29,
1997 and December 31, 1996, the Company's reserve for doubtful accounts was
$214,000 and $208,000, respectively.
Inventories - Inventories are valued at the lower of cost or market, but
not in excess of net realizable value. Cost is determined by the first-in,
first-out method. The Company has provided estimated reserves for inventory
in excess of the Company's current needs and for technological obsolescence.
Due to the uncertainties inherent in the evaluation process it is at least
reasonably possible that reserves for excess and obsolete inventories could be
further revised within the next year. The components of inventory are as
follows:
<TABLE>
<CAPTION> March 29 December 31,
1997 1996
<S> <C> <C>
Materials and supplies.............. $ 555,000 $ 475,000
Work-in-process and finished goods.. 1,586,000 1,170,000
Less progress billings.............. (212,000) (165,000)
$ 1,929,000 $ 1,480,000
</TABLE>
The Company has multiple sources of supplies for most of its purchased
parts and components. For a few components, there may be only a single source
of supply. Although the Company believes that other suppliers could provide
similar components, a change in suppliers could cause a delay in manufacturing
and customer delivery, and a possible loss of sales. A delay in or loss of
sales would adversely affect operating results.
Revenue Recognition - Revenues on engineering and systems contracts
requiring contract performance prior to commencement of deliveries are
recorded using the percentage-of-completion method, primarily based on
contract costs incurred to date compared to total estimated contract costs.
Losses, if any, are recorded when known. Revenue recognized in excess of
amounts billed is classified as current or non-current, on the basis of
expected realization or payment within or beyond one year, under unbilled
costs and earnings on contracts. Contract invoicing in excess of revenue is
classified as a current liability. All other revenue is recognized upon
shipment of products or performance of services. The Company has provided
loss reserves for certain contracts based on the estimated cost to complete
the contracts. Due to the uncertainties inherent in the estimation process it
is at least reasonably possible that an increase in the contract loss reserves
could be required within the next year.
Statements of Cash Flows - For purposes of the Statements of Cash Flows,
cash and cash equivalents include cash deposits and money market accounts. In
1997, non-cash financing activities included the issuance of 312,500 shares of
common stock for services valued at $79,000. Non-cash financing activities in
1996 were related to (i) an increase of $72,000 in the value of the creditors'
note in exchange for the settlement of unsecured credit claims valued at
$144,000 and (ii) the issuance of 122,000 shares of common stock in exchange
for services valued at $17,000.
Net Income (Loss) Per Share - Net income (loss) per share is computed using
the weighted average number of common shares and dilutive common equivalent
shares outstanding during each period using the treasury method. In addition,
the calculation of the number of shares used in computing net income per share
also includes Series A and Series B preferred stock which are convertible into
an aggregate of 10,038,000 shares of common stock, as if they were converted
into common stock as of their original date of issuance, if such inclusion
would be dilutive.
2. Extraordinary Gain on Extinguishment of Debt:
In the three month periods ended March 29, 1997 and March 30, 1996,
agreements were reached with certain unsecured creditors on the extinguishment
of debt resulting in gains of $8,000 and $52,000, respectively, net of
expense. The gains on the extinguishment of debt are reflected as an
extraordinary item in the accompanying consolidated financial statements.
<TABLE>
3. Short-Term Debt:
<CAPTION>
Short-term debt consisted of:
March 29,1997 December 31,1996
<S> <C> <C>
6% term note, due September 1977.. $ 600,000 $ 600,000
Creditors' note, due December 1997.. 781,000 837,000
Other obligations................... 2,000 4,000
$ 1,383,000 $ 1,441,000
</TABLE>
4. Undeclared Dividends on Preferred Stock:
At March 29, 1997, there were $32,000 and $70,000 in undeclared
dividends on Series A and Series B preferred stock, respectively.
_____________________________
Item 2. Management's Discussion and Analysis or Plan of Operation
Three Months Ended March 29, 1997 ("1997") Compared to Three Months Ended
March 30, 1996 ("1996")
Income (loss) before Extraordinary Gain
For the three month period ended March 29, 1997 ("1997"), income before
extraordinary gain was $113,000, a sharp improvement over a loss of $107,000
for the first quarter of 1996. The turnaround in operating results was
achieved primarily from higher sales, improved gross margins on sales and a
decrease in net interest expense; offset by an increase in selling and
administrative expense. Net income in 1997 was $121,000 compared to a net
loss of $55,000 in 1996. Included in the net loss in 1996 was an
extraordinary gain of $52,000 from the extinguishment of debt.
<TABLE>
The following table sets out, as a percentage of sales, certain income
(loss) data for 1997 and 1996:
<CAPTION>
1997 1996
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 50.0 59.9
Gross profit 50.0 40.1
Operating expense:
Selling and administrative expense 32.5 23.6
Research and development 13.5 12.7
Operating income 4.2 3.8
Income (loss) before extraordinary gain 3.8 (4.0)
Extraordinary gain 0.3 1.9
Net income (loss) 4.1% (2.1)%
</TABLE>
Sales and New Orders
Sales for the first quarter of 1997 were $2,989,000, an increase of 11%
over sales of $2,696,000 in the same period last year. Sales of mobile data
communications products and systems in 1997 increased by 19% and sales of
aerospace telemetry products decreased by 5% compared to 1996. The increase
in sales of mobile data communications products resulted primarily from export
sales which increased by $1,260,000 over the prior year.
New orders in 1997 increased by approximately $4,200,000 over orders in
1996. Orders for mobile data communications products increased by $4,400,000
primary as a result of orders received from three customers in Mexico. Order
activity for domestic customers continued to improve in the first quarter, and
the Company believes domestic orders for mobile data communications products
in the second quarter of 1997 will be significantly higher than domestic order
levels in the first quarter of 1997 and the level of domestic orders received
in the second quarter of 1996. Aerospace product orders in 1997 decreased
approximately $200,000 from order levels in 1996. The decrease in orders for
aerospace products resulted primarily from the timing of customer orders.
Aerospace orders for the second quarter and first half of 1997 are expected to
be comparable to order levels in 1996. The backlog of orders at March 29,
1997 was approximately $6,800,000, up 91% compared to backlog at the end of
the first quarter in 1996 and up 35% from backlog at December 31, 1996.
Gross Margin
Gross margin, as a percentage of sales, increased in 1997 to 50% of
sales from 40% of sales in 1996. Improved gross margin resulted primarily from
a change in product mix, with a higher percentage of sales concentrated in
software and standard products. Software and standard products typically
yield better margins than systems and special products. Gross margin was also
favorably impacted by overall higher sales prices on mobile data
communications products and systems.
Operating Expenses, Interest Expense and Income Taxes
Selling and administrative expense was $971,000 in 1997, an increase of
$334,000 or 52% over expense in 1996. Selling and administrative expense in
the first quarter of 1997 was comparable to selling and administrative expense
in the last quarter of 1996. As a percentage of sales, selling and
administrative expense was 33% and 24% of sales for the first quarter of 1997
and 1996, respectively. Approximately 70% of the increase in expense resulted
from increased staff and related costs for marketing and sales activities,
with the remaining increase resulting from higher administrative personnel
costs. The Company expects to increase total selling and administrative
expense in the first half of 1997 compared to the first half of 1996, as
higher levels of orders and sales materialize. Selling and administrative
expense as a percentage of sales for the 1997 fiscal year, however, is
expected to decrease compared to 1996.
Research and development expense in 1997 was $399,000, an increase of
16% or $56,000 over 1996. As a percentage of sales, research and development
expense was approximately 13% in 1997 and 1996. The Company anticipates
continuing its investments in new product development and in the enhancement
of existing products at approximately 12% to 14% of sales in 1997, down from
approximately 16% of sales for the 1996 year, primarily as a result of
increasing sales in 1997 compared to 1996.
Interest expense in 1997 was $20,000 compared to $204,000 in 1996. The
decrease in interest expense resulted primarily from the conversion of
$4,800,000 in secured debt to preferred stock in the last quarter of 1996.
The provision for income taxes in 1997 and 1996 represents an expense
for state income taxes. The provision for federal income taxes in 1997 was
offset by available tax credit carryforward benefits. For federal income tax
purposes, the Company has estimated net operating loss carryforwards of
$28,900,000 and tax credit carryforwards of $500,000 which expire in the years
1997 through 2010. These tax benefits have not been recognized for financial
statement purposes. The Company's future annual use of federal net operating
loss carryforwards and tax credit carryforwards, if any, will be limited
because of changes in 1993 and 1996 in the Company's common share ownership as
determined under the federal tax code.
Liquidity and Capital
Since its inception, the Company has financed its operations, investments
in new product development and met its working capital requirements through
the sale of common stock, convertible debentures and other financings. In the
first quarter of 1997, cash requirements were met primarily from $207,000 in
cash flow from operations and approximately $2,000,000 in advance deposits
from customers for contracts awarded in the first quarter. In fiscal 1996,
cash requirements were met by $273,000 in cash flow from operations and
proceeds of $1,430,000 from the sale of common stock.
In the third quarter of 1996, the Company completed a series of
transactions with ISA and certain of the Company's secured creditors. Through
these transactions, ISA acquired a 76% ownership interest in the Company's
outstanding common shares for a cash investment of $1,400,000, and secured
creditors holding debt in the amount of $6,600,000 agreed to restructure their
debt on terms considered by the Company to be favorable. In addition, in
December 1996, the holder of the $4,800,000 principal amount 6% Convertible
Debenture converted the debenture into 48,000 shares of Series B preferred
stock with a liquidation preference of $4,800,000.
As a result of the ISA transaction and the restructuring of the Company's
secured debt, profitable operations and the settlement of creditor debt at a
discount, in the year ended December 31, 1996 debt and other liabilities were
reduced by $8,319,000; a shareholders' deficit of $7,571,000 was eliminated;
and a working capital deficit was decreased from $7,648,000 to $468,000. As a
result of continued profitable operations in the first quarter of 1997,
shareholders' equity increased to $650,000 at March 29,1997, from $448,000 at
December 31, 1996, and the net working capital deficit was reduced to $162,000
from $468,000.
In 1997, accounts receivable decreased by $500,000 from the end of 1996
due to the timing of sales in the first quarter of 1997 compared to the last
quarter of 1996. Included in accounts receivable at March 29, 1997 and
December 31, 1996 were $292,000 and $584,000, respectively, in receivables due
from ISA. Unbilled costs and earnings on contracts decreased by $180,000 in
1997. The decrease was a result of the difference in the timing of revenue
recognition for financial statement purposes and actual contract invoicing
which is determined by contract terms. Inventories in 1997 increased by
$449,000, to $1,929,000 from $1,480,000 in 1996 primarily as a result of
contracts in progress. Investments in property and equipment were
approximately $98,000 in 1997. At March 29, 1997, the Company had no material
commitments for the purchase of capital equipment.
In 1997, payments on debt totaled $58,000 and approximately $1,383,000 in
debt outstanding at March 29, 1997 is scheduled for retirement in 1997. The
funds required to repay this debt are expected to be provided from a
combination of cash flow from operations, if any, and new debt or equity
financing.
Although the Company has established a recent trend of profitable
operations, prior to 1996 the Company had a history of operating losses.
Accordingly, there can be no assurances that the Company will operate at a
profit in the future. Further, the Company's new orders and sales are
typically concentrated in a few large single orders from a small base of
customers, and cash flow from operating activities may vary significantly from
quarter-to-quarter. As a result, cash flow from operations may not be
sufficient to meet ongoing cash requirements and additional financing may be
required to fund operations and working capital requirements in 1997. The
Company believes that continuing improvements in operating results and
increasing new order rates will allow the Company to finance its cash
requirements from new short-term and long-term financing, the sale of common
or preferred stock, or a combination of debt and equity. If additional
capital is required in 1997 it is likely to be provided or arranged by the
Company's controlling shareholder ISA. However, the Company believes short-
term financing collateralized by accounts receivable and other assets could be
available from other third party lenders.
In the event financing is not available in the time frame required, then
the Company would be forced to reduce its rate of sales growth, if any, reduce
operating expenses and reschedule research and development projects. In
addition, the Company might be required to sell certain of its assets or
license its technologies to others. These actions, while necessary for the
continuance of operations during a period of cash constraints and a shortage
of working capital, could adversely effect the Company's long-term business
and shareholder value.
Cautionary Statements
In the interest of providing the Company's shareholders and potential
investors with certain Company information, including management's assessment
of the Company's future potential, certain statements set forth herein or
elsewhere in the condensed unaudited consolidated financial statements,
contain or are based on projections of the timing and amount of new orders,
sales, gross margin, operating expenses, the realization of assets and other
financial items or relate to management's future plans and objectives or to
the Company's future economic performance. Such statements are "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and in Section 21E of the Securities Exchange Act of 1934,
as amended.
Although any forward-looking statements contained herein or otherwise
expressed by or on behalf of the Company are to the knowledge and in the
judgment of the management of the Company, expected to prove true and to come
to pass, management is not able to predict the future with absolute certainty.
Accordingly, shareholders and potential investors are hereby cautioned that
certain events or circumstances could cause actual results to differ
materially from those projected or predicted herein. In addition, the
forward-looking statements herein are based on management's knowledge and
judgment as of the date hereof, and the Company does not intend to update any
forward-looking statements to reflect events occurring or circumstances
existing hereafter.
In particular, the Company believes that the factors described in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1996,
as well as the following factors could impact forward-looking statements made
herein or in future written or oral releases and by hindsight, prove such
statements to be overly optimistic and unachievable:
Prior to the Company's restructuring of its business operations and
management in the first quarter of 1995, the Company had operated at a loss
since its inception. Although the Company achieved marginal operating profits
before interest expense and income taxes of $250,000 in the second half of
1995, $345,000 for the year ended December 31, 1996 and $124,000 in the first
quarter of 1997, there is no assurance that the Company will operate at a
profit on a quarter by quarter basis in the future.
The Company's common stock is subject to significant volatility in both
market price per share and trading volume. Factors such as new product
announcements and contract awards by the Company or its competitors;
fluctuations in operating results, new orders and backlog levels; and general
market conditions may have an immediate and significant impact on the market
price and trading volume of the Company's common stock.
As a result of ISA's controlling common stock interest in the Company
and its right to nominate and elect a majority of the members of the Board of
Directors, ISA controls the Company. Accordingly, ISA has the ability to
approve significant transactions without the approval of the other minority
shareholders, such as a sale of all the Company's assets or transactions
designed to take the Company private. ISA has stated its present intent to
keep the Company a publicly-held and traded entity, and ISA has no present
intent to take the Company private. In addition, as a result of ISA's
ownership control of the Company, it may be difficult to obtain debt or equity
financing from third party investors and lenders. To the extent that ISA does
not or cannot provide financing for the Company's working capital
requirements, when needed, the Company's operations would be adversely
affected.
At March 29, 1997, the Company employed approximately 77 personnel, all
of whom were located in the United States. A number of employees are
considered by the Company to be highly skilled and critical to particular
aspects of its business. The current market for experienced and skilled
technical personnel is highly competitive, and the Company may be unable to
retain personnel with the experience and skills that are critical to its
operations, or hire qualified and experienced personnel in the time frame
required. In the event key personnel leave the employment of the Company and
cannot be replaced in the time frame required, the operation of the Company
would be adversely affected.
The market for the Company's mobile data communications and aerospace
telemetry products are characterized by rapid change driven by advancements in
digital signal processing technology, computer technology and the construction
of new wireless terrestrial and satellite communications systems. The
Company's ability to compete successfully depends, in part, on its knowledge
of the wireless mobile data communications and aerospace telemetry markets,
its ability to anticipate and react to such changes, and its ability to
implement technological advancement in new products and software to meet
customer requirements. The Company intends to spend approximately 12% to 14%
of consolidated sales on research and development in 1997. The Company
believes this level of investment should be sufficient in the near term to
maintain the competitive position of the Company's present core technologies.
However, higher investment rates could be required thereafter to maintain the
competitive position of the Company's products and technology. In the event
the Company's cash flow or the award of new business is less than anticipated,
the Company may be required to significantly reduce its investment in research
and development.
The Company faces intense competitive in its markets, and its primary
competitors have substantially greater financial and technical resources. In
addition, the Company's business is concentrated in large, special order
contracts from a small base of customers. As a result, the timing and amount
of contract awards cannot be predicted with certainty and sales levels and
operating profits, if any, can be expected to fluctuate on a quarter to
quarter basis.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.13 Employment Agreement by and between Coded Communications
Corporation and Gary L. Luick.
10.14 Employment Agreement by and between Coded Communications
Corporation and John A. Robinson, Jr.
10.15 Employment Agreement by and between Coded Communications
Corporation and John Wiggins.
10.16 Employment Agreement by and between Coded Communications
Corporation and Steven Borgardt.
10.17 Employment Agreement by and between Coded Communications
Corporation and Richard Carrine.
27.1 Financial Data Schedule as of March 29, 1997 and the three
month period then ended.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated March 3, 1997 was filed
during the quarter to report the appointment of the Company's new chief
executive officer and president.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CODED COMMUNICATIONS CORPORATION
(Registrant)
April 28, 1997 /s/ Gary L. Luick
Date Gary L. Luick
Chief Executive Officer and President
Page 9 of 14
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EMPLOYMENT AGREEMENT
This Agreement is entered into as of March 3, 1997 between CODED
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Gary
Luick, an individual ("Employee"), who agree as follows:
1. Hiring. Employer hereby hires Employee as, and Employee hereby
agrees to act as, Chief Executive Officer and President.
2. Duties. Employee shall faithfully, loyally and diligently perform
the duties described on attached EXHIBIT A on a full-time basis devoting
Employee's entire productive time, ability and attention to the business of
Employer and performing such other duties as Employer's Board of Directors
shall from time to time specify that are consistent with the duties described
on EXHIBIT A and the duties normally performed by the Chief Executive Officer
and President.
3. Term. The term of this Agreement shall be three (3) years,
commencing on the date of this Agreement and, unless terminated earlier as set
forth below, this Agreement will expire on March 2, 2000 (the "Termination
Date"). Notwithstanding the above, this Agreement shall automatically extend
for a period of one year at expiration and each year thereafter, which shall
become the Termination Date, unless the Employer or Employee provides the
other party written notice not less than one hundred eighty (180) days prior
the Termination Date of its intent to terminate the Agreement.
4. Termination. At any time that Good Cause (as defined below)
exists or has arisen, Employer may, at its election, terminate this Agreement
by so notifying Employee in writing (the "Good Cause Notice"). From and after
the date of this Agreement, whether or not Good Cause exists or has arisen,
either Employer or Employee may, at either party's election, terminate this
Agreement by so notifying the other in writing (the "Termination Notice"),
under certain circumstances, in accordance with the Section below entitled
"Termination Obligations". Upon the earlier of the Termination Date,
immediately after the giving of the Good Cause Notice, or after the giving of
the Termination Notice in accordance with the Section below entitled
"Termination Obligations", (a) this Agreement shall be deemed terminated; (b)
neither Employee nor Employer shall have any further rights or obligations
under this Agreement except with respect (i) to Employer's obligations as set
out in the Sections below entitled "Termination Obligations" and
"Indemnification" of this Agreement and (ii) to Employee's obligations under
the Sections in this Agreement entitled "Confidentiality", "Proprietary
Information" and "Competition", which obligations shall survive any such
termination; and (c) Employee shall return to Employer all property belonging
to Employer, including without limitation all Confidential Material (as
defined below), promotional material, equipment, advertising information,
samples, price lists and similar items. For purposes of this Agreement, "Good
Cause" shall mean the existence or occurrence of any of the following:
5. Conviction of, or a plea of "guilty" or "no contest" to, a
felony;
6. A willful failure by Employee to substantially perform his
duties hereunder, other than a failure resulting from Employee's complete or
partial incapacity due to physical or mental illness or impairment;
7. A willful act by Employee which constitutes gross misconduct
or fraud and which is materially injurious to the Corporation
8. The death of Employee;
9. If Employee becomes materially "disabled" as the term is
defined under Employer's long-term disability group insurance plan.
No act, or failure to act, by Employee shall be considered "willful" unless
committed without good faith and without a reasonable belief that the act or
omission was in the Corporation's best interest.
10. Compensation. Employee's annual compensation under this Agreement
shall be Two Hundred Thousand Dollars ($200,000) per year ("Base Salary"),
payable at the rate of Three Thousand Eight Hundred Forty-Six Dollars and
15/100 ($3,846.15) per week, which payments shall be made in accordance with
and at the same times as Employer's ordinary payroll procedures. The
Employee's Base Salary will be reviewed annually by the Board of Directors of
the Employer; however, the Base Salary may not be reduced without the written
consent of the Employee.
11. Options. Employer hereby grants to Employee an initial stock
option (the "Options") to purchase Three Million (3,000,000) shares of
Employer's common stock at Thirty-Three Cents (.33) per share. The Options
are granted and subject to the terms and conditions of the Stock Option
Agreement attached to this Agreement as EXHIBIT B.
12. Bonus Plan. Annually, the Board of Directors of Employer shall
establish an Executive Bonus Plan pursuant to which the Employee may earn up
to fifty percent (50%) of his annual Base Salary. The terms and conditions of
the Executive Bonus Plan will be set annually by the Board of Directors and
will be primarily based upon fiscal year financial targets and goals such as
revenue, gross margin, operating income and cash flow. Notwithstanding the
above, the Employee shall be paid a minimum bonus of Fifty Thousand Dollars
($50,000) for the first year of this Agreement. The bonus shall be paid in
four (4) equal installments on or about March 28, 1997, June 30, 1997,
September 30, 1997 and December 31, 1997. As a condition of payment of the
1997 bonus, the Employee must be employed by the Company at the scheduled
payment date. Further, nothing in this Section shall preclude the Board of
Directors from approving a bonus in excess of Fifty Thousand Dollars ($50,000)
for the 1997 year; however, the bonus of Fifty Thousand Dollars ($50,000)
discussed herein shall be the minimum bonus payable to Employee in 1997 and
shall be applied as an offset against any other bonuses approved by the Board
of Directors for the Employee.
13. Benefits. Employee shall be entitled to the following benefits
during the term of this Agreement:
14. Three (3) weeks paid vacation for each one-year period
during the term of this Agreement (prorated for any partial year), to be taken
at such times that are consistent with Employer's standard vacation practices
and policies;
15. Reimbursement for reasonable business expenses incurred in
the proper performance of Employee's duties under this Agreement in accordance
with Employer's standard practices and policy;
16. Inclusion in Employer's group medical and other insurance
plans for Employer's employees. Insurance premiums for dependent coverage
shall be paid by the Employer;
17. A monthly automobile allowance of Seven Hundred Dollars
($700) per month in accordance with Employer's standard practices and policy;
18. All benefits generally available to other employees of
Employer;
19. Inclusion in Employer's term life insurance plan for
Executive Officers, with premiums paid by Employer, in accordance with
Employer's standard practices and policy.
20. Termination Obligations. In the event this Agreement is
terminated, the Employee will be entitled to the following termination
benefits:
21. If terminated by the Employee for any reason (except for the
employment of Employee by a competitor of the Employer) within thirty (30)
days after giving the Termination Notice to Employer after eighteen (18)
months of continuous employment with the Employer, then Employee is to receive
a severance benefit of twenty-five percent (25%) of Base Salary, payable in
three (3) equal monthly installments at the date of termination.
22. If terminated by the Employer for Good Cause (except if
termination is the result of Employee's being convicted of a felony) after
twelve (12) months of continuous employment with the Employer, then Employee
is to receive a severance benefit of twenty-five percent (25%) of Base Salary,
payable in a lump sum at the Termination Date.
23. If terminated by the Employer for any reason due to a
"change in control" (as that term is defined below) after nine (9) months of
continuous employment with the Employer, or for Good Cause within twelve (12)
months following a change of control (defined as a person, firm or entity,
through one or a series of transactions, acquiring more than fifty percent
(50%) of the Employer's common stock or purchasing substantially all of the
Employer's assets and/or business), then the Employee is to receive a
severance benefit of the greater of (a) one hundred percent (100%) of the
annual Base Salary or (b) the value of the remainder of the Base Salary
payable under this Agreement, payable in twelve (12) equal consecutive monthly
installments beginning at the Termination Date.
24. If terminated by the Employer due to the disability of
Employee, as the term "disability" shall be defined under the Employer's long-
term disability group insurance plan, after nine (9) months of continuous
employment with the Employer, then Employee is to receive a severance benefit
of fifty percent (50%) of annual Base Salary, payable in six (6) equal
consecutive monthly installments beginning on the Termination Date, less any
amounts payable to Employee under any disability insurance plan maintained by
the Employer for the benefit of the Employee which is received during the six
consecutive month period over which the 50% of annual Base Salary is paid.
25. If terminated by the Employer due to the death of the
Employee after nine (9) months of continuous employment with the Employer,
then the Employee's beneficiaries are to receive a death benefit equal to
fifty percent (50%) of Employee's annual Base Salary, payable in three (3)
equal consecutive monthly installments beginning on the Termination Date.
26. If terminated for any reason by Employer (except if
termination is the result of Employee's being convicted of a felony), then
Employer shall cause to be paid the COBRA medical insurance premiums of
Employee, including dependent premiums if applicable, for a period of three
(3) months beginning on the Termination Date; if terminated by Employee for
any reason (except for the employment of Employee by a competitor of the
Employer), then Employer shall cause to be paid Employee's monthly COBRA
medical insurance premiums (including dependent coverage) for a period of one
(1) month beginning on the Termination Date.
27. Confidentiality. Employee hereby acknowledges that Employer has
made (or may make) available to Employee certain customer lists, product
design information, know-how, performance standards, future plans, business
strategies, financial information, processes and other confidential and/or
proprietary information of Employer or licensed to Employer, including without
limitation trade secrets and copyrighted materials (collectively, the
"Confidential Material"). Except as essential to Employee's obligations under
this Agreement, neither Employee nor any agent, employee, officer or
independent contractor of or retained by Employee shall make any disclosure of
this Agreement, the terms of this Agreement or any of the Confidential
Material. Except as essential to Employee's obligations under this Agreement,
neither Employee nor any agent, employee, officer or independent contractor of
or retained by Employee shall make any duplication or other copy of any of the
Confidential Material. Employee shall notify each person to whom any
disclosure is made that such disclosure is made in confidence, that the
Confidential Material shall be kept in confidence by such person and that such
person shall be bound by the provisions of this Section. Notwithstanding the
above, Employee shall be required to execute Employer's Standard Employee
Confidentiality Agreement. In the event there are any contradictions between
the Employee's obligations under the Employer's Standard Confidentiality
Agreement and Employee's obligations hereunder, then the most restrictive
provisions shall apply.
28. Proprietary Information. For purposes of this Agreement,
"Proprietary Information" shall mean any information, future plans, business
strategies, financial information, processes, observation, data, written
material, record, document, computer program, software, firmware(?),
invention, discovery, improvement, development, tool, machine, apparatus,
appliance, design, promotional idea, customer list, practice, process,
formula, method, technique, trade secret, product and/or research related to
the actual or anticipated research development, products, organization,
business or finances of Employer (or any of its affiliates). All right, title
and interest of every kind and nature whatsoever in and to the Proprietary
Information made, discussed, developed, secured, obtained or learned by
Employee during the term of this Agreement, or the sixty (60) day period
immediately following termination of this Agreement, shall be the sole and
exclusive property of Employer for any purposes or uses whatsoever and shall
be disclosed promptly by Employee to Employer. The covenants set forth in the
preceding sentence shall apply regardless of whether any Proprietary
Information is made, discovered, developed, secured, obtained or learned (a)
solely or jointly with others, (b) during the usual hours of work or
otherwise, (c) at the request and upon the suggestion of Employer or otherwise
or (d) with Employer's materials, tools, instruments or on Employer's premises
or otherwise. All Proprietary Information developed, created, invested,
devised, conceived or discovered by Employee that are subject to copyright
protection are explicitly considered by Employee and Employer to be works made
for hire to the extent permitted by law. Employee hereby assigns to Employer
all of Employee's right, title and interest in and to the Proprietary
Information. Employee hereby forever fully releases and discharges Employer,
any affiliates of Employer and their respective officers, directors and
employees from and against any and all claims, demands, damages, liabilities,
costs and expenses of Employee arising out of or relating to any Proprietary
Information. Employee shall execute any documents and take any action
Employer may deem necessary or appropriate to effectuate the provisions of
this Agreement, including without limitation assisting Employer in obtaining
and/or maintaining patents, copyrights or similar rights to any Proprietary
Information assigned to Employer if Employer, in it sole discretion, requests
such assistance. Employee shall comply with any reasonable rules established
from time to time by Employer for the protection of the confidentiality of any
Proprietary Information. Employee irrevocably appoints the Chairman of the
Board of Directors of Employer to act as Employee's agent and attorney-in-fact
to perform all acts necessary to obtain and/or maintain patents, copyrights
and similar rights to any Proprietary Information assigned by Employee to
Employer under this Agreement if (a) Employee refuses to perform those acts or
(b) is unavailable within the meaning of any applicable laws. Employee
acknowledges that the grant of the foregoing power of attorney is coupled with
an interest and shall survive the death or disability of Employee. Employee
shall promptly disclose to Employer in confidence (a) all Proprietary
Information that Employee creates during the term of this Agreement and (b)
all patent applications filed by Employee within one year after termination of
this Agreement. Any application for a patent, copyright registration or
similar right filed by Employee within one year after termination of this
Agreement shall be presumed to relate to Proprietary Information created by
Employee during the term of this Agreement, unless Employee can prove
otherwise. Nothing contained in this Agreement shall be construed to preclude
Employer from exercising all of its rights and privileges as sole and
exclusive owner of all of the Proprietary Information owned by or assigned to
Employer under this Agreement. Employer, in exercising such rights and
privileges with respect to any particular item of Proprietary Information, may
decide not to file any patent application or any copyright registration on
such Proprietary Information, may decide to maintain such Proprietary
Information as secret and confidential or may decide to abandon such
Proprietary information or dedicate it to the public. Employee shall have no
authority to exercise any rights or privileges with respect to the Proprietary
Information owned by or assigned to Employer under this Agreement. This
Agreement does not apply to any Proprietary Information that qualifies fully
under the provisions of California Labor Code Section 2870 or any similar or
successor statute.
29. Competition. During the term of this Agreement, Employee shall
not own a five percent (5%) or more interest in, operate or participate in, or
be connected with as an officer, director, employee, agent, independent
contractor, partner, shareholder or principal of any business entity or person
producing, designing, providing, soliciting orders for selling, distributing
or marketing products, goods, equipment and/or services which compete with
Employer's products, goods, equipment and/or services. Employee, except
within the course of the performance of his duties hereunder, shall not any
time while he is in the employ of Employer or any of its parents, subsidiaries
or affiliates, and for a period of six (6) months thereafter, (a) employ any
individual who was employed by Employer or any of its parents, subsidiaries or
affiliates at any time during the period of six (6) months prior to the date
Employee intends to employ such person or (b) in any way cause, influence or
participate in the employment of any individual which would be contrary to
Employer's best interests as determined by the Employer in its sole
discretion.
30. Injunctive Relief. Each of Employer and Employee hereby
acknowledges (a) the unique nature of the provisions set forth in the Sections
of this Agreement entitled "Confidentiality", "Proprietary Information" and
"Competition"; (b) that Employer will suffer irreparable harm if Employee
breaches any of such provisions; and (c) that monetary damages will be
inadequate to compensate Employer for such breach. Therefore, if Employee
breaches any of such provisions, then Employer shall be entitled to injunctive
relief (in addition to any other remedies at law or equity) to enforce such
provisions.
31. Survival. The representations, warranties and covenants of
Employee in this Agreement shall survive any termination of this Agreement.
32. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
33. Further Assurances. Each party to this Agreement shall execute
and deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this
Agreement.
34. Venue and Jurisdiction. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
state and federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purposes of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this Section by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
set forth in this Agreement.
35. Arbitration. Any controversy arising between the Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement shall, on the written request of
either party served on the other, be submitted to arbitration. Any
arbitration arising under this Agreement shall comply with the American
Arbitration Association's Commercial Arbitration Rules and shall be final and
conclusive upon both parties. Any judgment upon the award may be entered in
any court having jurisdiction thereof.
36. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
37. Attorneys' Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies): all costs, expenses and actual
attorneys' fees (including expert witness and other consultants' fees and
costs) relating to or arising out of (a) the Proceeding (whether or not the
Proceeding proceeds to judgment) and (b) any post-judgment or post-award
Proceeding including, without limitation, one to enforce or collect any
judgment or award resulting from the Proceeding. All such judgments and
awards shall contain a specific provision for the recovery of all such
subsequently incurred costs, expenses and actual attorneys' fees. The
arbitrator(s) or court shall determine who is the prevailing party, whether or
not the dispute or controversy proceeds to final judgment. Employer and
Employee expressly acknowledge that this Section is not intended to in any way
alter the parties' agreement that arbitration shall be the exclusive method of
resolving any dispute related to this Agreement or Employee's employment with
the Employer as set forth in Section 18. Employer and Employee agree that the
reference to litigation in this Section is included so that the prevailing
party can recover his or its attorneys' fees and costs if (a) either party
files a lawsuit in violation of Section 18 (e.g., fees and costs incurred
obtaining a court order compelling arbitration); or (b) a court rules that the
arbitration provision in Section 18 is unenforceable for any reason.
38. Indemnification. Employer hereby indemnifies Employee against all
Claims (as defined below) and all costs, expenses and attorneys' fees incurred
in the defense of any of such Claims or any action or Proceeding brought on
any of such Claims to the extent not covered by any applicable insurance or to
the extent of any liability in excess of the policy limits of such insurance.
For purposes of this Section, "Claims" shall mean all liabilities, damages,
losses, costs, expenses, attorneys' fees and claims arising from any activity,
work or thing done, permitted or suffered by or undertaken by Employee in the
course and scope of his employment with Employer. If any action or Proceeding
is brought against Employee by reason of any such Claims, Employer, upon
notice from Employee, shall defend such action or Proceeding at Employer's
sole cost by legal counsel satisfactory to Employee. Nothing in this Section
creates any rights to which any insurance company may be subrogated and no
person who is not a party to this Agreement may enforce, directly or
indirectly, this Section. Employer acknowledges and agrees that, at such time
as it shall become financially practicable, Employer shall obtain errors and
omissions insurance for all officers and directors in commercially reasonable
amounts. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section unless otherwise provided when authorized or
ratified, shall survive the termination of this Agreement, whether upon the
expiration of the term or otherwise and shall continue as to the Employee who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of the Employee.
39. Modification. This Agreement may be modified only by a contract
in writing executed by the party to this Agreement against whom enforcement of
the modification is sought.
40. Headings. The Section headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement and (c) may not be used in the interpretation
of this Agreement.
41. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement; and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
42. Interpretation. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa) and the word "person" includes a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other entity. The
terms "includes" and "including" do not imply any limitation. For purposes of
this Agreement, the term "day" means any calendar day and the term "business
day" means any calendar day other than a Saturday, Sunday or any other day
designated as a holiday under California Government Code Sections 6700-6701.
Any act permitted or required to be performed under this Agreement upon a
particular day which is not a business day may be performed on the next
business day with the same effect as if it had been performed upon the day
appointed. No remedy or election under this Agreement is exclusive but,
rather, to the extent permitted by applicable law, each such remedy and
election is cumulative with all other remedies at law or in equity.
43. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement and
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable are not affected by such
invalidity or unenforceability (unless such provision or the application of
such provision is essential to this Agreement).
44. Successors in Interest and Assigns. Employee may not voluntarily
or by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Employer, which consent may be
withheld in Employer's sole and absolute discretion. Any such transfer in
violation of this Section is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and
assigns of each party to this Agreement.
45. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing.
Notice is duly given to another party upon (a) hand delivery to the other
party; (b) receipt by the other party when sent by facsimile to the address
and number for such party set forth below (provided, however, that the Notice
is not effective unless a duplicate copy of the facsimile Notice is promptly
given by one of the other methods permitted under this Section); (c) three (3)
business days after the Notice has been deposited with the United States
Postal Service as first-class, certified mail, return receipt requested,
postage prepaid, and addressed to the party as set forth below; or (d) the
next business day after the Notice has been deposited with a reputable
overnight delivery service, postage prepaid, addressed to the party as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider.
To Employer: Coded Communications Corporation
1939 Palomar Oaks Way
Carlsbad, CA 92009
Telephone: (619) 438-5649
Fax: (619) 438-5649
To Employee: Gary Luick
1939 Palomar Oaks Way
Carlsbad, CA 92009
Telephone: (619) 438-5649
Fax: (619) 438-5649
and P.O. Box 2682
Rancho Santa Fe, CA 92067-2682
Telephone: (619) 759-1949
Fax: (619) 759-1427
Each party shall make a reasonable good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
Section. A party may change its address for purposes of this Section by
giving the other party(ies) written notice of a new address in the manner set
forth above.
46. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default
or provision concerning the same or any other provision of this Agreement. No
delay or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A
consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
47. Drafting Ambiguities. Each party to this Agreement has reviewed
and revised this Agreement and has had the opportunity to have such party's
legal counsel review and revise this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
48. Third-Party Beneficiaries. Nothing in this Agreement is intended
to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this
Agreement to another person specifically identified as a "Third-Party
Beneficiary".
49. Receipt of Copy. Employee hereby acknowledges that it has
received a signed copy of this Agreement.
50. Guarantee. The obligations to Employee herein shall be guaranteed
and become the joint and severable obligations of the Employer, its parent
corporation (if any), its affiliated corporations and any corporation or
entity that owns or controls, directly or indirectly, more than fifty percent
(50%) of the Employer's common stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYEE:
GARY LUICK
[Signatures continued on next page]
EMPLOYER: CODED COMMUNICATIONS CORPORATION,
a Delaware corporation
By:
Hugo R. Camou
Chairman of the Board of Directors
ATTEST:
Steven Borgardt
Secretary
EXHIBIT A
POSITION DESCRIPTION
POSITION TITLE: President/CEO
POSITION REPORTS TO: Board of Directors
FUNCTION: As Chief Executive Officer, shall have general active
charge and control over the business and affairs of
the Corporation, subject to the Board of Directors.
Is responsible for directing the organization with the
objective of generating the maximum profit and return
on invested capital over the long term. Establishes
current and long-range objectives, plans and policies
subject to the approval of the Board of Directors, is
the senior spokesman and represents the Corporation
with its major customers, suppliers, the financial
community, the shareholders and the public. May
appoint such persons as officers, agents and employees
of the Corporation as he shall from time to time deem
necessary for the proper conduct of the business of
the Corporation and may fix their compensation and
terminate their employment. Any person appointed by
him as an officer, but not elected by the Board, shall
be a titular officer and not a corporate officer.
ETHICS AND VALUES: Performs all job responsibilities and conducts all
business relationships, both internal and external, in
concert with the ethical standards of the
Corporation's stated policies and values.
RESPONSIBILITIES AND JOB DUTIES:
1. With the advice of senior members of management and other resources,
develops basic objectives, policies and business plans; reviews these
with the Board of Directors.
2. Ensures that corporate policies are properly interpreted and
administered by subordinates; reviews and approves proposed internal
policies of operating units.
3. Directs the preparation of adequate plans for the future development and
growth of the Corporation and all of its operating units and joint
ventures; periodically presents such plans to the Board of Directors for
concurrence.
4. At specific times, presents operation and capital expenditure budgets
for review and approval by the Board of Directors.
5. Maintains liaison with the Board of Directors concerning the
investigations and negotiations pertaining to mergers, joint ventures,
the acquisition of businesses or sale or relocation of corporate assets.
6. Analyzes operating results of the Corporation and operating units
relative to established objectives and ensures that appropriate action
is taken to correct unsatisfactory conditions.
7. Ensures the adequacy and soundness of the Corporation's financial
conditions and reviews working capital projections; negotiates and
arranges for outside financing as necessary.
8. Establishes the specific limitation of authority of subordinates
regarding policies, contractual commitments, corporate assets,
expenditures and personnel actions.
9. Reviews and approves the appointment, employment, compensation, transfer
or termination of key executives, including all direct corporate reports
and direct reports of operating unit presidents.
10. Plans for the development of personnel resources within the Corporation
and recruitment of outside personnel necessary to initiate programs to
ensure successful management continuity; ensures the development and
implementation of a viable management succession program for all of his
direct reports and their direct reports as well; reviews all performance
reviews of direct reports of operating unit presidents.
11. Reviews and approves the engagement of consultants and advisors whose
fees during any 30-day period are anticipated to exceed $1,200 per day
or $150.00 per hour and the renewal of such agreements and/or contracts
in excess of $36,000 or 30 mandays.
12. Ensures the adequacy and proper utilization of corporate staff
activities as well as maintaining a cooperative effort on the part of
operating groups, staff units or other elements under his direction.
13. Represents the Corporation with major customers, suppliers, competitors,
commercial and investment banks, legal counsel, stockholders, government
agencies, professional and public organizations and other similar
groups.
14. Establishes the compensation policies of all operating unit
organizations and, in concert with the compensation committee of the
Board of Directors, sets the specific compensation elements of his
direct reports and approves the compensation of their direct reports as
well.
15. Approves all legal and litigation matters for all the Corporation and
operating units of the Corporation and reports significant legal matters
to the Board.
16. Is the Corporation's senior officer responsible, in concert with the
Board, for all environmental policies, actions, plans, investigations
and reviews; ensures that all operating units of the Corporation are in
compliance (in fact and spirit) with all local, state and federal laws
and regulations; reviews on an annual basis all operation units' plans
and programs relating to environmental and safety matters.
EMPLOYMENT AGREEMENT
This Agreement is executed effective April 1, 1997 between CODED
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and John A.
Robinson, Jr., an individual ("Employee"), who agree as follows:
1. Hiring. Employer hereby hires Employee as, and Employee hereby
agrees to act as, President of Decom Systems, Inc.
2. Duties. Employee shall faithfully and diligently perform the
following duties on a full-time basis: (a) Devoting Employee's entire
productive time, ability and attention to the business of Employer, including
without limitation performing the duties consistent with the position of
President of Decom Systems as set forth on attached Exhibit A; and
(b) Performing such other duties as Employer shall from time to time specify
that are consistent with the duties normally performed by an employee like
Employee.
2.1. If during the first twelve (12) month period of this
Agreement, the Employer restructures the operations of Decom Systems, Inc.
such that in the sole opinion of the Employer the Employee's entire productive
time and attention is not required to manage Decom's business, then Employer
will enter into an agreement with Employee pursuant to which Employee will
perform his duties hereunder on a less than full-time basis, and as long as
Employee is not in breach of that agreement he shall not be considered to have
breached this Agreement.
3. Term. The term of this Agreement shall commence on the date of this
Agreement, and, unless terminated earlier as set forth below, shall expire on
September 18, 1999 (the "Termination Date").
4. Termination. At any time that Good Cause (as defined below) exists
or has arisen, Employer may, at its election, terminate this Agreement by so
notifying Employee in writing (the "Good Cause Notice"). From and after the
date of this Agreement, whether or not Good Cause exists or has arisen, either
Employer or Employee may, at either party's election, terminate this Agreement
by so notifying the other in writing (the "Termination Notice"), for any
reason whatsoever or for no reason. Upon the earlier of the Termination Date,
immediately after the giving of the Good Cause Notice, or fifteen (15) days
after the giving of the Termination Notice, (a) this Agreement shall be deemed
terminated, (b) neither Employee nor Employer shall have any further rights or
obligations under this Agreement (except with respect to the obligations under
the Paragraphs in this Agreement entitled "Termination Obligations,"
"Confidentiality," "Proprietary Information," and "Competition," which
obligations shall survive any such termination), (c) Employee shall return to
Employer all property belonging to Employer, including without limitation all
Confidential Material (as defined below), promotional material, advertising
information, samples, price lists and similar items, and (d) Employer shall
have no obligation to make any further payments to Employee, except for
amounts earned pursuant to this Agreement by Employee prior to such
termination, which amounts Employer shall pay to Employee upon Employee's
returning to Employer all such property. For purposes of this Agreement, "Good
Cause" shall mean the existence or occurrence of any of the following:
4.1. If Employee is convicted of theft, larceny, embezzlement,
fraud or other felony.
4.2. The death of Employee.
4.3. If Employee becomes materially disabled (as "disability" is
defined under applicable state law or the Employee's long-term disability
insurance plan) to such an extent that Employee is precluded from performing
the duties set forth in this Agreement for a period of 90 consecutive days, or
120 days in the aggregate during any one-year period.
5. Compensation. Employee's total compensation under this Agreement
shall be $140,000 per year, payable at the rate of $2,692.31 per week, which
payments shall be made in accordance with and at the same times as Employer's
ordinary payroll procedures ("Base Salary").
6. Options. Employee acknowledges the prior grant to Employee of stock
options (the "Options") to purchase 1,000,000 (one million) shares of
Employer's common stock. The Options are granted and subject to the terms and
conditions of Employer's 1992 Stock Option Plan.
7. Benefits. Employee shall be entitled to the following benefits
during the term of this Agreement:
7.1. Four weeks paid vacation for each one-year period during the
term of this Agreement (prorated for any partial year), to be taken at such
times that are consistent with Employee's performance of Employee's duties
under this Agreement and Employer's policy for vacation.
7.2. Reimbursement for reasonable out-of-town travel expenses and
local expenses incurred in the proper performance of Employee's duties under
this Agreement, in accordance with Employer's policy.
7.3. Inclusion in Employer's medical plan for Employer's other
employees, including Employee's paid dependent insurance coverage.
7.4. All benefits generally available to other employees of
Employer.
7.5 Employer shall provide a leased automobile for use by the
Employee. Employer shall be responsible for automobile insurance and regular
maintenance and repairs; the Employee shall be responsible for all gasoline
expense.
7.6 Inclusion in Employer's term life insurance plan for
Executive Officers, with premiums paid by the Employer, when and if such plan
is approved by the Employer.
Employee shall not be entitled to any other compensation or benefits.
8. Termination Obligations. If this Agreement is terminated prior to
the Termination Date, Employee will be entitled to the following termination
benefits:
8.1. If this Agreement is terminated by Employee after giving
Employer the Termination Notice and if Employee has been within the employ of
Employer for 12 continuous months from the date of the Agreement, prior to the
giving of the Termination Notice, then Employee will receive the severance
benefits equal to the lesser of (i) the Base Salary payable over the unexpired
term of this Agreement payable in equal monthly payments beginning the first
month after the date of the Termination Notice, or (ii) eighteen (18) months
Base Salary payable in eighteen (18) equal monthly payments beginning the
first month after the date of the Termination Notice.
8.2. If this Agreement is terminated by Employer for any reason
other than Good Cause after giving Employee the Termination Notice, then
Employee shall receive a severance benefit equal to the balance of the Base
Salary payable over the unexpired term of this Agreement, such benefit to be
payable in equal monthly installments beginning the first month after the date
of the Termination Notice and ending on September 18, 1999.
8.3. If this Agreement is terminated by Employer due to
Employee's disability as described in Paragraph 4.3 above after giving
Employee the Good Cause Notice, then Employee shall receive a severance
benefit of twelve (12) month's Base Salary, less any amounts payable to
Employee under any applicable disability insurance maintained by Employer for
the benefit of Employee, payable in equal consecutive monthly installments
commencing one month after the effective date of the Good Cause Notice.
8.4. If this Agreement is terminated by Employer due to the death
of the Employee after giving Employee's estate the Good Cause Notice, then
Employee's estate shall receive a death benefit of six (6) month's Base
Salary, less any benefits paid to Employee's beneficiaries under any life
insurance plan maintained by Employer for the benefit of Employee, payable in
six (6) equal monthly installments commencing one month after the effective
date of the Good Cause Notice.
8.5. If this Agreement is terminated by Employer for any reason
other than Paragraph 4.1 after giving Employee the Termination Notice, then
Employer shall cause to be paid for the unexpired term of this Agreement: (i)
Employee's COBRA medical insurance premiums, including dependent care premiums
if applicable, and (ii) insurance premiums under any life insurance plan
existing at the Termination Date pursuant to paragraph 7.6 above.
8.6 If this Agreement is terminated by Employee for any reason,
then Employee shall return to Employer the leased automobile described in
paragraph 7.5 in good condition not more than thirty (30) days from the date
of the Termination Notice. In the event the Employer terminates this
Agreement for any reason other than Paragraph 4.1 above, then Employee shall
return to Employer the leased automobile in good condition within thirty (30)
days of the Termination Date, provided however, Employee shall have the option
to notify Employer within such thirty (30) day period that Employee elects to
(i) assume the remaining term of the lease agreement, or (ii) buy out the
leased vehicle at a price equal to the residual value of the leased vehicle as
set out in the lease agreement. In the event Employee is terminated by
Employer under Paragraph 4.1 above, the leased vehicle shall be returned to
the Employer in good condition within three (3) days of the date of the Good
Cause Notice.
Notwithstanding the foregoing, Employee shall not be entitled to
any benefits under this Paragraph 8 if Employee accepts any position of
employment or consulting with a competitor of Employer's mobile data
communications business at any time within one year after the Termination Date
or effective date of the Termination Notice or Good Cause Notice. In such
case, Employer will have no further Termination Obligations under Paragraph 8
to Employee effective on the date Employee accepts any position of employment
or consulting with a mobile data competitor.
9. Representations and Warranties. Employee represents and warrants
that this Agreement will not cause or require Employee to breach any
obligation to, or agreement or confidence with, any other person.
10. Confidentiality. Employee hereby acknowledges that Employer has
made (or may make) available to Employee certain customer lists, product
design information, performance standards and other confidential and/or
proprietary information of Employer and its subsidiaries or licensed to
Employer and its subsidiaries, including without limitation trade secrets and
copyrighted materials (collectively, the "Confidential Material"). Neither
Employee nor any agent, employee, officer, or independent contractor of or
retained by Employee shall make any disclosure of this Agreement, the terms of
this Agreement, or any of the Confidential Material. Neither Employee nor any
agent, employee, officer, or independent contractor of or retained by Employee
shall make any duplication or other copy of any of the Confidential Material.
Immediately upon request from Employer, Employee shall return to Employer all
Confidential Material. Employee shall notify each person to whom any
disclosure is made that such disclosure is made in confidence, that the
Confidential Material shall be kept in confidence by such person, and that
such person shall be bound by the provisions of this Paragraph.`
11. Proprietary Information. For purposes of this Agreement,
"Proprietary Information" shall mean any information, observation, data,
written material, record, document, computer program, software, firmware,
invention, discovery, improvement, development, tool, machine, apparatus,
appliance, design, promotional idea, customer list, practice, process,
formula, method, technique, trade secret, product and/or research related to
the actual or anticipated research, development, products, organization,
business or finances of Employer (or any of its affiliates). All right, title
and interest of every kind and nature whatsoever in and to the Proprietary
Information made, discussed, developed, secured, obtained or learned by
Employee during the term of this Agreement, or the 60-day period immediately
following termination of this Agreement, shall be the sole and exclusive
property of Employer for any purposes or uses whatsoever, and shall be
disclosed promptly by Employee to Employer. The covenants set forth in the
preceding sentence shall apply regardless of whether any Proprietary
Information is made, discovered, developed, secured, obtained or learned
(a) solely or jointly with others, (b) during the usual hours of work or
otherwise, (c) at the request and upon the suggestion of Employer or
otherwise, or (d) with Employer's materials, tools, instruments or on
Employer's premises or otherwise. All Proprietary Information developed,
created, invented, devised, conceived or discovered by Employee that are
subject to copyright protection are explicitly considered by Employee and
Employer to be works made for hire to the extent permitted by law. Employee
hereby assigns to Employer all of Employee's right, title and interest in and
to the Proprietary Information. Employee hereby forever fully releases and
discharges Employer, any affiliates of Employer and their respective officers,
directors and employees, from and against any and all claims, demands,
damages, liabilities, costs and expenses of Employee arising out of, or
relating to, any Proprietary Information. Employee shall execute any
documents and take any action Employer may deem necessary or appropriate to
effectuate the provisions of this Agreement, including without limitation
assisting Employer in obtaining and/or maintaining patents, copyrights or
similar rights to any Proprietary Information assigned to Employer, if
Employer, in its sole discretion, requests such assistance. Employee shall
comply with any reasonable rules established from time to time by Employer for
the protection of the confidentiality of any Proprietary Information.
Employee irrevocably appoints the Chief Executive Officer of Employer to act
as Employee's agent and attorney-in-fact to perform all acts necessary to
obtain and/or maintain patents, copyrights and similar rights to any
Proprietary Information assigned by Employee to Employer under this Agreement
if (a) Employee refuses to perform those acts, or (b) is unavailable, within
the meaning of any applicable laws. Employee acknowledges that the grant of
the foregoing power of attorney is coupled with an interest and shall survive
the death or disability of Employee. Employee shall promptly disclose to
Employer, in confidence (a) all Proprietary Information that Employee creates
during the term of this Agreement, and (b) all patent applications filed by
Employee within one year after termination of this Agreement. Any application
for a patent, copyright registration or similar right filed by Employee within
one year after termination of this Agreement shall be presumed to relate to
Proprietary Information created by Employee during the term of this Agreement,
unless Employee can prove otherwise. Nothing contained in this Agreement
shall be construed to preclude Employer from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to Employer under this Agreement. Employer, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Employee
shall have no authority to exercise any rights or privileges with respect to
the Proprietary Information owned by or assigned to Employer under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.
12. Competition. During the term of this Agreement, Employee shall not
own an interest in, operate or participate in, or be connected as an officer,
director, employee, agent, independent contractor, partner, shareholder or
principal of any business entity or person producing, designing, providing,
soliciting orders for, selling, distributing, or marketing products, goods,
equipment and/or services which compete with Employer's products, goods,
equipment and/or services. To the extent permitted by applicable law, for one
year following termination of this Agreement, Employee shall not undertake any
employment or activity competitive with Employer's business, including without
limitation the inducement or solicitation of Employer's customers, if the
duties or work of, in connection with or related to such competitive
employment or activity would or might cause Employee to reveal or use any
Proprietary Information.
13. Injunctive Relief. Each of Employer and Employee hereby
acknowledge (a) the unique nature of the provisions set forth in the Paragraph
of this Agreement entitled "Confidentiality," "Proprietary Information," and
"Competition," (b) that Employer will suffer irreparable harm if Employee
breaches any of such provisions, and (c) that monetary damages will be
inadequate to compensate Employer for such breach. Therefore, if Employee
breaches any of such provisions, then Employer shall be entitled to injunctive
relief (in addition to any other remedies at law or equity) to enforce such
provisions.
14. Survival. The representations, warranties and covenants of
Employee in this Agreement shall survive any termination of this Agreement.
15. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
16. Further Assurances. Each party to this Agreement shall execute and
deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this
Agreement.
17. Venue and Jurisdiction. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
set forth in this Agreement.
18. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
19. Attorney's Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies) all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and
costs) relating to or arising out of (a) the Proceeding (whether or not the
Proceeding proceeds to judgment), and (b) any post-judgment or post-award
proceeding including, without limitation, one to enforce or collect any
judgment or award resulting from the Proceeding. All such judgments and
awards shall contain a specific provision for the recovery of all such
subsequently incurred costs, expenses, and actual attorney's fees.
20. Modification. This Agreement may be modified only by a contract
in writing executed by the party to this Agreement against whom enforcement of
the modification is sought.
21. Headings. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the
interpretation of this Agreement.
22. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
23. Interpretation. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa) and the word "person" includes a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other entity. The
terms "includes" and "including" do not imply any limitation. For purposes of
this Agreement, the term "day" means any calendar day and the term "business
day" means any calendar day other than a Saturday, Sunday or any other day
designated as a holiday under California Government Code Sections 6700-6701.
Any act permitted or required to be performed under this Agreement upon a
particular day which is not a business day may be performed on the next
business day with the same effect as if it had been performed upon the day
appointed. No remedy or election under this Agreement is exclusive, but
rather, to the extent permitted by applicable law, each such remedy and
election is cumulative with all other remedies at law or in equity.
24. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such
invalidity or unenforceability unless such provision or the application of
such provision is essential to this Agreement.
25. Successors-in-Interest and Assigns. Employee may not voluntarily
or by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Employer, which consent may be
withheld in Employer's sole and absolute discretion. Any such transfer in
violation of this paragraph is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and
assigns of each party to this Agreement.
26. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing.
Notice is duly given to another party upon: (a) hand delivery to the other
party, (b) receipt by the other party when sent by facsimile to the address
and number for such party set forth below (provided, however, that the Notice
is not effective unless a duplicate copy of the facsimile Notice is promptly
given by one of the other methods permitted under this paragraph), (c) three
business days after the Notice has been deposited with the United States
postal service as first class certified mail, return receipt requested,
postage prepaid, and addressed to the party as set forth below, or (d) the
next business day after the Notice has been deposited with a reputable
overnight delivery service, postage prepaid, addressed to the party as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery-service-
provider.
To: CODED COMMUNICATIONS CORPORATION
1939 Palomar Oaks Way
Carlsbad, CA 92009
(619) 438-5649 -- (Telecopy)
To: John A. Robinson, Jr.
1735 Kings Road
Vista, CA 92084
Each party shall make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
27. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default
or provision concerning the same or any other provision of this Agreement. No
delay or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A
consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
28. Drafting Ambiguities. Each party to this Agreement has reviewed
and revised this Agreement and has had the opportunity to have such party's
legal counsel review and revise this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
29. Third Party Beneficiaries. Nothing in this Agreement is intended
to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this
Agreement to another person specifically identified as a "Third Party
Beneficiary."
30. ARBITRATION OF DISPUTES. ANY CONTROVERSY OR CLAIM RELATING TO THIS
AGREEMENT SHALL BE SETTLED IN SAN DIEGO, CALIFORNIA BY ARBITRATION IN
ACCORDANCE WITH THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES
OF THE AMERICAN ARBITRATION ASSOCIATION, AND JUDGMENT UPON THE AWARD RENDERED
BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE
ARBITRATOR(S) SHALL NOT HAVE THE AUTHORITY TO AWARD PUNITIVE DAMAGES AGAINST
ANY PARTY(IES) TO THIS AGREEMENT.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE
DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW
YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE
COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THIS AGREEMENT TO NEUTRAL ARBITRATION.
Employer's Initials: ________ Employee's Initials: __________
31. Receipt of Copy. Employee hereby acknowledges that it has received
a signed copy of this Agreement.
EMPLOYEE:
_____________________________________
John A. Robinson, Jr.
EMPLOYER:
CODED COMMUNICATIONS CORPORATION,
a Delaware corporation
By: ___________________________________________
Gary Luick, President and Chief Executive Office
Exhibit A
Position Description
POSITION TILE: President of Decom Systems, Inc.
POSITION REPORTS TO: Chief Executive Officer.
FUNCTION: As President, shall have general active charge
and control over the business and affairs of
Decom Systems, Inc. (the "Corporation"), subject
to the Chief Executive Officer. Is responsible
for directing the organization with the
objective of generating the maximum profit and
return on invested capital over the long-term.
Represents the Corporation with its major
customers and suppliers.
ETHICS AND VALUES: Performs all job responsibilities and conducts all business
relationships, both internal and external, in
concert with the ethical standards of the
Corporation's stated policies and values.
RESPONSIBILITIES AND JOB DUTIES:
1. With the advice of senior members of management and other resources,
develops basic objectives and business plans; has these approved by the
Chief Executive Officer.
2. Ensures that corporate policies are properly interpreted and administered
by subordinates; reviews and approves proposed internal policies with the
Vice President of Administration or other applicable Corporate officers.
3. Directs the preparation of adequate plans for the future development and
growth of the Corporation, periodically presents such plans to the Chief
Executive Officer for approval.
4. At specific times, presents operation and capital expenditure budgets for
review and approval by the Chief Executive Officer.
5. With the senior members of management, analyzes operating results of the
Corporation and operating units relative to established objectives and
ensures that appropriate action is taken to correct unsatisfactory
conditions.
6. Establishes the specific limitation of authority of subordinates regarding
policies, contractual commitments, corporate assets, expenditures and
personnel actions, with the concurrence of the Vice President Finance.
A-1
EMPLOYMENT AGREEMENT
This Agreement is entered into as of August 1, 1996 between CODED
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and John
Wiggins, an individual ("Employee"), who agree as follows:
1. Hiring. Employer hereby hires Employee as, and Employee hereby
agrees to act as, Chief Operating Officer.
2. Duties. Employee shall faithfully, loyally and diligently perform
the following duties on a full-time basis: (a) devoting Employee's entire
productive time, ability and attention to the business of Employer, including
such tasks and duties consistent with the position of Chief Operating Officer
as shall be delegated, assigned or referred to Employee by the Chief Executive
Officer or President of the Employer; and (b) performing such other duties as
Employer shall from time to time specify that are consistent with the duties
normally performed by the Chief Operating Officer of Employer.
3. Term. The term of this Agreement shall be 3 years, commencing on
the date of this Agreement and, unless terminated earlier as set forth below,
this Agreement will expire on July 31, 1999 (the "Termination Date").
Notwithstanding the above, this Agreement shall automatically extend for a
period of one year at expiration and each year thereafter unless the Employer
or Employee provides the other party written notice not less than 120 days
prior to the expiration date, of its intent to terminate the Agreement.
4. Termination. At any time that Good Cause (as defined below)
exists or has arisen, Employer may, at its election, terminate this Agreement
by so notifying Employee in writing (the "Good Cause Notice"). From and after
the date of this Agreement, whether or not Good Cause exists or has arisen,
either Employer or Employee may, at either party's election, terminate this
Agreement by so notifying the other in writing (the "Termination Notice"), for
any reason whatsoever or for no reason. Upon the earlier of the Termination
Date, immediately after the giving of the Good Cause Notice, or 7 days after
the giving of the Termination Notice, (a) this Agreement shall be deemed
terminated, (b) neither Employee nor Employer shall have any further rights or
obligations under this Agreement except with respect (i) to Employer's
obligations as set out in paragraphs entitled "Termination Obligations" and
"Indemnification" of this Agreement and (ii) to Employee's obligations under
the paragraphs in this Agreement entitled "Confidentiality," "Proprietary
Information," and "Competition," which obligations shall survive any such
termination, and (c) Employee shall return to Employer all property belonging
to Employer, including without limitation all Confidential Material (as
defined below), promotional material, equipment, advertising information,
samples, price lists and similar items. For purposes of this Agreement, "Good
Cause" shall mean the existence or occurrence of any of the following:
4.1 If Employee is convicted of a felony.
4.2 If Employee commits gross mismanagement, as determined in good
faith by the Board of Directors (or an appointed committee of the Board of
Directors with at least one committee member a disinterested director) and CEO
of Employer, whose determination shall be final and binding.
4.3 The death of Employee.
4.4 If Employee becomes materially disabled to such an extent
that Employee is precluded from performing the duties set forth in this
Agreement for a period of 90 consecutive days, or 120 days in the aggregate
during any one-year period.
5. Compensation. Employee's annual compensation under this Agreement
shall be $125,000 ("Base Salary") payable at the rate of $2403.85 per week,
which payments shall be made in accordance with and at the same times as
Employer's ordinary payroll procedures. The Employee's Base Salary will be
reviewed annually by the CEO and Board of Directors of the Employer; however,
the Base Salary may not be reduced without the written consent of the
Employee.
6. Options. Employer acknowledges the prior grant to Employee of an
initial stock option (the "Options") to purchase 1,250,000 shares of
Employer's common stock (the "Option Shares") at a price per share equal to
$.30 per share. The Options are granted and subject to the terms and
conditions of the Employer's 1992 Stock Option Plan, as amended.
7. Bonus Plan. Annually, the Board of Directors shall establish an
Executive Bonus Plan pursuant to which the Employee may earn up to 30% of his
annual Base Salary. The terms and conditions of the Executive Bonus Plan will
be set annually by the Board of Directors and will be primarily based upon
fiscal year financial targets and goals such as revenue, gross margin,
operating income and cash flow.
8. Benefits. Employee shall be entitled to the following benefits
during the term of this Agreement:
8.1 Three weeks paid vacation for each one-year period during the
term of this Agreement (prorated for any partial year), to be taken at such
times that are consistent with Employer's standard vacation practices and
policies.
8.2 Reimbursement for reasonable business expenses incurred in
the proper performance of Employee's duties under this Agreement, in
accordance with Employer's standard practices and policy.
8.3 Inclusion in Employer's group medical and other insurance
plans for Employer's employees. Insurance premiums for dependent coverage
shall be paid by the Employer.
8.4 A monthly automobile allowance of $600 per month, in
accordance with employer's standard practices and policy.
8.5 All benefits generally available to other employees of
Employer.
8.6 A monthly housing allowance of $2800.00 in accordance with
Employer's standard practices and policy (the monthly automobile and housing
allowance are collectively the "Compensation Package").
8.7 Inclusion in Employer's term life insurance plan for
Executive Officers, with premiums paid by Employer, in accordance with
Employer's standard practices and policy.
9. Relocation Reimbursement. The Employee will be reimbursed by the
Employer for the reasonable out-of-pocket expenses incurred by Employee to
relocate from Atlanta, Georgia to San Diego, California.
9.1 Employee shall be reimbursed for reasonable closing costs,
estimated at approximately $3,000 for closing costs on the sale of Employee's
personal residence in Atlanta and approximately $11,000 for closing costs on
the purchase of Employee's personal residence in San Diego, California.
9.2 The Employee will be reimbursed for the reasonable out-of-
pocket expense incurred by Employee to relocate Employee's personal property
to San Diego, California, and for reasonable out-of-pocket travel expenses for
Employee's immediate family from Atlanta to San Diego.
9.3 In the event Employee is terminated by Employer within 12
months of the date of this Agreement for any reason other than Good Cause,
then Employer will reimburse Employee for all reasonable out-of-pocket
expenses incurred by Employee to relocate from San Diego, California to
Atlanta, Georgia. These expenses are to include the reasonable costs to move
Employee's personal belongings to Atlanta and the travel expenses of the
Employee's immediate family, and are to be comparable to the relocating
expense package offered to Employee on the move from Atlanta to San Diego.
10. Termination Obligations. In the event this Agreement is
terminated, the Employee will be entitled to the following termination
benefits.
10.1 If terminated by the Employee for any reason (except for the
employment of Employee by a competitor of the Employer) with 30 day notice to
Employer, then Employee is to receive a severance benefit of 25% of Base
Salary payable in a lump sum on the date of termination.
10.2 If terminated by the Employer for Good Cause (except if
termination is the result of Employee's committing a felony), then Employee is
to receive a severance benefit of 25% of Base Salary and Compensation Package,
payable in a lump sum at the date of termination.
10.3 If terminated by the Employer for any reason other than for
Good Cause, (or for Good Cause within 12 months following a change of control
(defined as a person, firm or entity through one or a series of transactions,
acquiring more than 40% of the Employer's common stock or purchasing
substantially all of the Employer's assets and/or business), then the Employee
is to receive a severance benefit of the greater of (i) 100% of annual Base
Salary and Compensation Package or (ii) the value of the remainder of this
Base Salary and Compensation Package payable under this Agreement; payable in
12 equal consecutive monthly installments on the date of termination.
10.4 If terminated by the Employer due to the disability of
Employee, as the term "disability" shall be defined under Employer's long-term
disability group insurance plan, then Employee is to receive a severance
benefit of 50% of annual Base Salary and Compensation Package, less any
amounts payable to Employee under any disability insurance plan maintained by
the Employer for the benefit of the Employee, payable in six (6) equal
consecutive monthly installments beginning on the date of termination.
10.5 If terminated by the Employer due to the death of the
Employee, then the Employee's beneficiaries are to receive a death benefit
equal to 50% of Employee's annual Base Salary and Compensation Package, less
any benefits paid to Employee's beneficiaries under any Executive Officer term
life insurance plan maintained by Employer for the benefit of Executive
Officers, payable in three (3) equal consecutive monthly installments
beginning on the date of termination.
10.6 If terminated for any reason by Employer, (except if
termination is the result of Employee's committing a felony), then Employer
shall cause to be paid the COBRA medical insurance premiums of Employee,
including dependent premiums if applicable, for a period of nine (9) months
beginning on the date of termination; if terminated by Employee for any
reason, (except for the employment of Employee by a competitor of the
Employer), then Employer shall cause to be paid Employee's monthly COBRA
medical insurance premiums (including dependent coverage) for a period of
three (3) months, beginning on the date of termination.
11. Confidentiality. Employee hereby acknowledges that Employer has
made (or may make) available to Employee certain customer lists, product
design information, know-how, performance standards future plans, business
strategies, financial information, processes and other confidential and/or
proprietary information of Employer or licensed to Employer, including without
limitation trade secrets and copyrighted materials (collectively, the
"Confidential Material"). Except as essential to Employee's obligations under
this Agreement, neither Employee nor any agent, employee, officer, or
independent contractor of or retained by Employee shall make any disclosure of
this Agreement, the terms of this Agreement, or any of the Confidential
Material. Except as essential to Employee's obligations under this Agreement,
neither Employee nor any agent, employee, officer, or independent contractor
of or retained by Employee shall make any duplication or other copy of any of
the Confidential Material. Immediately upon request from Employer, Employee
shall return to Employer all Confidential Material. Employee shall notify
each person to whom any disclosure is made that such disclosure is made in
confidence, that the Confidential Material shall be kept in confidence by such
person, and that such person shall be bound by the provisions of this
Paragraph.
11.1 Notwithstanding the above, Employee shall be required to
execute Employer's standard Employee Confidentiality Agreement. In the event
there are any contradictions between the Employee's obligations under the
Employer's Standard Confidentiality Agreement and Employee's obligations
hereunder, then the most restrictive provisions shall apply.
12. Proprietary Information. For purposes of this Agreement,
"Proprietary Information" shall mean any information, future plans, business
strategies, financial information, processes, observation, data, written
material, record, document, computer program, software, firmware, invention,
discovery, improvement, development, tool, machine, apparatus, appliance,
design, promotional idea, customer list, practice, process, formula, method,
technique, trade secret, product and/or research related to the actual or
anticipated research development, products, organization, business or finances
of Employer (or any of its affiliates). All right title and interest of every
kind and nature whatsoever in and to the Proprietary Information made,
discussed, developed, secured, obtained or learned by Employee during the term
of this Agreement, or the 60-day period immediately following termination of
this Agreement, shall be the sole and exclusive property of Employer for any
purposes or uses whatsoever, and shall be disclosed promptly by Employee to
Employer. The covenants set forth in the preceding sentence shall apply
regardless of whether any Proprietary Information is made, discovered,
developed, secured, obtained or learned (a) solely or jointly with others, (b)
during the usual hours of work or otherwise, (c) at the request and upon the
suggestion of Employer or otherwise,
or (d) with Employer's materials, tools, instruments or on Employer's premises
or otherwise. All Proprietary Information developed, created, invented,
devised, conceived or discovered by Employee that are subject to copyright
protection are explicitly considered by Employee and Employer to be works made
for hire to the extent permitted by law. Employee hereby assigns to Employer
all of Employee's right, title and interest in and to the Proprietary
Information. Employee hereby forever fully releases and discharges Employer,
any affiliates of Employer and their respective officers, directors and
employees, from and against any and all claims, demands, damages, liabilities,
costs and expenses of Employee arising out of, or relating to, any Proprietary
Information. Employee shall execute any documents and take any action
Employer may deem necessary or appropriate to effectuate the provisions of
this Agreement, including without limitation assisting Employer in obtaining
and/or maintaining patents, copyrights or similar rights to any Proprietary
Information assigned to Employer, if Employer, in its sole discretion,
requests such assistance. Employee shall comply with any reasonable rules
established from time to time by Employer for the protection of the
confidentiality of any Proprietary Information. Employee irrevocably appoints
the CEO or President of Employer to act as Employee's agent and attorney-in-
fact to perform all acts necessary to obtain and/or maintain patents,
copyrights and similar rights to any Proprietary Information assigned by
Employee to Employer under this Agreement if (a) Employee refuses to perform
those acts, or (b) is unavailable, within the meaning of any applicable laws.
Employee acknowledges that the grant of the foregoing power of attorney is
coupled with an interest and shall survive the death or disability of
Employee. Employee shall promptly disclose to Employer in confidence (a) all
Proprietary Information that Employee creates during the term of this
Agreement, and (b) all patient applications filed by Employee within one year
after termination of this Agreement. Any application for a patient copyright
registration or similar right filed by Employee within one year after
termination of this Agreement shall be presumed to relate to Proprietary
Information created by Employee during the term of this Agreement, unless
Employee can prove otherwise. Nothing contained in this Agreement shall be
construed to preclude Employer from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to Employer under this Agreement. Employer, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Employee
shall have no authority to exercise any rights or privileges with respect to
the Proprietary Information owned by or assigned to Employer under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.
13. Competition. During the term of this Agreement, Employee shall
not own a 5% or more interest in, operate or participate in, or be connected
as an officer, director, employee, agent, independent contractor, partner,
shareholder or principal of any business entity or person producing,
designing, providing, soliciting orders for selling, distributing, or
marketing products, goods, equipment and/or services which compete with
Employer's products, goods, equipment and/or services.
13.1 Employee, except within the course of the performance of his
duties hereunder, shall not at any time while he is in the employ of Employer
or any of its parents, subsidiaries or affiliates, and for a period of six (6)
months thereafter (i) employ any individual who was employed by
Employer or any of its parents, subsidiaries or affiliates, at any time during
the period of six (6) months prior to the date Employee intends to employ such
person or (ii) in any way cause, influence, or participate in the employment
of any individual which would be contrary to Employer's best interests, as
determined by the Employer, in its sole discretion.
14. Injunctive Relief. Each of Employer and Employee hereby
acknowledge (a) the unique nature of the provisions set forth in the Paragraph
of this Agreement entitled "Confidentiality," "Proprietary Information," and
"Competition," (b) that Employer will suffer irreparable harm if Employee
breaches any of such provisions, and (c) that monetary damages will be
inadequate to compensate Employer for such breach. Therefore, if Employee
breaches any of such provisions, then Employer shall be entitled to injunctive
relief (in addition to any other remedies at law or equity) to enforce such
provisions.
15. Survival. The representations, warranties and covenants of
Employee in this Agreement shall survive any termination of this Agreement.
16. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
17. Further Assurances. Each party to this Agreement shall execute
and deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this
Agreement.
18. Venue and Jurisdiction. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
set forth in this Agreement.
19. Arbitration. Any controversy arising between the Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement shall, on the written request of
either party served on the other, be submitted to arbitration. Any
arbitration arising under this Agreement shall comply with the American
Arbitration Association's Commercial Arbitration Rules and shall be final and
conclusive upon both parties. Any judgment upon the award may be entered in
any court having jurisdiction thereof.
20. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
21. Attorney's Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies): all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and
costs) relating to or
arising out of (a) the Proceeding (whether or not the Proceeding proceeds to
judgment), and (b) any post-judgment or post-award proceeding including,
without limitation, one to enforce or collect any judgment or award resulting
from the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and actual attorney's fees.
22. Indemnification. The Employer shall indemnify the Employee, if the
Employee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Employer), by reason of the fact that he is or was a director,
officer, employee or agent of the Employer, or is or was a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Employer, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not of
itself, create a presumption that the Employer did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Employer, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
22.1 Actions or Suits by or in the Right of the Employer. The
Employer shall indemnify the Employee if the Employee, was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Employer to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Employer or is or was serving at the request of the Employer as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against and all expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Employer and except that no indemnification shall be made in respect of any
claim, issue or matter as to which the Employee shall have been adjudged to be
liable to the Employer unless and only to the extent that the Court of Chancery
for the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the Employee is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
22.2 Persons Successful. To the extent that the Employee has been
successful on the merits or otherwise in defense or any action, suit or
proceeding referred to herein this Agreement, or in defense of any claim, issue
or matter therein, he shall be indemnified against any and all expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
22.3 Advance Payment. Expenses incurred by the Employee defending
a civil or criminal action, suit or proceeding shall be paid by the Employer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the Employee to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Employer pursuant to this Article.
22.4 Other Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article shall not be deemed exclusive of any other rights to which the Employee
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in any
other capacity while holding such office.
22.5 Insurance. The Employer may purchase and maintain insurance
on behalf of the Employee who is or was a director, officer, employee or agent
of the Employer, or is or was serving at the request of the Employer as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Employer would have the power to indemnify him against such
liability under the provisions of this Article or of Title 8, Section 145, of
the General Corporation Law of the State of Delaware.
22.6 Persons Ceasing to be a Director or Officer. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Article unless otherwise provided when authorized or ratified, shall
survive the termination of this Agreement, whether upon the expiration of the
term or otherwise and shall continue as to the Employee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of the Employee.
23. Modification. This Agreement may be modified only by a contract
in writing executed by the party to this Agreement against whom enforcement of
the modification is sought.
24. Headings. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the
interpretation of this Agreement.
25. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
26. Interpretation. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa) and the word "person" includes a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other entity. The
terms "includes" and "including" do not imply any limitation. For purposes of
this Agreement, the term "day" means any calendar day and the term "business
day" means any calendar day other than a Saturday, Sunday or any other day
designated as a holiday under California Government Code Sections 6700-6701.
Any act permitted or required to be performed under this Agreement upon a
particular day which is not a business day may be performed on the next
business day with the same effect as if it had been performed upon the day
appointed. No remedy or election under this Agreement is exclusive, but
rather, to the extent permitted by applicable law, each such remedy and
election is cumulative with all other remedies at law or in equity.
27. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such
invalidity or unenforceability (unless such provision or the application of
such provision is essential to this agreement).
28. Successors-in-Interest and Assigns. Employee may not voluntarily
or by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Employer, which consent may be
withheld in Employer's sole and absolute discretion. Any such transfer in
violation of this paragraph is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and
assigns of each party to this Agreement.
29. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing.
Notice is duly given to another party upon: (a) hand delivery to the other
party, (b) receipt by the other party when sent by facsimile to the address
and number for such party set forth below (provided, however, that the Notice
is not effective unless a duplicate copy of the facsimile Notice is promptly
given by one of the other methods permitted under this paragraph), (c) three
business days after the Notice has been deposited with the United States
postal service as first class certified mail, return receipt requested,
postage prepaid, and addressed to the party as set forth below, or (d) the
next business day after the Notice has been deposited with a reputable
overnight delivery service, postage prepaid, addressed to the party as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery-service-
provider.
To: CODED COMMUNICATIONS CORPORATION
1939 Palomar Oaks Way
Carlsbad, CA 92009
Telephone: (619) 438-5649
Fax: (619) 438-5649)
To: John Wiggins
12899 Harwick Lane
San Diego, CA 92130
Each party shall make a reasonable good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
30. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default
or provision concerning the same or any other provision of this Agreement. No
delay or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A
consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
31. Drafting Ambiguities. Each party to this Agreement has reviewed
and revised this Agreement and has had the opportunity to have such party's
legal counsel review and revise this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
32. Third Party Beneficiaries. Nothing in this Agreement is intended
to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this
Agreement to another person specifically identified as a "Third Party
Beneficiary."
33. Receipt of Copy. Employee hereby acknowledges that it has
received a signed copy of this Agreement.
34. Guarantee. The obligations to Employee herein shall be guaranteed
and become the joint and severable obligations of the Employer, its parent
corporation (if any), its affiliated corporations and any corporation or
entity that owns or controls, direct or indirectly, more than 50 percent of
the Employer's common stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INDIVIDUAL:
______________________________
John Wiggins
CODED COMMUNICATIONS CORPORATION,
a Delaware corporation
By:_____________________________________
John A. Robinson, Jr.
President and CEO
APPROVED:
_______________________________________
Ing. Hugo R. Camou
14
EMPLOYMENT AGREEMENT
This Agreement is entered into as of September 23, 1996 between CODED
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Richard
Carrine, an individual ("Employee"), who agree as follows:
1. Hiring. Employer hereby hires Employee as, and Employee hereby
agrees to act as, Vice President Manufacturing.
2. Duties. Employee shall faithfully, loyally and diligently perform
the following duties on a full-time basis: (a) devoting Employee's entire
productive time, ability and attention to the business of Employer, including
such tasks and duties consistent with the position of Vice President
Manufacturing as shall be delegated, assigned or referred to Employee by the
Chief Executive Officer or President of the Employer; and (b) performing such
other duties as Employer shall from time to time specify that are consistent
with the duties normally performed by the Vice President Manufacturing of
Employer.
3. Term. The term of this Agreement shall be 3 years, commencing on
the date of this Agreement and, unless terminated earlier as set forth below,
this Agreement will expire on July 31, 1999 (the "Termination Date").
Notwithstanding the above, this Agreement shall automatically extend for a
period of one year at expiration and each year thereafter unless the Employer
or Employee provides the other party written notice not less than 120 days
prior to the expiration date, of its intent to terminate the Agreement.
4. Termination. At any time that Good Cause (as defined below)
exists or has arisen, Employer may, at its election, terminate this Agreement
by so notifying Employee in writing (the "Good Cause Notice"). From and after
the date of this Agreement, whether or not Good Cause exists or has arisen,
either Employer or Employee may, at either party's election, terminate this
Agreement by so notifying the other in writing (the "Termination Notice"), for
any reason whatsoever or for no reason. Upon the earlier of the Termination
Date, immediately after the giving of the Good Cause Notice, or 7 days after
the giving of the Termination Notice, (a) this Agreement shall be deemed
terminated, (b) neither Employee nor Employer shall have any further rights or
obligations under this Agreement except with respect (i) to Employer's
obligations as set out in paragraphs entitled "Termination Obligations" and
"Indemnification" of this Agreement and (ii) to Employee's obligations under
the paragraphs in this Agreement entitled "Confidentiality," "Proprietary
Information," and "Competition," which obligations shall survive any such
termination, and (c) Employee shall return to Employer all property belonging
to Employer, including without limitation all Confidential Material (as
defined below), promotional material, equipment, advertising information,
samples, price lists and similar items. For purposes of this Agreement, "Good
Cause" shall mean the existence or occurrence of any of the following:
4.1 If Employee is convicted of a felony.
4.2 If Employee commits gross mismanagement, as determined in good
faith by the Board of Directors (or an appointed committee of the Board of
Directors with at least one committee member a disinterested director) and CEO
of Employer, whose determination shall be final and binding.
4.3 The death of Employee.
4.4 If Employee becomes materially disabled to such an extent
that Employee is precluded from performing the duties set forth in this
Agreement for a period of 90 consecutive days, or 120 days in the aggregate
during any one-year period.
5. Compensation. Employee's annual compensation under this Agreement
shall be $110,000 ("Base Salary") payable at the rate of $2,115.39 per week,
which payments shall be made in accordance with and at the same times as
Employer's ordinary payroll procedures. The Employee's Base Salary will be
reviewed annually by the CEO and President of the Employer; however, the Base
Salary may not be reduced without the written consent of the Employee.
6. Options. Employer acknowledges the prior grant to Employee of an
initial stock option (the "Options") to purchase 800,000 shares of Employer's
common stock (the "Option Shares") at a price per share equal to $.30 per
share. The Options are granted and subject to the terms and conditions of the
Employer's 1992 Stock Option Plan, as amended.
7. Bonus Plan. Annually, the Board of Directors shall establish an
Executive Bonus Plan pursuant to which the Employee may earn up to 30% of his
annual Base Salary. The terms and conditions of the Executive Bonus Plan will
be set annually by the Board of Directors and will be primarily based upon
fiscal year financial targets and goals such as revenue, gross margin,
operating income and cash flow.
8. Benefits. Employee shall be entitled to the following benefits
during the term of this Agreement:
8.1 Four weeks paid vacation for each one-year period during the
term of this Agreement (prorated for any partial year), to be taken at such
times that are consistent with Employer's standard vacation practices and
policies.
8.2 Reimbursement for reasonable business expenses incurred in
the proper performance of Employee's duties under this Agreement, in
accordance with Employer's standard practices and policy.
8.3 Inclusion in Employer's group medical and other insurance
plans for Employer's employees. Insurance premiums for dependent coverage
shall be paid by the Employer.
8.4 A monthly automobile allowance of $500 per month (the
"Compensation Package"), in accordance with employer's standard practices and
policy.
8.5 All benefits generally available to other employees of
Employer.
8.6 Inclusion in Employer's term life insurance plan for
Executive Officers, with premiums paid by Employer, in accordance with
Employer's standard practices and policy.
9. One-Time Bonus. In recognition of the Employee's performance,
initiative and contributions to the restructuring and reorganization of the
Company in 1995 and 1996, the Company shall pay to the Employee a one-time
bonus of $25,000. This bonus will be paid by the Company in a lump sum not
later than 30 days from the date of this Agreement.
10. Termination Obligations. In the event this Agreement is
terminated, the Employee will be entitled to the following termination
benefits.
10.1 If terminated by the Employee for any reason (except for the
employment of Employee by a competitor of the Employer) with 30 day notice to
Employer, then Employee is to receive a severance benefit of 25% of Base
Salary payable in a lump sum on the date of termination.
10.2 If terminated by the Employer for Good Cause (except if
termination is the result of Employee's committing a felony), then Employee is
to receive a severance benefit of 25% of Base Salary and Compensation Package,
payable in a lump sum at the date of termination.
10.3 If terminated by the Employer for any reason other than for
Good Cause, or for Good Cause within 12 months of a change of control (defined
as a person, firm or entity, through one or a series of transactions,
acquiring more than 40% of the Employer's common stock or purchasing
substantially all of the Employer's assets and/or business), then the Employee
is to receive a severance benefit of the greater of (i) 100% of annual Base
Salary and Compensation Package or (ii) the value of the remainder of this
Base Salary and Compensation Package payable under this Agreement; payable in
12 equal consecutive monthly installments on the date of termination.
10.4 If terminated by the Employer due to the disability of
Employee, as the term "disability" shall be defined under Employer's long-term
disability group insurance plan, then Employee is to receive a severance
benefit of 50% of annual Base Salary and Compensation Package, less any
amounts payable to Employee under any disability insurance plan maintained by
the Employer for the benefit of the Employee, payable in six (6) equal
consecutive monthly installments beginning on the date of termination.
10.5 If terminated by the Employer due to the death of the
Employee, then the Employee's beneficiaries are to receive a death benefit
equal to 50% of Employee's annual Base Salary, less any benefits paid to
Employee's beneficiaries under any Executive Officer term life insurance plan
maintained by Employer for the benefit of Executive Officers, payable in three
(3) equal consecutive monthly installments beginning on the date of
termination.
10.6 If terminated for any reason by Employer, 6 (except if
termination is the result of Employee's committing a felony), then Employer
shall cause to be paid the COBRA medical insurance premiums of Employee,
including dependent premiums if applicable, for a period of nine (9) months
beginning on the date of termination; if terminated by Employee for any
reason, (except for the employment of Employee by a competitor of the
Employer), then Employer shall cause to be paid Employee's monthly COBRA
medical insurance premiums (including dependent coverage) for a period of
three (3) months, beginning on the date of termination.
11. Confidentiality. Employee hereby acknowledges that Employer has
made (or may make) available to Employee certain customer lists, product
design information, know-how, performance standards future plans, business
strategies, financial information, processes and other confidential and/or
proprietary information of Employer or licensed to Employer, including without
limitation trade secrets and copyrighted materials (collectively, the
"Confidential Material"). Except as essential to Employee's obligations under
this Agreement, neither Employee nor any agent, employee, officer, or
independent contractor of or retained by Employee shall make any disclosure of
this Agreement, the terms of this Agreement, or any of the Confidential
Material. Except as essential to Employee's obligations under this Agreement,
neither Employee nor any agent, employee, officer, or independent contractor
of or retained by Employee shall make any duplication or other copy of any of
the Confidential Material. Immediately upon request from Employer, Employee
shall return to Employer all Confidential Material. Employee shall notify
each person to whom any disclosure is made that such disclosure is made in
confidence, that the Confidential Material shall be kept in confidence by such
person, and that such person shall be bound by the provisions of this
Paragraph.
11.1 Notwithstanding the above, Employee shall be required to
execute Employer's standard Employee Confidentiality Agreement. In the event
there are any contradictions between the Employee's obligations under the
Employer's Standard Confidentiality Agreement and Employee's obligations
hereunder, then the most restrictive provisions shall apply.
12. Proprietary Information. For purposes of this Agreement,
"Proprietary Information" shall mean any information, future plans, business
strategies, financial information, processes, observation, data, written
material, record, document, computer program, software, firmware, invention,
discovery, improvement, development, tool, machine, apparatus, appliance,
design, promotional idea, customer list, practice, process, formula, method,
technique, trade secret, product and/or research related to the actual or
anticipated research development, products, organization, business or finances
of Employer (or any of its affiliates). All right title and interest of every
kind and nature whatsoever in and to the Proprietary Information made,
discussed, developed, secured, obtained or learned by Employee during the term
of this Agreement, or the 60-day period immediately following termination of
this Agreement, shall be the sole and exclusive property of Employer for any
purposes or uses whatsoever, and shall be disclosed promptly by Employee to
Employer. The covenants set forth in the preceding sentence shall apply
regardless of whether any Proprietary Information is made, discovered,
developed, secured, obtained or learned (a) solely or jointly with others, (b)
during the usual hours of work or otherwise, (c) at the request and upon the
suggestion of Employer or otherwise, or (d) with Employer's materials, tools,
instruments or on Employer's premises or otherwise. All Proprietary
Information developed, created, invented, devised, conceived or discovered by
Employee that are subject to copyright protection are explicitly considered by
Employee and Employer to be works made for hire to the extent permitted by
law. Employee hereby assigns to Employer all of Employee's right, title and
interest in and to the Proprietary Information. Employee hereby forever fully
releases and discharges Employer, any affiliates of Employer and their
respective officers, directors and employees, from and against any and all
claims, demands, damages, liabilities, costs and expenses of Employee arising
out of, or relating to, any Proprietary Information. Employee shall
execute any documents and take any action Employer may deem necessary or
appropriate to effectuate the provisions of this Agreement, including without
limitation assisting Employer in obtaining and/or maintaining patents,
copyrights or similar rights to any Proprietary Information assigned to
Employer, if Employer, in its sole discretion, requests such assistance.
Employee shall comply with any reasonable rules established from time to time
by Employer for the protection of the confidentiality of any Proprietary
Information. Employee irrevocably appoints the CEO or President of Employer
to act as Employee's agent and attorney-in-fact to perform all acts necessary
to obtain and/or maintain patents, copyrights and similar rights to any
Proprietary Information assigned by Employee to Employer under this Agreement
if (a) Employee refuses to perform those acts, or (b) is unavailable, within
the meaning of any applicable laws. Employee acknowledges that the grant of
the foregoing power of attorney is coupled with an interest and shall survive
the death or disability of Employee. Employee shall promptly disclose to
Employer in confidence (a) all Proprietary Information that Employee creates
during the term of this Agreement, and (b) all patient applications filed by
Employee within one year after termination of this Agreement. Any application
for a patient copyright registration or similar right filed by Employee within
one year after termination of this Agreement shall be presumed to relate to
Proprietary Information created by Employee during the term of this Agreement,
unless Employee can prove otherwise. Nothing contained in this Agreement
shall be construed to preclude Employer from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to Employer under this Agreement. Employer, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Employee
shall have no authority to exercise any rights or privileges with respect to
the Proprietary Information owned by or assigned to Employer under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.
13. Competition. During the term of this Agreement, Employee shall
not own a 5% or more interest in, operate or participate in, or be connected
as an officer, director, employee, agent, independent contractor, partner,
shareholder or principal of any business entity or person producing,
designing, providing, soliciting orders for selling, distributing, or
marketing products, goods, equipment and/or services which compete with
Employer's products, goods, equipment and/or services.
13.1 Employee, except within the course of the performance of his
duties hereunder, shall not at any time while he is in the employ of Employer
or any of its parents, subsidiaries or affiliates, and for a period of six (6)
months thereafter (i) employ any individual who was employed by Employer or
any of its parents, subsidiaries or affiliates, at any time during the period
of six (6) months prior to the date Employee intends to employ such person or
(ii) in any way cause, influence, or participate in the employment of any
individual which would be contrary to Employer's best interests, as determined
by the Employer, in its sole discretion.
14. Injunctive Relief. Each of Employer and Employee hereby
acknowledge (a) the unique nature of the provisions set forth in the Paragraph
of this Agreement entitled "Confidentiality," "Proprietary Information," and
"Competition," (b) that Employer will suffer irreparable harm if Employee
breaches any of such provisions, and (c) that monetary damages will be
inadequate to compensate Employer for such breach. Therefore, if Employee
breaches any of such provisions, then Employer shall be entitled to injunctive
relief (in addition to any other remedies at law or equity) to enforce such
provisions.
15. Survival. The representations, warranties and covenants of
Employee in this Agreement shall survive any termination of this Agreement.
16. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
17. Further Assurances. Each party to this Agreement shall execute
and deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this
Agreement.
18. Venue and Jurisdiction. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
set forth in this Agreement.
19. Arbitration. Any controversy arising between the Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement shall, on the written request of
either party served on the other, be submitted to arbitration. Any
arbitration arising under this Agreement shall comply with the American
Arbitration Association's Commercial Arbitration Rules and shall be final and
conclusive upon both parties. Any judgment upon the award may be entered in
any court having jurisdiction thereof.
20. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
21. Attorney's Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies): all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and
costs) relating to or arising out of (a) the Proceeding (whether or not the
Proceeding proceeds to judgment), and (b) any post-judgment or post-award
proceeding including, without limitation, one to enforce or collect any
judgment or award resulting from the Proceeding. All such judgments and
awards shall contain a specific provision for the recovery of all such
subsequently incurred costs, expenses, and actual attorney's fees.
22. Indemnification. The Employer shall indemnify the Employee, if the
Employee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Employer), by reason of the fact that he is or was a director,
officer, employee or agent of the Employer, or is or was a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Employer, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not of
itself, create a presumption that the Employer did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Employer, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
22.1 Actions or Suits by or in the Right of the Employer. The
Employer shall indemnify the Employee if the Employee, was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Employer to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Employer or is or was serving at the request of the Employer as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against and all expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Employer and except that no indemnification shall be made in respect of any
claim, issue or matter as to which the Employee shall have been adjudged to be
liable to the Employer unless and only to the extent that the Court of Chancery
for the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the Employee is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
22.2 Persons Successful. To the extent that the Employee has been
successful on the merits or otherwise in defense or any action, suit or
proceeding referred to herein this Agreement, or in defense of any claim, issue
or matter therein, he shall be indemnified against any and all expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
22.3 Advance Payment. Expenses incurred by the Employee defending
a civil or criminal action, suit or proceeding shall be paid by the Employer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the Employee to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Employer pursuant to this Article.
22.4 Other Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article shall not be deemed exclusive of any other rights to which the Employee
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in any
other capacity while holding such office.
22.5 Insurance. The Employer may purchase and maintain insurance
on behalf of the Employee who is or was a director, officer, employee or agent
of the Employer, or is or was serving at the request of the Employer as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Employer would have the power to indemnify him against such
liability under the provisions of this Article or of Title 8, Section 145, of
the General Corporation Law of the State of Delaware.
22.6 Persons Ceasing to be a Director or Officer. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Article unless otherwise provided when authorized or ratified, shall
survive the termination of this Agreement, whether upon the expiration of the
term or otherwise and shall continue as to the Employee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of the Employee.
23. Modification. This Agreement may be modified only by a contract
in writing executed by the party to this Agreement against whom enforcement of
the modification is sought.
24. Headings. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the
interpretation of this Agreement.
25. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
26. Interpretation. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa) and the word "person" includes a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other entity. The
terms "includes" and "including" do not imply any limitation. For purposes of
this Agreement, the term "day" means any calendar day and the term "business
day" means any calendar day other than a Saturday, Sunday or any other day
designated as a holiday under California Government Code Sections 6700-6701.
Any act permitted or required to be performed under this Agreement upon a
particular day which is not a business day may be performed on the next
business day with the same effect as if it had been performed upon the day
appointed. No remedy or election under this Agreement is exclusive, but
rather, to the extent permitted by applicable law, each such remedy and
election is cumulative with all other remedies at law or in equity.
27. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such
invalidity or unenforceability (unless such provision or the application of
such provision is essential to this agreement).
28. Successors-in-Interest and Assigns. Employee may not voluntarily
or by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Employer, which consent may be
withheld in Employer's sole and absolute discretion. Any such transfer in
violation of this paragraph is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and
assigns of each party to this Agreement.
29. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing.
Notice is duly given to another party upon: (a) hand delivery to the other
party, (b) receipt by the other party when sent by facsimile to the address
and number for such party set forth below (provided, however, that the Notice
is not effective unless a duplicate copy of the facsimile Notice is promptly
given by one of the other methods permitted under this paragraph), (c) three
business days after the Notice has been deposited with the United States
postal service as first class certified mail, return receipt requested,
postage prepaid, and addressed to the party as set forth below, or (d) the
next business day after the Notice has been deposited with a reputable
overnight delivery service, postage prepaid, addressed to the party as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery-service-
provider.
To: CODED COMMUNICATIONS CORPORATION
1939 Palomar Oaks Way
Carlsbad, CA 92009
Telephone: (619) 438-5649
Fax: (619) 438-5649)
To: Richard Carrine
951 Hawthorne Court
San Marcos, CA 92069
Each party shall make a reasonable good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
30. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default
or provision concerning the same or any other provision of this Agreement. No
delay or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A
consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
31. Drafting Ambiguities. Each party to this Agreement has reviewed
and revised this Agreement and has had the opportunity to have such party's
legal counsel review and revise this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
32. Third Party Beneficiaries. Nothing in this Agreement is intended
to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this
Agreement to another person specifically identified as a "Third Party
Beneficiary."
33. Receipt of Copy. Employee hereby acknowledges that it has
received a signed copy of this Agreement.
34. Guarantee. The obligations to Employee herein shall be guaranteed
and become the joint and severable obligations of the Employer, its parent
corporation (if any), its affiliated corporations and any corporation or
entity that owns or controls, direct or indirectly, more than 50 percent of
the Employer's common stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INDIVIDUAL:
______________________________
Richard Carrine
CODED COMMUNICATIONS CORPORATION,
a Delaware corporation
By:_____________________________________
John A. Robinson, Jr.
President and CEO
APPROVED:
_______________________________________
Ing. Hugo R. Camou
Chairman of the Board
11
EMPLOYMENT AGREEMENT
This Agreement is entered into as of September 23, 1996 between CODED
COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Steven
Borgardt, an individual ("Employee"), who agree as follows:
1. Hiring. Employer hereby hires Employee as, and Employee hereby
agrees to act as, Vice President Finance and Chief Financial Officer ("CFO").
2. Duties. Employee shall faithfully, loyally and diligently perform
the following duties on a full-time basis: (a) devoting Employee's entire
productive time, ability and attention to the business of Employer, including
such tasks and duties consistent with the position of Vice President Finance
and CFO as shall be delegated, assigned or referred to Employee by the Chief
Executive Officer of the Employer; and (b) performing such other duties as
Employer shall from time to time specify that are consistent with the duties
normally performed by the Vice President Finance and CFO.
3. Term. The term of this Agreement shall be 3 years, commencing on
the date of this Agreement and, unless terminated earlier as set forth below,
this Agreement will expire on August 30, 1999 (the "Termination Date").
Notwithstanding the above, this Agreement shall automatically extend for a
period of one year at expiration and each year thereafter unless the Employer
or Employee provides the other party written notice not less than 120 days
prior to the expiration date, of its intent to terminate the Agreement.
4. Termination. At any time that Good Cause (as defined below)
exists or has arisen, Employer may, at its election, terminate this Agreement
by so notifying Employee in writing (the "Good Cause Notice"). From and after
the date of this Agreement, whether or not Good Cause exists or has arisen,
either Employer or Employee may, at either party's election, terminate this
Agreement by so notifying the other in writing (the "Termination Notice"), for
any reason whatsoever or for no reason. Upon the earlier of the Termination
Date, immediately after the giving of the Good Cause Notice, or 7 days after
the giving of the Termination Notice, (a) this Agreement shall be deemed
terminated, (b) neither Employee nor Employer shall have any further rights or
obligations under this Agreement except with respect (i) to Employer's
obligations as set out in paragraphs entitled "Termination Obligations" and
"Indemnification" of this Agreement and (ii) to Employee's obligations under
the paragraphs in this Agreement entitled "Confidentiality," "Proprietary
Information," and "Competition," which obligations shall survive any such
termination, and (c) Employee shall return to Employer all property belonging
to Employer, including without limitation all Confidential Material (as
defined below), promotional material, equipment, advertising information,
samples, price lists and similar items. For purposes of this Agreement, "Good
Cause" shall mean the existence or occurrence of any of the following:
4.1 If Employee is convicted of a felony.
4.2 If Employee commits gross mismanagement, as determined in good
faith by the Board of Directors (or an appointed committee of the Board of
Directors with at least one committee member a disinterested director) and CEO
of Employer, whose determination shall be final and binding.
4.3 The death of Employee.
4.4 If Employee becomes materially disabled to such an extent
that Employee is precluded from performing the duties set forth in this
Agreement for a period of 90 consecutive days, or 120 days in the aggregate
during any one-year period.
5. Compensation. Employee's annual compensation under this Agreement
shall be $125,000 ("Base Salary") payable at the rate of $2,403.85 per week,
which payments shall be made in accordance with and at the same times as
Employer's ordinary payroll procedures. The Employee's Base Salary will be
reviewed annually by the CEO and Board of Directors of the Employer; however,
the Base Salary may not be reduced without the written consent of the
Employee.
6. Options. Employer acknowledges the prior grant to Employee of an
initial stock option (the "Options") to purchase 800,000 shares of Employer's
common stock (the "Option Shares") at a price per share equal to $.30 per
share. The Options are granted and subject to the terms and conditions of the
Employer's 1992 Stock Option Plan, as amended.
7. Bonus Plan. Annually, the Board of Directors shall establish an
Executive Bonus Plan pursuant to which the Employee may earn up to 30% of his
annual Base Salary. The terms and conditions of the Executive Bonus Plan will
be set annually by the Board of Directors and will be primarily based upon
fiscal year financial targets and goals such as revenue, gross margin,
operating income and cash flow.
8. Benefits. Employee shall be entitled to the following benefits
during the term of this Agreement:
8.1 Four weeks paid vacation for each one-year period during the
term of this Agreement (prorated for any partial year), to be taken at such
times that are consistent with Employer's standard vacation practices and
policies.
8.2 Reimbursement for reasonable business expenses incurred in
the proper performance of Employee's duties under this Agreement, in
accordance with Employer's standard practices and policy.
8.3 Inclusion in Employer's group medical and other insurance
plans for Employer's employees. Insurance premiums for dependent coverage
shall be paid by the Employer.
8.4 A monthly automobile allowance of $500 per month, in
accordance with employer's standard practices and policy.
8.5 All benefits generally available to other employees of
Employer.
8.6 An annual non-accountable expense allowance of $6,000,
payable $3,000 on each and every March 1 and August 30 during the term of this
Agreement (the auto and expense allowances are collectively the "Compensation
Package").
8.7 Inclusion in Employer's term life insurance plan for
Executive Officers, with premiums paid by Employer, in accordance with
Employer's standard practices and policy.
9. One Time Bonus. In recognition of the Employee's performance,
initiative and contributions to the restructuring and reorganization of the
Company in 1995 and 1996, the Company shall pay to the Employee a one-time
bonus of $25,000. This bonus will be paid by the Company in a lump sum not
later than 30 days from the date of this Agreement.
10. Termination Obligations. In the event this Agreement is
terminated, the Employee will be entitled to the following termination
benefits.
10.1 If terminated by the Employee for any reason (except for the
employment of Employee by a competitor of the Employer) with 30 day notice to
Employer, then Employee is to receive a severance benefit of 25% of Base
Salary payable in a lump sum on the date of termination.
10.2 If terminated by the Employer for Good Cause (except if
termination is the result of Employee's committing a felony), then Employee is
to receive a severance benefit of 25% of Base Salary and Compensation Package,
payable in a lump sum at the date of termination.
10.3 If terminated by the Employer for any reason other than for
Good Cause, or for Good Cause within 12 months following a change of control
(defined as a person, firm or entity, through one or a series of transactions,
acquiring more than 40% of the Employer's common stock or purchasing
substantially all of the Employer's assets and/or business), then the Employee
is to receive a severance benefit of the greater of (i) 100% of annual Base
Salary and Compensation Package or (ii) the value of the remainder of the Base
Salary and Compensation Package payable under this Agreement; payable in 12
equal consecutive monthly installments beginning at the date of termination.
10.4 If terminated by the Employer due to the disability of
Employee, as the term "disability" shall be defined under Employer's long-term
disability group insurance plan, then Employee is to receive a severance
benefit of 50% of annual Base Salary and Compensation Package, less any
amounts payable to Employee under any disability insurance plan maintained by
the Employer for the benefit of the Employee, payable in six (6) equal
consecutive monthly installments beginning on the date of termination.
10.5 If terminated by the Employer due to the death of the
Employee, then the Employee's beneficiaries are to receive a death benefit
equal to 50% of Employee's annual Base Salary, less any benefits paid to
Employee's beneficiaries under any Executive Officer term life insurance plan
maintained by Employer for the benefit of Executive Officers, payable in three
(3) equal consecutive monthly installments beginning on the date of
termination.
10.6 If terminated for any reason by Employer (except if
termination is the result of Employee's committing a felony), then Employer
shall cause to be paid the COBRA medical insurance premiums of Employee,
including dependent premiums if applicable, for a period of nine (9) months
beginning on the date of termination; if terminated by Employee for any reason
(except for the employment of Employee by a competitor of the Employer), then
Employer shall cause to be paid Employee's monthly COBRA medical insurance
premiums (including dependent coverage) for a period of three (3) months,
beginning on the date of termination.
11. Confidentiality. Employee hereby acknowledges that Employer has
made (or may make) available to Employee certain customer lists, product
design information, know-how, performance standards, future plans, business
strategies, financial information, processes and other confidential and/or
proprietary information of Employer or licensed to Employer, including without
limitation trade secrets and copyrighted materials (collectively, the
"Confidential Material"). Except as essential to Employee's obligations under
this Agreement, neither Employee nor any agent, employee, officer, or
independent contractor of or retained by Employee shall make any disclosure of
this Agreement, the terms of this Agreement, or any of the Confidential
Material. Except as essential to Employee's obligations under this Agreement,
neither Employee nor any agent, employee, officer, or independent contractor
of or retained by Employee shall make any duplication or other copy of any of
the Confidential Material. Immediately upon request from Employer, Employee
shall return to Employer all Confidential Material. Employee shall notify
each person to whom any disclosure is made that such disclosure is made in
confidence, that the Confidential Material shall be kept in confidence by such
person, and that such person shall be bound by the provisions of this
Paragraph.
11.1 Notwithstanding the above, Employee shall be required to
execute Employer's standard Employee Confidentiality Agreement. In the event
there are any contradictions between the Employee's obligations under the
Employer's Standard Confidentiality Agreement and Employee's obligations
hereunder, then the most restrictive provisions shall apply.
12. Proprietary Information. For purposes of this Agreement,
"Proprietary Information" shall mean any information, future plans, business
strategies, financial information, processes, observation, data, written
material, record, document, computer program, software, firmware, invention,
discovery, improvement, development, tool, machine, apparatus, appliance,
design, promotional idea, customer list, practice, process, formula, method,
technique, trade secret, product and/or research related to the actual or
anticipated research development, products, organization, business or finances
of Employer (or any of its affiliates). All right title and interest of every
kind and nature whatsoever in and to the Proprietary Information made,
discussed, developed, secured, obtained or learned by Employee during the term
of this Agreement, or the 60-day period immediately following termination of
this Agreement, shall be the sole and exclusive property of Employer for any
purposes or uses whatsoever, and shall be disclosed promptly by Employee to
Employer. The covenants set forth in the preceding sentence shall apply
regardless of whether any Proprietary Information is made, discovered,
developed, secured, obtained or learned (a) solely or jointly with others, (b)
during the usual hours of work or otherwise, (c) at the request and upon the
suggestion of Employer or otherwise, or (d) with Employer's materials, tools,
instruments or on Employer's premises or otherwise. All Proprietary
Information developed, created, invented, devised, conceived or discovered by
Employee that are subject to copyright protection are explicitly considered by
Employee and Employer to be works made for hire to the extent permitted by
law. Employee hereby assigns to Employer all of Employee's right, title and
interest in and to the Proprietary Information. Employee hereby forever fully
releases and discharges Employer, any affiliates of Employer and their
respective officers, directors and employees, from and against any and all
claims, demands, damages, liabilities, costs and expenses of Employee arising
out of, or relating to, any Proprietary Information. Employee shall
execute any documents and take any action Employer may deem necessary or
appropriate to effectuate the provisions of this Agreement, including without
limitation assisting Employer in obtaining and/or maintaining patents,
copyrights or similar rights to any Proprietary Information assigned to
Employer, if Employer, in its sole discretion, requests such assistance.
Employee shall comply with any reasonable rules established from time to time
by Employer for the protection of the confidentiality of any Proprietary
Information. Employee irrevocably appoints the CEO or President of Employer
to act as Employee's agent and attorney-in-fact to perform all acts necessary
to obtain and/or maintain patents, copyrights and similar rights to any
Proprietary Information assigned by Employee to Employer under this Agreement
if (a) Employee refuses to perform those acts, or (b) is unavailable, within
the meaning of any applicable laws. Employee acknowledges that the grant of
the foregoing power of attorney is coupled with an interest and shall survive
the death or disability of Employee. Employee shall promptly disclose to
Employer in confidence (a) all Proprietary Information that Employee creates
during the term of this Agreement, and (b) all patient applications filed by
Employee within one year after termination of this Agreement. Any application
for a patient copyright registration or similar right filed by Employee within
one year after termination of this Agreement shall be presumed to relate to
Proprietary Information created by Employee during the term of this Agreement,
unless Employee can prove otherwise. Nothing contained in this Agreement
shall be construed to preclude Employer from exercising all of its rights and
privileges as sole and exclusive owner of all of the Proprietary Information
owned by or assigned to Employer under this Agreement. Employer, in
exercising such rights and privileges with respect to any particular item of
Proprietary Information, may decide not to file any patent application or any
copyright registration on such Proprietary Information, may decide to maintain
such Proprietary Information as secret and confidential, or may decide to
abandon such Proprietary Information or dedicate it to the public. Employee
shall have no authority to exercise any rights or privileges with respect to
the Proprietary Information owned by or assigned to Employer under this
Agreement. This Agreement does not apply to any Proprietary Information that
qualifies fully under the provisions of California Labor Code Section 2870 or
any similar or successor statute.
13. Competition. During the term of this Agreement, Employee shall
not own a 5% or more interest in, operate or participate in, or be connected
as an officer, director, employee, agent, independent contractor, partner,
shareholder or principal of any business entity or person producing,
designing, providing, soliciting orders for selling, distributing, or
marketing products, goods, equipment and/or services which compete with
Employer's products, goods, equipment and/or services.
13.1 Employee, except within the course of the performance of his
duties hereunder, shall not at any time while he is in the employ of Employer
or any of its parents, subsidiaries or affiliates, and for a period of six (6)
months thereafter (i) employ any individual who was employed by Employer or
any of its parents, subsidiaries or affiliates, at any time during the period
of six (6) months prior to the date Employee intends to employ such person or
(ii) in any way cause, influence, or participate in the employment of any
individual which would be contrary to Employer's best interests, as determined
by the Employer, in its sole discretion.
14. Injunctive Relief. Each of Employer and Employee hereby
acknowledge (a) the unique nature of the provisions set forth in the Paragraph
of this Agreement entitled "Confidentiality," "Proprietary Information," and
"Competition," (b) that Employer will suffer irreparable harm if Employee
breaches any of such provisions, and (c) that monetary damages will be
inadequate to compensate Employer for such breach. Therefore, if Employee
breaches any of such provisions, then Employer shall be entitled to injunctive
relief (in addition to any other remedies at law or equity) to enforce such
provisions.
15. Survival. The representations, warranties and covenants of
Employee in this Agreement shall survive any termination of this Agreement.
16. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
17. Further Assurances. Each party to this Agreement shall execute
and deliver all instruments and documents and take all actions as may be
reasonably required or appropriate to carry out the purposes of this
Agreement.
18. Venue and Jurisdiction. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts
service of process sufficient for personal jurisdiction in any action against
it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices
set forth in this Agreement.
19. Arbitration. Any controversy arising between the Employer and
Employee involving the construction or application of any of the terms,
provisions or conditions of this Agreement shall, on the written request of
either party served on the other, be submitted to arbitration. Any
arbitration arising under this Agreement shall comply with the American
Arbitration Association's Commercial Arbitration Rules and shall be final and
conclusive upon both parties. Any judgment upon the award may be entered in
any court having jurisdiction thereof.
20. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
21. Attorney's Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies): all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and
costs) relating to or arising out of (a) the Proceeding (whether or not the
Proceeding proceeds to judgment), and (b) any post-judgment or post-award
proceeding including, without limitation, one to enforce or collect any
judgment or award resulting from the Proceeding. All such judgments and
awards shall contain a specific provision for the recovery of all such
subsequently incurred costs, expenses, and actual attorney's fees.
22. Indemnification. The Employer shall indemnify the Employee, if the
Employee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Employer), by reason of the fact that he is or was a director,
officer, employee or agent of the Employer, or is or was a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Employer, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not of
itself, create a presumption that the Employer did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Employer, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
22.1 Actions or Suits by or in the Right of the Employer. The
Employer shall indemnify the Employee if the Employee, was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Employer to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Employer or is or was serving at the request of the Employer as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against and all expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Employer and except that no indemnification shall be made in respect of any
claim, issue or matter as to which the Employee shall have been adjudged to be
liable to the Employer unless and only to the extent that the Court of Chancery
for the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the Employee is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
22.2 Persons Successful. To the extent that the Employee has been
successful on the merits or otherwise in defense or any action, suit or
proceeding referred to herein this Agreement, or in defense of any claim, issue
or matter therein, he shall be indemnified against any and all expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
22.3 Advance Payment. Expenses incurred by the Employee defending
a civil or criminal action, suit or proceeding shall be paid by the Employer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the Employee to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Employer pursuant to this Article.
22.4 Other Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other subsections of this
Article shall not be deemed exclusive of any other rights to which the Employee
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in any
other capacity while holding such office.
22.5 Insurance. The Employer may purchase and maintain insurance
on behalf of the Employee who is or was a director, officer, employee or agent
of the Employer, or is or was serving at the request of the Employer as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Employer would have the power to indemnify him against such
liability under the provisions of this Article or of Title 8, Section 145, of
the General Corporation Law of the State of Delaware.
22.6 Persons Ceasing to be a Director or Officer. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Article unless otherwise provided when authorized or ratified, shall
survive the termination of this Agreement, whether upon the expiration of the
term or otherwise and shall continue as to the Employee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of the Employee.
23. Modification. This Agreement may be modified only by a contract
in writing executed by the party to this Agreement against whom enforcement of
the modification is sought.
24. Headings. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the
interpretation of this Agreement.
25. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or
accompany the execution of this Agreement.
26. Interpretation. Whenever the context so requires in this
Agreement, all words used in the singular may include the plural (and vice
versa) and the word "person" includes a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other entity. The
terms "includes" and "including" do not imply any limitation. For purposes of
this Agreement, the term "day" means any calendar day and the term "business
day" means any calendar day other than a Saturday, Sunday or any other day
designated as a holiday under California Government Code Sections 6700-6701.
Any act permitted or required to be performed under this Agreement upon a
particular day which is not a business day may be performed on the next
business day with the same effect as if it had been performed upon the day
appointed. No remedy or election under this Agreement is exclusive, but
rather, to the extent permitted by applicable law, each such remedy and
election is cumulative with all other remedies at law or in equity.
27. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and
the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such
invalidity or unenforceability (unless such provision or the application of
such provision is essential to this agreement).
28. Successors-in-Interest and Assigns. Employee may not voluntarily
or by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Employer, which consent may be
withheld in Employer's sole and absolute discretion. Any such transfer in
violation of this paragraph is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and
assigns of each party to this Agreement.
29. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing.
Notice is duly given to another party upon: (a) hand delivery to the other
party, (b) receipt by the other party when sent by facsimile to the address
and number for such party set forth below (provided, however, that the Notice
is not effective unless a duplicate copy of the facsimile Notice is promptly
given by one of the other methods permitted under this paragraph), (c) three
business days after the Notice has been deposited with the United States
postal service as first class certified mail, return receipt requested,
postage prepaid, and addressed to the party as set forth below, or (d) the
next business day after the Notice has been deposited with a reputable
overnight delivery service, postage prepaid, addressed to the party as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery-service-
provider.
To: CODED COMMUNICATIONS CORPORATION
1939 Palomar Oaks Way
Carlsbad, CA 92009
Telephone: (619) 438-5649
Fax: (619) 438-5649)
To: Steven Borgardt
3224 Avenida Magoria
Escondido, CA 92029
Each party shall make a reasonable good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
30. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default
or provision concerning the same or any other provision of this Agreement. No
delay or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A
consent to or approval of an act does not waive or render unnecessary the
consent to or approval of any other or subsequent act.
31. Drafting Ambiguities. Each party to this Agreement has reviewed
and revised this Agreement and has had the opportunity to have such party's
legal counsel review and revise this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
32. Third Party Beneficiaries. Nothing in this Agreement is intended
to confer any rights or remedies on any person or entity other than the
parties to this Agreement and their respective successors-in-interest and
permitted assignees, unless such rights are expressly granted in this
Agreement to another person specifically identified as a "Third Party
Beneficiary."
33. Receipt of Copy. Employee hereby acknowledges that it has
received a signed copy of this Agreement.
34. Guarantee. The obligations to Employee herein shall be guaranteed
and become the joint and severable obligations of the Employer, its parent
corporation (if any), its affiliated corporations and any corporation or
entity that owns or controls, direct or indirectly, more than 50 percent of
the Employer's common stock.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INDIVIDUAL:
______________________________
Steven Borgardt
CODED COMMUNICATIONS CORPORATION,
a Delaware corporation
By:_____________________________________
John A. Robinson, Jr.
President and CEO
APPROVED:
_______________________________________
Ing. Hugo R. Camou
Chairman of the Board
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