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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 19, 1997
CELLULAR TECHNICAL SERVICES COMPANY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-19437 11-2962080
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
2401 Fourth Avenue
Seattle, Washington 98121
(Address of Principal Executive Offices) (Zip Code)
(206) 443-6400
(Registrant's telephone number, including area code)
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This Current Report on Form 8-K is filed by Cellular Technical Services
Company, Inc., a Delaware corporation (the "Company"), in connection with the
matters described herein.
Item 5. Other Events
On February 19, 1997, the Company and Mr. William Zollner entered into
an employment agreement pursuant to which Mr. Zollner became employed as
President and Chief Operating Officer of the Company. Reference is made to the
employment agreement attached as an Exhibit to this Report.
Item 7. Financial Statements, Pro Forma Information and Exhibits
(c) Exhibits.
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99 Employment Agreement dated February 19, 1997, between the Company and
William Zollner.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 6, 1997
CELLULAR TECHNICAL SERVICES,
COMPANY, INC.
By: /s/ Michael E. McConnell
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Michael E. McConnell,
Chief Financial Officer
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EXHIBIT 99
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EMPLOYMENT AGREEMENT
This Agreement is entered into as of February 19, 1997,
between CELLULAR TECHNICAL SERVICES COMPANY, INC., a Delaware corporation (the
"Company"), and
WILLIAM C. ZOLLNER (the "Executive"). In consideration of the mutual promises,
covenants and obligations contained herein, the parties agree as follows:
I. Employment and Term. Company hereby employs Executive as
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the President and Chief Operating Officer of Company on the terms and conditions
set forth in this Agreement, and Executive hereby accepts and agrees to such
employment with Company, for an original term beginning on the date of this
Agreement and ending on the second (2nd) anniversary of this Agreement, subject
to continuation set forth below. The Chief Executive Officer of Company and
Executive shall meet and discuss in good faith the terms of a new or extended
contract of Executive's employment with Company at least three (3) months prior
to the end of the original term and each extended term thereafter. Unless
otherwise extended, replaced, or terminated as set forth herein, this Agreement
shall, after the original term, continue thereafter on a month-to-month basis
terminable by either party upon written notice of termination to the other party
in accordance with Subsection 9.1, below, at least thirty (30) days before the
termination date.
II. Duties. Executive is employed to perform the duties of
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President and Chief Operating Officer of Company and shall have such authority
and perform such duties consistent with such position as may be assigned to
Executive by the Chief Executive Officer and/or the Board of Directors of
Company from time to time. Executive shall perform such duties faithfully,
diligently, to the best of Executive's ability, and in a manner consistent with
the best interests of Company. Executive shall devote Executive's full time,
skills, and efforts to the performance of such duties and to the furtherance of
the best interests of Company. All of the foregoing duties and responsibilities
will be subject to the terms of this Agreement, the supervision of the Chief
Executive Officer and the Board of Directors of Company, and the then-current
plans, practices, policies, and procedures established by Company and generally
applicable to comparable executives of Company.
III. Compensation, Benefits, Vacation, and Expenses. In
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consideration for Executive's services under this Agreement, Executive shall
receive the following compensation and benefits during the term of this
Agreement:
A. Base Salary. Executive shall receive an
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annualized base salary of $162,000.00, which shall be paid in accordance with
Company's usual payroll policies for comparable executives of Company. Company
shall consider increases to such base salary at least annually. Such base salary
shall not be subject to reduction except for Cause (as defined in Section 6,
below). Any change in such base salary: (i) shall not serve to cancel this
Agreement or otherwise limit or reduce any other right or obligation to
Executive under this Agreement; and (ii) shall merely serve to amend this
Subsection with respect to such change in base salary, and all of the other
terms of this Agreement shall continue in full force and effect.
B. Incentive Compensation and Bonuses. Executive
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shall receive annual incentive compensation and bonuses in accordance with the
terms of the Executive Incentive Compensation Plan attached hereto as Exhibit A,
subject to Company's then-current plans, practices, policies, and procedures
with respect to incentive compensation established by the Board of Directors of
Company (or a committee thereof) and generally applicable to comparable
executives of Company.
C. Stock Options. Company will grant to Executive
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options to purchase shares of voting common stock of Company pursuant to the
terms of that certain Stock Option Contract dated as of February 19, 1997
between Executive and Company attached hereto as Exhibit B. Such options shall
be in such amounts, exercisable at such per-share exercise price, and vested
under such vesting schedule as set forth in such Stock Option Contract. Such
Stock Option Contract shall be subject to all of the terms and conditions of
Company's 1996 Stock Option Plan.
D. Benefits. Executive and Executive's family shall be
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entitled to participate in and shall receive all benefits under all welfare
benefit plans, practices, policies, and programs generally provided by Company
(including without limitation all health, medical, dental, prescription,
disability, salary continuance, life insurance, 401(k) retirement savings, and
other benefit plans and programs) to comparable executives of Company.
E. Annual Vacation. Executive shall be entitled to a
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minimum of three (3) weeks paid annual vacation, which shall be in addition to
Company holidays and sick leave. Such vacation may be scheduled in Executive's
reasonable discretion, subject to reasonable oversight by the President, Chief
Executive Officer, and/or the Board of Directors of Company. Annual vacation
increases, accruals, and the like will be provided pursuant to the vacation and
leave policies, practices, and procedures established by Company and generally
applicable to comparable executives of Company.
F. Expenses. Executive shall be entitled to
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reimbursement for reasonable business expenses incurred by Executive for the
benefit of Company. Executive shall present from time to time itemized accounts
or receipts for such expenses in accordance with the plans, practices, policies,
and procedures established by Company and generally applicable to comparable
executives of Company.
G. Relocation Expenses. In consideration for Executive
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relocating to Seattle, Washington, Company agrees to reimburse Executive for up
to $65,000.00 of Executive's expenses (inclusive of all associated tax
reimbursements) relating to such relocation, which reimbursement shall be paid
in one lump sum upon submission of appropriate documentation for same.
IV. Proprietary Rights. Upon the execution of this Agreement,
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Executive and Company shall enter into that certain Agreement Regarding
Confidential Information and Property Rights attached hereto as Exhibit C, and
Executive shall fully comply with the provisions of such agreement.
V. Restrictive Covenants.
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A. Nonsolicitation. During the term of Executive's
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employment with Company and for a period of twelve (12) months after the
termination thereof, however caused, Executive shall not directly or indirectly
do any of the following without Company's prior written approval: (i)
communicate with or solicit any person or entity which was a customer of Company
or which Company was actively soliciting to be a customer during the twelve (12)
month period preceding termination of Executive's employment with Company (each
being a "Customer") for the purpose of marketing services or products in
competition with any services or products of Company, whether or not
communication is initiated by the Customer, Executive, or any other party; (ii)
in any manner interfere with Company's business relationship with any Customer
or potential customer or otherwise urge any Customer or potential customer to
discontinue business or not to do business with Company; or (iii) hire, offer to
hire, solicit, or endeavor to entice away any employee, agent, or consultant of
Company or
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any of its affiliates, or otherwise urge any such person to discontinue his or
her relationship with Company, whether or not communication is initiated by such
person, Executive, or any other party.
B. Noncompetition. During the term of Executive's
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employment with Company and for a period of twelve (12) months after the
termination thereof, however caused (except by Executive with Good Reason or by
either party following a Change of Control, in which case the terms of this
Subsection shall not apply), Executive shall not directly or indirectly do any
of the following without Company's prior written approval: (i) engage as owner,
employee, consultant, or otherwise, within the United States, in any facet of
the business activities of Company or any of its affiliates, except as required
in the ordinary course of Executive's employment with Company, or (ii) otherwise
compete, within the United States, with the business activities of Company or
any of its affiliates; provided, that Executive shall have the right to make
passive investments in any entity so long as Executive does not participate in
the business of such entity in violation of this Subsection.
C. Nondisparagement. During the term of Executive's
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employment with Company and for a period of twelve (12) months after the
termination thereof, however caused, Executive shall not make any disparaging
remarks about Company or its products or services to any person or entity,
provided that the terms of this Subsection will not limit Executive's right to
give truthful testimony in the event that Executive is required to testify
pursuant to a court order or applicable law.
D. Injunctive Relief. Executive agrees that if he
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violates the provisions of this Section 5 or otherwise threatens to do so,
Company, in addition to any other rights and remedies available under this
Agreement or otherwise, shall be entitled to obtain an injunction issued
(without the necessity of a bond) by any court of competent jurisdiction
restricting Executive from committing or continuing any such violation.
VI. Termination of Employment.
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A. Definitions. For purposes of this Agreement, the
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following terms shall have the following definitions:
1. "Cause" shall mean and be deemed to exist if
any of the following events occur: (i) a material breach by Executive of
Executive's obligations under this Agreement (other than as a result of
incapacity due to Disability or death) caused either by Executive's willful
misconduct committed in bad faith without reasonable belief that the conduct
causing such breach is in the best interests of Company, or by Executive's gross
negligence; (ii) actual fraud or embezzlement on the part of Executive; or (iii)
the conviction of Executive of, or a plea of guilty or no contest by Executive
to, a felony involving moral turpitude.
2. "Disability" shall mean the definition of the
term "Disability" in Company's disability benefit plan covering executives of
Company as in effect from time to time, or, if no such disability benefit plan
exists, then such term shall mean the inability, by reason of any
medically-determined physical or mental impairment, of Executive to
satisfactorily perform Executive's duties hereunder for a period of more than
ninety (90) consecutive days or an aggregate of more than ninety (90) days in
any rolling twelve-month period.
3. "Good Reason" shall mean and be deemed to exist
if any of the following events occur without the written approval of Executive
(and regardless of whether the event occurs before or after a Change of Control
of Company): (i) Company reduces, in any material respect, Executive's position,
title, responsibilities, or then-current base salary contemplated by this
Agreement without Cause or assigns Executive duties which are inconsistent, in
any material respect, with such position, title, or
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responsibilities without Cause; (ii) Company fails to pay any amount when due to
Executive hereunder or materially breaches any other obligation hereunder which
is not remedied within thirty (30) days after receipt of written notice from
Executive specifying such breach; or (iii) any failure by Company or any of its
successors or assigns to comply with and satisfy their respective obligations
under Subsection 9.2, below.
4. Change of Control" shall mean and be deemed to
exist if any of the following events occur:
i) the occurrence of a change of "control" of Company (as such quoted term is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended from time to time (the "Act")) or any change in the "ownership or
effective control" or in the "ownership of a substantial portion of the assets"
of Company (as such quoted phrases are used in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")); or
ii) any "person" (as such quoted term is used in Sections 3(a)(9), 13(d), and/or
14(d)(2) of the Act) other than the Company, any entity controlled by the
Company, or any employee benefit plan (or trust) sponsored or maintained by the
Company, becomes the "beneficial owner" (as such quoted term is used in Rule
13d-3 promulgated under the Act), directly or indirectly, of 25% or more of
either: (A) Company's then-outstanding shares of voting common stock
("Outstanding Company Common Stock"), or (B) the combined voting power of the
then-outstanding voting securities of Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities"); or
iii) the following persons (collectively, the "Incumbent Board") cease for any
reason to constitute a majority of the Board of Directors of Company: (A)
individuals who, as of the date hereof, constitute the Board of Directors, and
(B) individuals who become members of the Board of Directors after the date
hereof whose election, or nomination for election by Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Board of Directors, but excluding, for this purpose, any director designated by
a person who has entered into an agreement with Company to effect a transaction
described in this definition of Change of Control or whose initial election or
appointment to the Board of Directors occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 promulgated
under the Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the directors then comprising the
incumbent Board of Directors; or
iv) the approval by Company's shareholders of any merger, consolidation, or
other business combination involving Company, other than a merger,
consolidation, or other business combination with respect to which, immediately
following such business combination: (A) all or substantially all of the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities outstanding immediately prior thereto, are
the beneficial owners of at least 60% of, respectively, the shares of voting
common stock of the surviving entity, and the combined voting power of the
voting securities of the surviving entity entitled to vote generally in the
election of directors, outstanding immediately after such business combination
in substantially the same proportion as their ownership in the Company
immediately prior to such business combination, (B) no "person" (as such quoted
term is used in Sections 3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than
the Company, any entity controlled by the Company, or any employee benefit plan
(or trust) sponsored or maintained by the Company or the surviving entity, is
the "beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated
under the Act), directly or indirectly, of 25% or more of either the
then-outstanding shares of voting common stock of the surviving entity or the
combined voting power of the then-outstanding voting securities of the surviving
entity entitled to vote generally in the election of
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directors, and (C) at least a majority of the members of the board of directors
of the surviving entity were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such business combination; or
v) the approval by Company's shareholders of any sale, exchange, or other
disposition (in one transaction or a series of related transactions) of all or
substantially all of the assets of Company, other than to a corporation with
respect to which, immediately following such disposition: (A) all or
substantially all of the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities outstanding
immediately prior thereto, are the beneficial owners of at least 60% of,
respectively, the shares of voting common stock of such corporation, and the
combined voting power of the voting securities of such corporation entitled to
vote generally in the election of directors, outstanding immediately after such
disposition in substantially the same proportion as their ownership in the
Company immediately prior to such disposition, (B) no "person" (as such quoted
term is used in Sections 3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than
the Company, any entity controlled by the Company, or any employee benefit plan
(or trust) sponsored or maintained by the Company or such corporation, is the
"beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated under
the Act), directly or indirectly, of 25% or more of either the then-outstanding
shares of voting common stock of such corporation or the combined voting power
of the then-outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such disposition; or
vi) the approval by the shareholders of Company of any plan or proposal for
liquidation or dissolution of Company.
Notwithstanding anything to the contrary, if a Change of Control occurs and if
this Agreement or Executive's employment with Company is terminated prior to the
date on which the Change of Control occurs, then a "Change of Control" shall be
deemed to have occurred on the date immediately prior to the date of such
termination, so long as Executive can reasonably demonstrate that such
termination: (A) was at the request of a third party who had taken steps
reasonably calculated to effect the Change of Control, or (B) otherwise arose in
connection with or anticipation of the Change of Control.
A. Termination Upon Death of Executive. In the event
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of the death of Executive during the term of this Agreement, Executive's
employment shall automatically terminate without further obligation to
Executive's estate under this Agreement, except that Executive's estate shall be
entitled to receive all monies and other rights to which Executive otherwise
would have been entitled hereunder through the end of the calendar month after
the month in which death occurred, plus all accrued and unpaid monies owing
through such date under this Agreement, all of which shall be paid to
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days after the month in which death occurred.
B. Termination Upon Disability of Executive. If
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Company determines in good faith that the Disability of Executive has occurred
during the term of this Agreement, Company may provide to Executive written
notice in accordance with Subsection 9.1, below, of its intention to terminate
Executive's employment. In such event, Executive's employment with Company shall
terminate effective at the end of six (6) months after Executive's receipt of
such notice, provided that within the six (6) month period after such receipt
the Executive shall not have returned to full-time performance of Executive's
duties hereunder. Until the termination of employment at the expiration of the
six (6) month period, Executive shall receive Executive's regular compensation
and benefits as specified in Section 3, above. If Executive's employment is so
terminated,
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Company shall have no further obligation to Executive under this Agreement,
except that Executive shall be entitled to receive upon the effective date of
such termination all such monies and rights to which Executive is entitled
hereunder through the effective date of such termination, plus all accrued and
unpaid monies owing hereunder through such date, all of which shall be paid to
Executive in cash within thirty (30) days after such date.
C. Termination For Cause, Etc. Company may terminate
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Executive's employment with Company for Cause by providing Executive with prior
written notice of termination in accordance with Subsection 9.1, below. If
Company terminates Executive's employment for Cause in accordance with this
Subsection or terminates Executive's employment in the manner specified in
Section 1, above, or if Executive terminates Executive's employment other than
as provided under Subsection 6.5, below, Company shall have no further
obligation to Executive under this Agreement, except that Executive shall be
entitled to receive upon the effective date of such termination only such monies
and rights to which Executive is entitled hereunder through the effective date
of such termination, plus all accrued and unpaid monies owing hereunder through
such date, all of which shall be paid to Executive in cash within thirty (30)
days after such date.
D. Termination For Good Reason, Etc. Executive may
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terminate Executive's employment with Company for Good Reason by providing
Company with prior written notice of termination in accordance with Subsection
9.1, below. If during the term of this Agreement (and regardless of whether
before or after a Change of Control of Company): (i) Executive terminates this
Agreement or Executive's employment with Company for Good Reason, or (ii)
Company terminates this Agreement or Executive's employment with Company in any
manner other than as expressly permitted under Subsections 1, 6.2, 6.3, or 6.4,
above, then: (A) Company shall make a lump sum payment equal to one (1) times
the highest annual compensation (as reportable on Executive's IRS W-2 form)
received by Executive from Company during any of the most recent two (2) years
ending on or prior to the date on which the termination occurs; (B) all stock
options granted to Executive shall become fully vested and immediately
exercisable at Executive's election, regardless of whether Executive exercises
any other rights afforded Executive under this Agreement; (C) all welfare
benefit plans, practices, policies, and programs applicable to Executive
hereunder and in existence during the ninety (90) day period prior to the
effective date of termination, or if more favorable to Executive those in effect
generally at any time thereafter with respect to other comparable executives of
Company, shall continue as to Executive for an additional one (1) year after the
effective date of termination, provided, however, that if Executive becomes
reemployed with another employer and is eligible to receive medical and other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall not apply to the extent duplicative to
those provided under such other plan during such applicable period of
eligibility; and (D) Executive shall be entitled to receive upon the effective
date of such termination all such monies and rights to which Executive is
entitled hereunder through the effective date of such termination, plus all
accrued and unpaid monies owing hereunder through such date. The payments
described in clauses (A) and (D) above shall be paid to Executive in cash within
sixty (60) days after the effective date of termination.
E. Effect of Termination. Upon the termination of this
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Agreement or Executive's employment with Company, all obligations of the parties
hereunder shall cease, except the terms of Sections 4 through 9 hereof shall
survive such termination for any reason.
VII. Change of Control.
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A. Acceleration of Vesting of Options. Upon the
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occurrence of a Change of Control of Company during the term of this Agreement,
all stock options granted to Executive shall become fully
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vested and immediately exercisable at Executive's election, regardless of
whether Executive exercises any other rights afforded Executive under this
Agreement.
B. Compensation Reduction. Notwithstanding any other
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provision of this Agreement to the contrary, if any payments or benefits made by
Company to Executive hereunder or otherwise would be subject to the excise tax
or taxes imposed by Section 4999 of the Code (collectively, the "Affected
Amount"), such Affected Amount shall be reduced so that Executive shall be
entitled to receive an Affected Amount with a "present value" (as determined for
purposes of Section 280G of the Code) of not more in the aggregate than 2.99
times the Executive's applicable "base amount" under Section 280G of the Code
(collectively, the "Limited Amount"); provided, however, that if the entire
Affected Amount, when reduced by such excise tax or taxes, is greater than the
Limited Amount, then no reduction shall be made under this Subsection. Unless
the parties otherwise agree to in writing, any reduction under this Subsection
shall be conclusively determined by the independent certified public accounting
firm regularly employed by Company during the ninety (90) day period prior to
the effective date of the event triggering the payment of the Affected Amount to
Executive, and the determination of such independent certified public accounting
firm shall be final and binding on all parties.
VII. Indemnification. Company shall indemnify and hold harmless
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Executive and Executive's family, heirs, estate, and legal representatives from
and against any and all claims, damages, losses, liabilities, and expenses
(including without limitation all reasonable attorneys' fees) arising out of or
in connection with Executive's performance of Executive's duties and
responsibilities hereunder in Executive's capacity as an officer or employee of
Company or any of its affiliates to the maximum extent permitted by law.
Executive shall notify Company of any indemnifiable claim coming to Executive's
attention which may result in any indemnification obligation on Company's part
hereunder. Company shall have the right to conduct the defense against any such
claim brought by a third party with counsel of its selection. The obligations of
Company under this Section shall continue following the termination of this
Agreement and/or the termination of Executive's employment with Company. After a
Change of Control of Company, Company shall pay promptly as incurred all
reasonable attorneys' fees and related expenses which Executive may incur as a
result of any dispute or contest (regardless of the outcome thereof) by Company,
Executive, or others with respect to the validity or enforceability of, or the
rights and/or obligations under, any provision of this Agreement.
IX. Miscellaneous.
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A. Notices.
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1. All notices hereunder by either party shall be
given by personal delivery, by sending such notice by U.S. certified mail,
postage prepaid, or by a reputable courier service, fees prepaid, to the other
party at its address set forth on the signature page below. Any notice given in
accordance with this Subsection shall be effective as of the date of receipt or
attempted delivery (if receipt is refused), as the case may be. Each party may
change its address for notice purposes upon written notification thereof to the
other party in accordance with this Subsection.
2. All notices of termination described in
Sections 1, 6.3, 6.4, and 6.5 shall be provided in writing in accordance with
Subsection 9.1.1 and shall: (i) indicate the specific termination provision in
this Agreement relied upon; (ii) to the extend applicable, provide in reasonable
detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated; and (iii) indicate the applicable effective
date of termination. The failure by either party to set forth in the notice of
termination any
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fact or circumstance which contributes to a showing of justification for
termination shall not waive any right of such party hereunder or preclude such
party from subsequently asserting such fact or circumstance in enforcing such
party's rights hereunder.
B. Assignment; Binding Effect. This Agreement is
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personal to Executive and, therefore neither this Agreement nor any of
Executive's rights, powers, duties or obligations hereunder may be assigned by
Executive without Company's prior written approval. This Agreement shall be
binding upon and inure to the benefit of Executive and Executive's heirs,
estate, and legal representatives, and shall be binding upon and inure to the
benefit of Company and its successors and assigns. Company shall require its
successors and assigns to expressly assume and agree to perform under this
Agreement in the same manner and to the same extent that Company would be
required to perform if no such succession or assignment had take place, and
Company's successors and assigns shall so expressly assume and agree to perform
under this Agreement. For purposes of this Agreement, successors and assigns of
Company shall include without limitation all persons acquiring, directly or
indirectly, any voting securities or assets of Company which results in a Change
of Control of Company, whether by merger, consolidation, stock or asset
purchase, or otherwise, and such successors and assigns shall thereafter be
deemed "Company" for the purposes hereof.
C. Taxes. Company may withhold from any amounts
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payable under this Agreement such federal, state, or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
D. Headings. The headings in this Agreement are
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included for the convenience of reference and will be given no effect in the
construction of this Agreement.
E. Severability. The invalidity or unenforceability of
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any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. In the event that any provision of
this Agreement is deemed invalid or unenforceable by any court of competent
jurisdiction, such provision shall be deemed to be modified to the extent
necessary for the provision to be legally enforceable to the fullest extent
permitted by applicable law. Any court of competent jurisdiction may enforce or
modify any provision of this Agreement in order that the provision will be
enforced by the court to the fullest extent permitted by applicable law.
F. Waiver. Any waivers hereunder must be in writing.
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No consent or waiver, express or implied, by any party to or of any breach or
default by the other in the performance by the other of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in the performance by such other party of the same or
any other obligations of such party hereunder.
G. Governing Law. This Agreement and the obligations
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of the parties hereunder shall be interpreted, construed, and enforced in
accordance with the laws of the state of Washington applicable to contracts made
and to be performed in the state of Washington, without regard to conflict of
laws principles.
H. Entire Agreement; Amendments; Conflicts. This
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Agreement and the attached Exhibits (which are incorporated herein by this
reference): (i) contain the entire agreement and understanding between the
parties with respect to the subject matter hereof; and (ii) supersede all prior
agreements, negotiations, representations, and proposals, written and oral,
relating to the subject matter hereof. This Agreement may be modified,
supplemented, and/or amended only by a writing signed by both Executive and an
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authorized representative of Company. In the event of any conflict between this
Agreement and any other agreement between Executive and Company, the terms of
this Agreement shall control.
EXECUTED as of the date set forth above.
EXECUTIVE: COMPANY:
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CELLULAR TECHNICAL SERVICES COMPANY, INC.
By_______________________________________
________________________________ _________________________________________
Signature Print Name
WILLIAM C. ZOLLNER
________________________________ _________________________________________
Print Name Title
Executive's Address for Notices: Company's Address for Notices:
- ------------------------------- -----------------------------
________________________________ 2401 Fourth Avenue, Suite 808
________________________________ Seattle, Washington 98121
________________________________ Attention: Legal Department
Attachments:
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Exhibit A - Executive Incentive Compensation Plan
Exhibit B - Stock Option Contract
Exhibit C - Agreement Regarding Confidential Information and Property Rights
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EXHIBIT A
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EXECUTIVE INCENTIVE COMPENSATION PLAN
This Exhibit pertains to and is made a part of that certain letter of
Employment Agreement ("Employment Agreement") dated as of February 19, 1997,
between CELLULAR TECHNICAL SERVICES COMPANY, INC. (the "Company") and WILLIAM C.
ZOLLNER (the "Executive").
1. Bonus Criteria.
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1.1 For Fiscal Year 1997. For Company's fiscal year ended
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December 31, 1997, Executive will be entitled to an incentive bonus if Company
equals or exceeds year-end earnings per share of $0.5625, as follows:
(i) if Company equals or achieves year-end earnings per
share between $0.5625 and $0.75, Executive will be entitled to an incentive
bonus equal to $70,000.00, plus $3,684.21 for each $0.01 that Company exceeds
year-end earnings per share of $0.5625, up to a maximum of $140,000.00 for
achieving year-end earnings of $0.75 per share; plus
(ii) if Company exceeds year-end earnings per share of
$0.75, Executive will be entitled to an incentive bonus equal to $1,000.00 for
each $0.01 that Company exceeds year-end earnings per share of $0.75; plus
(iii) such additional amount as the Board of Directors
of Company (or the Compensation and Stock Option Committee thereof) may
determine in its sole discretion.
For purposes of the above incentive bonuses, "year-end earnings per share" means
Company's year-end earnings per share as reported in Company's SEC Form 10-K for
fiscal year ended December 31, 1997.
1.2 For Fiscal Years After 1997. Executive's bonus for each
---------------------------
fiscal year after 1997 will be based on corporate performance and other criteria
specifically identified for the Executive by the Board of Directors of CTS (or
the Compensation and Stock Option Committee thereof).
2. Additional Stock Option Grants. In addition to the stock
---------------------------------
options described in Section 3.3 of the Employment Agreement, the Board of
Directors of CTS (or the Compensation and Stock Option Committee thereof) may
grant additional stock options to Executive in such amounts, at such exercise
price, under such vesting schedule, and pursuant to such additional terms as it
may determine in its sole discretion.
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EXHIBIT B
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OFFICER NONQUALIFIED STOCK OPTION CONTRACT
(1996 STOCK OPTION PLAN)
THIS NONQUALIFIED STOCK OPTION CONTRACT entered into as of
February 19, 1997 between CELLULAR TECHNICAL SERVICES COMPANY, INC., a Delaware
corporation (the "Company"), and WILLIAM C. ZOLLNER (the "Optionee"). The
Company and Optionee hereby agree as follows:
I. The Company, in accordance with the allotment made by the
Compensation and Stock Option Committee of the Board of Directors of Company
(the "Committee") and subject to the terms and conditions of the 1996 Stock
Option Plan of the Company (the "Plan"), hereby grants to the Optionee an option
to purchase an aggregate of 300,000 shares of the common stock, $.001 par value
per share, of the Company ("Common Stock") at an exercise price of $11.375 per
share, being at least equal to the fair market value of such shares of Common
Stock on the date hereof. This option is not intended to constitute an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
II. The term of this option shall be ten (10) years from the
date hereof, subject to earlier termination as provided in the Plan. However,
this option shall not be exercisable until the completion of one full year of
Optionee's employment with the Company after the date hereof, on which date this
option shall become exercisable as to 20% of the total number of shares of
Common Stock subject hereto, and after which date this option shall become
exercisable as to an additional 20% of such shares on each of the next four (4)
successive anniversaries of such date. The right to purchase shares of Common
Stock under this option shall be cumulative, so that if the full number of
shares purchasable in a period shall not be purchased, the balance may be
purchased at any time or from time to time thereafter, but not after the
expiration of the option. In addition, this option shall become immediately
exercisable in full upon a "Change of Control" (as defined below) of the Company
during the term of this option or as otherwise provided in any employment
agreement between the Optionee and the Company. Notwithstanding any of the
foregoing: (a) Optionee may not exercise this option beyond the date that
Optionee's employment relationship with the Company terminates, except as
otherwise provided in the Plan or in any employment agreement between the
Optionee and the Company, and (b) in no event may a fraction of a share of
Common Stock be purchased under this option. For purposes of this Contract, a
"Change of Control" shall mean and be deemed to exist if any of the following
events occur:
i) the occurrence of a change of "control" of Company (as such
quoted term is defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended from time to time (the "Act")) or any change in the
"ownership or effective control" or in the "ownership of a substantial portion
of the assets" of Company (as such quoted phrases are used in Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended from time to time (the
"Code")); or
ii) any "person" (as such quoted term is used in Sections
3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than the Company, any entity
controlled by the Company, or any employee benefit plan (or trust) sponsored or
maintained by the Company, becomes the "beneficial owner" (as such quoted term
is used in Rule 13d-3 promulgated under the Act), directly or indirectly, of 25%
or more of either: (A) Company's then-outstanding shares of voting common stock
("Outstanding Company Common Stock"), or (B) the combined voting power of the
then-outstanding voting securities of Company entitled to vote generally in the
election of directors ("Outstanding Company Voting Securities"); or
iii) the following persons (collectively, the "Incumbent
Board") cease for any reason to constitute a majority of the Board of Directors
of Company: (A) individuals who, as of the date hereof, constitute the Board of
Directors, and (B) individuals who become members of the Board of Directors
after the date hereof whose election, or nomination for election by Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Board of Directors, but excluding, for this purpose, any
director designated by a person who has entered into an agreement with Company
to effect a transaction described in this definition of Change of Control or
whose initial election or appointment to the Board of Directors occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a- 11 promulgated under the Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
directors then comprising the incumbent Board of Directors; or
iv) the approval by Company's shareholders of any merger,
consolidation, or other business combination involving Company, other than a
merger, consolidation, or other business combination with respect to which,
immediately following such business combination: (A) all or substantially all of
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities outstanding immediately prior thereto, are
the beneficial owners of at least 60% of, respectively, the shares of voting
common stock of the surviving entity, and the combined voting power of the
voting securities of the surviving entity entitled to vote generally in the
election of directors, outstanding immediately after such business combination
in substantially the same proportion as their ownership in the Company
immediately prior to such business combination, (B) no "person" (as such quoted
term is used in Sections 3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than
the Company, any entity controlled by the Company, or any employee benefit plan
(or trust) sponsored or maintained by the Company or the surviving entity, is
the "beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated
under the Act), directly or indirectly, of 25% or more of either the
then-outstanding shares of voting common stock of the surviving entity or the
combined voting power of the then-outstanding voting securities of the surviving
entity entitled to vote generally in the election of directors, and (C) at least
a majority of the members of the board of directors of the surviving entity were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such business combination; or
v) the approval by Company's shareholders of any sale,
exchange, or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of Company, other than
to a corporation with respect to which, immediately following such disposition:
(A) all or substantially all of the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
outstanding immediately prior thereto, are the beneficial owners of at least 60%
of, respectively, the shares of voting common stock of such corporation, and the
combined voting power of the voting securities of such corporation entitled to
vote generally in the election of directors, outstanding immediately after such
disposition in substantially the same proportion as their ownership in the
Company immediately prior to such disposition, (B) no "person" (as such quoted
term is used in Sections 3(a)(9), 13(d), and/or 14(d)(2) of the Act) other than
the Company, any entity controlled by the Company, or any employee benefit plan
(or trust) sponsored or maintained by the Company or such corporation, is the
"beneficial owner" (as such quoted term is used in Rule 13d-3 promulgated under
the Act), directly or indirectly, of 25% or more of either the then-outstanding
shares of voting common stock of such corporation or the combined voting power
of the then-outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such disposition; or
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vi) the approval by the shareholders of Company of any plan or
proposal for liquidation or dissolution of Company.
Notwithstanding anything to the contrary, if a Change of Control occurs and if
the Optionee's employment relationship with the Company is terminated prior to
the date on which the Change of Control occurs, then a "Change of Control" shall
be deemed to have occurred on the date immediately prior to the date of such
termination, so long as Optionee can reasonably demonstrate that such
termination: (A) was at the request of a third party who had taken steps
reasonably calculated to effect the Change of Control, or (B) otherwise arose in
connection with or anticipation of the Change of Control.
III. This option shall be exercised by giving written notice to
the Company, at its address identified on the signature page below, stating that
the Optionee is exercising the option hereunder, specifying the number of shares
being purchased, and accompanied by payment in full of the aggregate purchase
price therefor: (a) in cash or by certified check, (b) with previously acquired
shares of Common Stock which have been held by the Optionee for at least six
months, or (c) a combination of the foregoing.
IV. The Company may withhold cash and/or shares of Common
Stock to be issued to the Optionee in the amount which the Company determines is
necessary to satisfy its obligation to withhold taxes or other amounts incurred
by reason of the grant or exercise of this option or the disposition of the
underlying shares of Common Stock. Alternatively, the Company may require the
Optionee to pay the Company such amount in cash promptly upon demand.
V. Notwithstanding the foregoing, this option shall not be
exercisable by the Optionee unless (a) a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
shares of Common Stock to be received upon the exercise of this option shall be
effective and current at the time of exercise, or (b) there is an exemption from
registration under the Securities Act for the issuance of the shares of Common
Stock upon such exercise. The Optionee hereby represents and warrants to the
Company that, unless such a Registration Statement is effective and current at
the time of exercise of this option, the shares of Common Stock to be issued
upon the exercise of this option will be acquired by the Optionee for his own
account, for investment only, and not with a view to the resale or distribution
thereof. In any event, the Optionee shall notify the Company of any proposed
resale of the shares of Common Stock issued to him upon exercise of this option.
Any subsequent resale or distribution of shares of Common Stock by the Optionee
shall be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective and current with respect to the sale of shares of Common
Stock being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption, the Optionee
shall, prior to any offer of sale or sale of such shares of Common Stock,
provide the Company (unless waived by the Company) with a favorable written
opinion of counsel, in form and substance satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution. Such
representations and warranties shall also be deemed to be made by the Optionee
upon each exercise of this option. Nothing herein shall be construed as
requiring the Company to register the shares subject to this option under the
Securities Act.
VI. Notwithstanding anything herein to the contrary, if at any
time the Committee shall determine, in its discretion, that the listing or
qualification of the shares of Common Stock subject to this option on any
securities exchange or under any applicable law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition to,
or in connection with, the granting of an option or the issue of shares of
Common Stock hereunder, this option may not be exercised in whole or in part
unless such
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listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
VII. The Company may affix appropriate legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to: (a) prevent a violation of, or to perfect an exemption from, the
registration requirements of the Securities Act; or (b) implement the provisions
of the Plan or this Contract or any other agreement between the Company and the
Optionee with respect to such shares of Common Stock.
VIII. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue in the employ of the Company, any Parent or any
of its Subsidiaries, or interfere in any way with any right of the Company, any
Parent or its Subsidiaries to terminate such employment at any time for any
reason whatsoever without liability to the Company, any Parent or any of its
Subsidiaries.
IX. This option is not transferable by the Optionee otherwise
than by will or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee or the Optionee's
legal representatives.
X. All notices hereunder by either party shall be given by
personal delivery, by sending such notice by U.S. certified mail, postage
prepaid, or by a reputable courier service, fees prepaid, to the other party at
its address identified on the signature page below. Any notice given in
accordance with this section shall be effective as of the date of receipt or
attempted delivery (if receipt is refused), as the case may be. Each party may
change its address for notice purposes upon written notification thereof to the
other party in accordance with this section.
XI. The Company and the Optionee agree that: (a) they will
both be subject to and bound by all of the terms and conditions of the Plan, a
copy of which is attached hereto and made a part hereof; (b) any undefined
capitalized term used herein shall have the meaning ascribed to it in the Plan;
(c) in the event of a conflict between the terms of this Contract and the terms
of the Plan, the terms of the Plan shall govern; (d) the Company may amend the
Plan and the options granted to the Optionee under the Plan, subject to the
limitations contained in the Plan; and (e) Optionee shall comply with all
applicable laws relating to the Plan and the grant and exercise of this option
and the disposition of the shares of Common Stock acquired upon exercise of the
option, including without limitation, federal and state securities and "blue
sky" laws.
XII. This Contract shall be: (a) governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to the conflicts of law rules thereof; and (b) binding upon and inure to the
benefit of any successor or assign of the Company and to any heir, distributee,
executor, administrator or legal representative entitled to the Optionee's
rights hereunder. The invalidity, illegality or unenforceability of any
provision herein shall not affect the validity, legality or enforceability of
any other provision.
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EXECUTED as of the date first set forth above.
OPTIONEE: CTS:
- -------- ---
CELLULAR TECHNICAL SERVICES COMPANY, INC.
- ------------------------------ By---------------------------------------
Signature
WILLIAM C. ZOLLNER
- ------------------------------ -----------------------------------------
Print Name Print Name
- ------------------------------ -----------------------------------------
Social Security Number Title
Optionee's Address for Notices: CTS's Address for Notices:
- ------------------------------ -------------------------
- ------------------------------ 2401 Fourth Avenue, Suite 808
- ------------------------------ Seattle, Washington 98121
- ------------------------------ Attention: Chief Financial Officer
Attachments:
- ------------
1996 Stock Option Plan
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EXHIBIT C
-6-
[GRAPHIC OMITTED] EMPLOYEE AGREEMENT REGARDING
Intellectual Property and Proprietary Information
- --------------------------------------------------------------------------------
IN CONSIDERATION of my employment or my continued employment at will by
Cellular Technical Services Company, Inc. and/or any of its partners,
subsidiaries, or affiliated companies (hereinafter collectively referred to as
the "Company"), and in further consideration of the Company's award to me, while
employed by the Company, of an inventor's honorarium for the specific assignment
to the Company of each original U.S. Patent Application:
A. I hereby assign and agree to assign to the Company, all my
right, title and interest in and to all inventions,
discoveries, improvements, ideas, computer or other apparatus
programs and related documentation, and other works of
authorship (hereinafter each and collectively designated
"Intellectual Property"), whether or not capable of
registration under applicable patent or copyright laws or
susceptible to other forms of protection, which during the
period of my employment by the Company I may make or create,
solely or jointly with others, in whole or in part, either:
1. in the course of such employment, or
2. relating to the business or research or development
of the Company, or
3. with the use of the time, material, equipment,
supplies, or facilities of the Company, or its
private proprietary, confidential or trade secret
information.
This Agreement does not apply to an invention for which no equipment,
supplies, facilities, or private, proprietary, confidential or trade secret
information of the Company was used and which was developed entirely on my own
time, unless (a) the invention related (i) directly to the business of the
Company, or (ii) to the Company's actual or demonstrably anticipated research or
development, or (b) the invention results from any work performed by me for the
Company.
B. I further agree, without charge to the Company:
1. to disclose promptly to the Company all such
Intellectual Property,
2. to promptly, at the request of the Company, execute
a specific assignment to the Company of all right,
title and interest to such Intellectual Property,
including without limitation priority rights arising
from patent applications, and
3. to do anything else reasonably necessary to enable
the Company to secure patents, copyrights or other
forms of protection for such Intellectual Property
in the United States and in other countries.
C. I acknowledge and agree that in performing my responsibilities
as an employee of the Company, I will have access to
information regarding equipment, devices, software, designs,
research know- how, processes, technical data and other
technology, customers, marketing and production plans and
strategies, payroll and other financial information and
administrative information, and other information
(collectively the "Information"), pertaining to the Company's
business or its actual or anticipated research or development
(collectively the "Business"), which the Company considers
confidential and proprietary. Therefore, in order to protect
the legitimate business interests of the Company in such
Information, I agree as follows:
1. During the term of my employment with the Company and
for a period of five (5) years following the
termination thereof, I will hold in strictest
confidence all Information of the Company of which I
become aware in the course of my employment,
regardless of the form
of such Information, e.g., oral, written, electronic,
or otherwise. During this period, I will treat all
such Information as secret and confidential, but in
any event with no less care than that which a
reasonable person or business would utilize with
respect to trade secrets or highly confidential
information. In particular, I will:
a. restrict disclosure of the Information
solely to those employees of the Company
with a "need to know" and not disclose the
Information to any other person or entity
without prior written authorization of the
Company;
b. insure the proper safekeeping of the
Information and timely and complete
disposition or destruction of materials; and
c. not use the Information for my own benefit
or the benefit of others, or engage in
conduct which is competitive with the
Business.
For purposes of this Agreement, a "need to know"
means that the employee requires access to the
Information in order to perform his or her
responsibilities as an employee of the Company.
2. Notwithstanding the above, I will have no obligation
to preserve the confidentiality or honor the
restriction on use in Paragraph 1, above, as to any
Information which becomes part of the public domain
by other than an unauthorized disclosure or through
my fault. I agree that I will have the burden of
proving the existence of the exception to
confidentiality described in this Paragraph 2.
3. All information shall be deemed and remain the
property of the Company.
4. If I am required to disclose the Information by a
legal or regulatory action, then I will immediately
notify the Company in such time as to permit the
Company to intervene or contest such disclosure.
5. I agree to indemnify the Company and hold it harmless
from any and all claims, judgments, damages, losses,
costs, and expenses, including attorney's fees,
resulting from any publication, disclosure, or use by
me in violation of this Agreement.
D. I further agree that the various provisions of this Agreement:
1. shall be interpreted in accordance with Washington
law,
2. shall be binding upon my heirs, executors,
administrators, successors and assigns,
3. shall be deemed separable from each other, and the
invalidity of one provision shall not affect the
validity of any other provision,
4. shall not be deemed to provide or imply the duration
or other terms and conditions of my employment, and
-2-
5. shall not be modified, supplemented, or altered
except by a writing signed by both parties to this
Agreement.
E. In the event of a breach or threatened breach of this
Agreement, the parties shall be entitled to injunctive relief
and all other remedies provided by law. In the event of a
dispute regarding this Agreement, the prevailing party shall
be entitled to recover all attorney's fees and related
expenses incurred, including those incurred on appeal.
F. The masculine, feminine, singular and plural of any word or
words used in this Agreement shall be deemed to include and
refer to the gender and number appropriate in the context.
G. I hereby acknowledge having on this day received a copy of
this Agreement.
EMPLOYEE: COMPANY:
- -------- -------
William C. Zollner, Cellular Technical Services Company, Inc.
- ------------------
President & Chief Operating Officer 2401 Fourth Avenue, Suite 808
- -----------------------------------
Employee name and title Seattle, WA 98121
/s/ William C. Zollner 2/19/97 By /s/ Lynne Sederholm
- ----------------------------------- -------------------
Employee signature and date
Its Human Resources Manager
Date /s/ 2/20/97
-----------
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