EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“Agreement”) with an effective date of June 1,
2008 (the “Effective Date”) and dated December 31, 2008
(the “Execution Date”), is by and between Teletouch
Communications, Inc., a Delaware corporation (together with its
subsidiaries, the “Company”), and Robert M. McMurrey,
an individual residing in Fort Worth, Texas (the
“Employee”).
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire for
Employee to continue serving the Company as its Chairman
& Chief Executive Officer; and to continue serving in some
cases as the Chief Executive Officer of its various
subsidiaries, and
WHEREAS, the parties desire to provide that the
Employee be employed by the Company under the terms of this
Agreement.
NOW THEREFORE in consideration of
the mutual benefits to be derived from this Agreement, the Company
and the Employee hereby agree as follows:
1.
Term of Employment; Office and Duties
(a) Commencing
on the Effective Date of this Agreement (the “Employment
Date”), and for an initial term ending May 31, 2011, the
Company shall employ the Employee as a senior executive of the
Company with the title of Chairman & Chief Executive Officer,
and Chief Executive Officer of some of its various subsidiaries,
with the duties and responsibilities prescribed for such offices in
the Bylaws of the Company and such additional duties and
responsibilities consistent with such positions as may from time to
time be assigned to the Employee by the Board of
Directors. Employee agrees to perform such duties and
discharge such responsibilities in accordance with the terms of
this Agreement. This Agreement shall automatically renew
for successive additional one (1) year terms, unless
either the Company or the Employee (collectively the
“Parties” or individually the “Party”)
gives the other Party written advance notice of an intent not to
renew the Agreement at least sixty (60) days prior to its
expiration.
(b) The
Employee shall devote substantially all of his working time to the
business and affairs of the Company other than during vacations of
four weeks per year and periods of illness or incapacity;
provided , however , that nothing in this Agreement
shall preclude the Employee from devoting time
required: (i) for serving as a director or officer of
any organization or entity not in the cellular telephone business,
and any other businesses in which the Company is directly involved
or becomes involved as a function of Employee’s duties; (ii)
delivering lectures or fulfilling speaking engagements; or (iii)
engaging in charitable and community activities, including sitting
on any Boards of Directors and/or committees of such organizations
related to such activities; provided , however , that
such activities do not interfere with the performance of his duties
hereunder.
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2.
Compensation and Benefits .
For all services rendered by the Employee in any
capacity during the period of Employee’s employment by the
Company, including without limitation, services as an executive
officer or member of any committee of the Board of Directors or any
subsidiary, affiliate or division thereof, from and after the
Effective Date the Employee shall be compensated as
follows:
(a)
Base Salary . The Company shall pay the Employee
a fixed salary (“Base Salary”) at a rate of Three
Hundred and Eighty Thousand Dollars ($380,000) per year. The Board
of Directors may periodically review the Employee’s Base
Salary with a view to increasing such Base Salary if, in the
judgment of the Board of Directors, the earnings of the Company or
the services of the Employee merit such an
increase. Base Salary will be payable in accordance with
the customary payroll practices of the Company.
(b)
Annual Bonus . Employee will be entitled to
receive an annual bonus (the “Annual Bonus”), payable
each year no later than sixty (60) days after the end of the
Company’s most recently completed fiscal year. The final
determination on the total amount of the Annual Bonus will be made
by the Compensation Committee of the Board of Directors, based
primarily on mutually agreed upon performance criteria as set forth
in Annual Bonus - 2009 Performance Criteria: McMurrey (the
“Performance Criteria”), established with respect to
the ensuing fiscal year, within sixty (60) days of the end of each
fiscal year, or ninety (90) days after the start of any fiscal year
(the “Performance Criteria Agreement Period”), such as
the case may be. The Performance Criteria for the 2009 fiscal year
shall be established and mutually agreed upon on or before the date
of execution of this Agreement. In the event that the applicable
Performance Criteria cannot be mutually agreed upon by the
Compensation Committee and the Employee during the Performance
Criteria Agreement Period, such Performance Criteria shall be
established by majority vote of the Compensation Committee within
no more than thirty (30) days of the end of the Performance
Criteria Agreement Period, subject to the minimum Annual Bonus
payment terms and conditions further described herein below. The
targeted amount of the Annual Bonus shall be set by the
Compensation Committee during the Performance Criteria Agreement
Period in an amount up to Fifty Percent (50%), but in no event
shall bonus criteria be set whereby Employee has a bonus target of
less than Fifty Percent (50%) of the Executive’s base salary
(“Target Bonus Amount”). The Target Bonus Amount shall
be deemed earned if Employee meets the mutually agreed upon
Performance Criteria. The Compensation Committee may also consider
other more subjective factors in making its determination for any
fiscal period. The actual Annual Bonus for any given period may be
higher than or, if Employee fails to meet the Performance Criteria,
lower than 50% of Employee’s base salary. Specifically, the
Compensation Committee will give consideration to Performance
Criteria including Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (“Adjusted EBITDA”) as
further defined in that certain Loan and Security Agreement entered
into by and among the Company and Thermo Credit, LLC on April 30,
2008, and any modifications, exceptions, mutual releases and
successors thereto), and to other traditional criteria for
determining operating performance as may be mutually
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agreed
by the parties. The Performance Criteria may be reviewed and
revised from time to time during each annual period to adjust and
account for periodic changes to and for the Company’s
business needs, such as the case may be.
(c)
Fringe Benefits, Option Grants and Miscellaneous Employment
Matters .
(i) The Employee shall be entitled to
participate in such short-term disability, health and life
insurance and other fringe benefit plans or programs, including a
Section 401(k) retirement plan, of the Company established from
time to time by the Board of Directors, if any, to the extent that
his position, tenure, salary, age, health and other qualifications
make him eligible to participate, subject to the rules and
regulations applicable thereto. Such additional benefits
shall include, but not be limited to, paid sick leave, individual
health insurance and personal days, all in accordance with the
policies of the Company. Where possible, all waiting and
eligibility periods will be waived.
(ii) The Company will provide
Employee with term life insurance in an amount equal to one million
($1,000,000.00) at no direct or indirect cost to the
Employee. A portion of said life insurance coverage may
be through policies normally provided to the Company’s
officers. Employee shall have the right to designate the
beneficiary of the death benefits of said life
insurance.
(iii) The Employee shall be entitled
to a grant of non-qualified stock options (the “Employment
Options”) on the last business day of each fiscal year in
which this Agreement is in effect to purchase a minimum of 319,000
shares of the Company’s Common Stock, par value $.001 per
share (the “Common Stock”) with an exercise price to be
determined in the manner specified in the stock option or equity
incentive plan under which the grant is issued. Each annual grant
of Employment Options shall be fully vested upon
issuance. The term of the Employment Option is for a
period of ten (10) years from the date of grant, except that, in
the event of termination without Cause or not For Good Reason, the
Employment Option must be exercised with ninety (90) days of
termination.
(d)
Withholding and Employment Tax . Payment of all
compensation hereunder shall be subject to customary withholding
tax and other employment taxes as may be required with respect to
compensation paid by an employer/corporation to an
employee.
(e)
Disability . The Company shall maintain the
current disability insurance policy with MetLife Insurance Company
(the current insurance provider) providing income protection in the
event of Employee’s long term disability as defined in such
policy in an amount equal to at least 60% of Employee’s
salary with a minimum coverage of Sixteen Thousand Two Hundred
Fifty Dollars ($16,250) per month as calculated by the insurance
company. In addition, Employer shall maintain with a reputable
insurance company disability insurance providing additional income
protection in the amount of Five Thousand Dollars ($5,000.00) per
month in the event of Employee’s long term disability as
defined in such policy. Such policies shall be made active by the
Company within 60-Days of the Execution Date. In the event of the
Employee’s Disability (as hereinafter defined), the Employee
and his family shall continue to be
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covered by all of the Company’s life,
medical, health and dental plans, at the Company’s expense,
to the extent such benefits can be obtained at a reasonable cost,
for the term of such Disability (as hereinafter defined) in
accordance with the terms of such plans.
(f)
Death
. The
Company shall, to the extent such benefits can be obtained at a
reasonable cost, provide the Employee with life insurance benefits
at least as favorable to the Employee as those being provided by
the Company to other senior executives of the
Company. In the event of the Employee’s death, the
Employee’s family shall continue to be covered by all of the
Company’s medical, health and dental plans, at the
Company’s expense, to the extent such benefits can be
obtained at a reasonable cost, effective January 1, 2009, for
thirty-six (36) months following the Employee’s death in
accordance with the terms of such plans.
(g)
Vacation .
Employee shall receive four (4) weeks of vacation annually,
administered in accordance with the Company’s existing
vacation policy.
3.
Business Expenses .
The Company shall pay or reimburse all
reasonable travel and entertainment expenses incurred by the
Employee in connection with the performance of his duties under
this Agreement, including reimbursement for attending out-of-town
meetings of the Board of Directors in accordance with such
procedures as the Company may from time to time establish for
senior officers and as required to preserve any deductions for
federal income taxation purposes to which the Company may be
entitled and subject to the Company’s normal requirements
with respect to reporting and documentation of such expenses.
Notwithstanding the foregoing, all expenses must be promptly
submitted for reimbursement by the Employee. In no event
shall any reimbursement be paid by the Company after the end of the
year following the year in which the expense is incurred by the
Employee.
4.
Termination of Employment .
Notwithstanding any other provision of this
Agreement, Employee’s employment with the Company may be
terminated upon written notice to the other Party as
follows:
(a) By
the Company, in the event of the Employee’s death or
Disability (as hereinafter defined) or for Cause (as hereinafter
defined). For purposes of this Agreement,
“Cause” shall mean either: (i) the indictment of, or
the bringing of formal charges against, Employee by a governmental
authority of competent jurisdiction for charges involving criminal
fraud or embezzlement; (ii) the conviction of Employee of a crime
involving an act or acts of dishonesty, fraud or moral turpitude by
the Employee, which act or acts constitute a felony; (iii)
Employee’s continued failure to substantially perform
Employee’s duties hereunder, as reasonably determined by the
Board of Directors, which is not cured in a reasonable time, which
time shall be 30 days from receipt of written notice from the Board
of Directors specifically setting forth such failure; (iv) Employee
having willfully caused the Company, without the approval of the
Board of Directors, to fail to abide by either a valid material
contract to which
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the
Company is a party or the Company’s Bylaws; (v) Employee
having committed acts or omissions constituting gross negligence or
willful misconduct with respect to the Company; (vi) Employee
having committed acts or omissions constituting a material breach
of Employee’s duty of loyalty or fiduciary duty to the
Company or any material act of dishonesty or fraud with respect to
the Company which are not cured in a reasonable time, which time
shall be 30 days from receipt of written notice from the Company of
such material breach; or (vii) Employee having committed acts or
omissions constituting a material breach of this Agreement which
are not cured in a reasonable time, which time shall be 30 days
from receipt of written notice from the Company of such material
breach. A determination that Cause exists as defined in
clauses (iv), (v), (vi) or (vii) (as to this Agreement) of the
preceding sentence shall be made by at least a majority of the
members of the Board of Directors. For purposes of this
Agreement, “Disability
