Exhibit 10.17
EMPLOYMENT AGREEMENT
THIS
AGREEMENT (the “ Agreement ”), dated as of
February 23, 2009 and effective as of the Closing Date (as defined
below), if one occurs, is by and between Woodland Wireless
Solutions, Ltd., a Michigan corporation (the “ Company
”), and Ned Timmer (“ Executive ”).
Capitalized terms used herein are defined in Section 9 and
throughout this Agreement.
WHEREAS,
Woodland Holdings Corp., a Delaware corporation (the “
Buyer ”) is purchasing 100% of the issued and
outstanding equity interests of each of the Company, West Michigan
Co-Location Services, LLC, a Michigan limited liability company and
T2 TV, LLC, a Michigan limited liability company, pursuant to a
certain Stock Purchase Agreement, dated the date hereof (the
“ Stock Purchase Agreement ”), by and among the
Company, Cornerworld Corporation, a Nevada corporation (“
Cornerworld ”), the Executive and HCC Foundation, a
Michigan not-for-profit corporation;
WHEREAS,
the Buyer is purchasing 100% of the issued and outstanding equity
interests of each of Phone Services and More, LLC, a Michigan
limited liability company doing business as Visitatel, and T
Squared Communications LLC, a Michigan limited liability company,
pursuant to that certain Unit Purchase Agreement, dated the date
hereof (the “ Unit Purchase Agreement ”, and
together with the Stock Purchase Agreement, the “ Purchase
Agreements ”) by and between Buyer and the
Executive.
WHEREAS,
it is a pre-condition to the Company’s obligation to
consummate the transactions contemplated by the Purchase Agreements
that Executive and the Company enter into this
Agreement;and
WHEREAS,
the Company desires to employ Executive, and Executive desires to
accept employment with the Company, on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as
follows:
1.
Employment Term . Unless earlier terminated in accordance with
Section 4 hereof, the term of this Agreement shall be the four-year
period commencing as of the date hereof and ending on the day
before the fourth anniversary of the date hereof (the “
Term ”); provided that, in no event shall
Executive’s employment be terminated without Cause prior to
the date that is twenty-four (24) months from the date hereof,
except upon the unanimous consent of the Board of Directors of
Cornerworld (with Executive recusing himself from such
deliberations).
2.
Employment .
(a)
Employment by the Company . Executive agrees to be employed
by the Company upon the terms and subject to the conditions set
forth in this Agreement. Executive shall serve as the Chief
Operating Officer of the Woodland Holdings Corp., and
shall
1
report to the Board of Directors
of Buyer (the “ Board of Directors ”) and the
Chief Executive Officer of Cornerworld or their respective
designees.
(b)
Performance of Duties . In his capacity as Chief Operating
Officer of the Buyer, Executive shall be responsible for the
following, with respect to the Buyer and all of its subsidiaries:
(i) overview of the operations and performance of technical and
computer equipment including, without limitation, servers,
switches, Video Head-end, routers and satellite dish, (ii)
supporting customer relations, (iii) review, reconciliation and
approval of all financial statements, (iv) overview of the
following departments/groups: billing, customer service, technical
and equipment, (v) assisting in the implementation of new
initiatives by the Board of Directors and/or the Chief Executive
Officer of Cornerworld, (vi) supporting the implementation and
execution of the budget and projections as approved by the Board of
Directors of Cornerworld, and (vii) such other duties and
responsibilities he may be reasonably assigned by the Board of
Directors and/or the Chief Executive Officer of Cornerworld or
their respective designees. The Executive hereby agrees to accept
such employment and to render the services described above.
Throughout the Term, Executive agrees to: (i) devote his full
business effort, time, attention, energy, and skill to his position
with the Buyer and the duties set forth herein (subject to the
Company’s policies with respect to vacations and absences);
(ii) faithfully, loyally, and industriously perform such duties and
serve the Buyer and its subsidiaries to the best of
Executive’s ability; (iii) comply with all of the
Company’s policies and procedures, as well as all applicable
law and regulations, that are known or should be known to
Executive; and (iv) comply with all reasonable requests,
instructions and regulations made by Cornerworld. Executive’s
employment under this Agreement shall be on a part-time basis. It
is anticipated that Executive will spend an average of sixteen (16)
hours per week, during normal business hours, attending to the
business and affairs of the Company and, at the direction of the
Board of Directors and/ or the Chief Executive Officer of
Cornerworld or their respective designees, traveling in accordance
with Section 2(c).
(c)
Place of Performance . Executive may work remotely from his
office in Cape Coral, Florida, or any other suitably equipped
location. Executive agrees to travel to the Company’s
principal offices located at 301 Hoover Blvd, Holland, Michigan, as
necessary or appropriate in the performance of Executive’s
duties, as reasonably determined by the Board of Directors and/or
the Chief Executive Officer of Cornerworld or their respective
designees.Executive recognizes that his duties will require him, at
the Company’s expense, to travel to domestic and
international locations.
3.
Compensation and Benefits .
(a)
Base Salary . The Company agrees to pay to Executive a base
salary (“ Base Salary ”) at the annual rate of
$50,000. Payments of the Base Salary shall be payable in equal
installments in accordance with the Company’s standard
payroll practices.
(b)
Profit Participation . Executive shall be eligible to
receive an annual profit participation payment (the “
Profit Participation Payment ”). The Profit
Participation Payment payable to Executive in respect of a
Participation Year, if any, shall be equal to fifty percent (50%)
of such Participation Year’s Adjusted EBITDA over the June
2008 Adjusted EBITDA. The Profit Participation Payment under this
Section 3(b) shall be in lieu of any bonus
2
payable under any bonus plan or
program applicable to employees of the Company generally (including
any bonus plan or program operated by an affiliate of the Company
and made applicable to employees of the Company
generally).
|
|
|
|
|
(i)
Participation Payment Calculation . As promptly as
practicable, but in any event within thirty (30) days after the end
of each Participation Year, Buyer shall prepare and deliver to the
Executive (i) Financial Statements for such Participation Year,
(ii) a statement of the Profit Participation Payment for such
Participation Year, which shall explain in reasonable detail the
calculations of Adjusted EBITDA for such Participation Year (a
“ Participation Payment Statement ”) and (iii)
any and all reasonable supporting documentation in such detail as
is reasonably requested by the Executive to enable the Executive to
verify the amounts set forth in such Financial Statements and in
such Participation Payment Statement.
|
|
|
|
|
|
(ii)
Dispute . The Executive may dispute such Financial
Statements and/or Profit Participation Payment Statement for such
Participation Year by sending a written notice (a “
Dispute Notice ”) to Buyer within fifteen (15) days
after Buyer’s delivery to the Executive of such Financial
Statements, Participation Payment Statement, and any supporting
documents required to be produced pursuant to Section 3(b)(i). The
Dispute Notice shall identify each disputed item on the Financial
Statements or Participation Statement, specify the amount of such
dispute and set forth in reasonable detail the basis for such
dispute. In the event of any such disputes, Buyer and the Executive
shall attempt, in good faith, to reconcile their differences, and
any resolution by them as to any disputed items shall be final,
binding and conclusive on the parties and shall be evidenced by a
writing signed by Buyer and the Executive, including, as
appropriate, revised Financial Statements (“ Revised
Financial Statements ”) and/or a revised Participation
Payment Statement (a “ Revised Participation Payment
Statement ”) reflecting such resolution. If Buyer and the
Executive are unable to resolve all disputed items within fifteen
(15) days after the Executive’s delivery of the Dispute
Notice to Buyer, then Buyer and the Executive shall promptly
evidence any resolved disputes in writing signed by Buyer and
Executive and submit any remaining disputed items for final binding
resolution to any independent accounting firm mutually acceptable
to Buyer and the Executive (which accounting firm has not, within
the prior sixty (60) months, provided services to the Executive or
Cornerworld or any of their affiliates). If Buyer and the Executive
are unable to agree upon an independent accounting firm within
thirty (30) days after the Executive’s delivery of the
Dispute Notice to Buyer, an independent accounting firm selected by
Buyer (which accounting firm has not, within the prior sixty (60)
months, provided services to Executive or Cornerworld or any of
their Affiliates) and an independent accounting firm selected by
the Executive (which accounting firm has not, within the prior
sixty (60) months, provided services to Executive or Cornerworld or
any of its Affiliates) shall select an independent accounting firm
that has not, within the prior sixty (60) months, provided services
to Executive or Cornerworld or any of their Affiliates. Such
independent accounting firm mutually agreed upon by Buyer and the
Executive or
|
3
|
|
|
|
|
by the procedure referenced in
the immediately preceding sentence, as the case may be, is
hereinafter referred to as the “ Independent Accounting
Firm .” If any remaining disputed items are submitted to
an Independent Accounting Firm for resolution, (i) each party will
furnish to the Independent Accounting Firm such work papers and
other documents and information relating to the remaining disputed
items as the Independent Accounting Firm may request and are
available to such party, and each party will be afforded the
opportunity to present to the Independent Accounting Firm any
material relating to the disputed items and to discuss the
resolution of the disputed items with the Independent Accounting
Firm; (ii) each party will use its good faith commercially
reasonable efforts to cooperate with the resolution process so that
the disputed items can be resolved within forty-five (45) days
after submission of the disputed items to the Independent
Accounting Firm; (iii) the determination by the Independent
Accounting Firm, as set forth in a written notice to Buyer and the
Executive (which written notice shall include, as appropriate,
Revised Financial Statements and/or a Revised Participation Payment
Statement), shall be final, binding and conclusive on the parties;
and (iv) the fees and disbursements of the Independent Accounting
Firm shall be allocated between Buyer and Executive in the same
proportion that the aggregate amount of the disputed items
submitted to the Independent Accounting Firm that are
unsuccessfully disputed by each party (as finally determined by the
Independent Accounting Firm) bears to the total amount of all
disputed items submitted to the Independent Accounting
Firm.
|
|
|
|
|
|
(iii)
The Financial Statements for such fiscal year and the Participation
Payment Statement or, if either have been adopted pursuant to
Section 3(b), the Revised Financial Statements and/or the Revised
Participation Payment Statement, shall be deemed to be final,
binding and conclusive on Buyer and Executive (“ Final
Statements ”) upon the earliest of (i) the failure of the
Executive to deliver to Buyer the Dispute Notice within fifteen
(15) days after Buyer’s delivery to the Executive of the
Financial Statements, the Participation Statement and other
supporting documents required to be produced pursuant to Section
3(b)(i) for such Participation Year to the Executive; (ii) the
resolution of all disputes by Buyer and the Executive, as evidenced
by, as appropriate, Revised Financial Statements and/or a Revised
Participation Payment Statement; and (iii) the resolution of all
disputes by the Independent Accounting Firm, as evidenced by, as
appropriate, Revised Financial Statements and/or a Revised
Participation Payment Statement. Any Profit Participation Payment
based on Final Statements shall be made in accordance with
subsection (iv) hereof.
|
|
|
|
|
|
(iv)
Profit Participation Payments . Each Profit Participation
Payment shall be paid and payable by Buyer, the Company or any
Affiliate of any of them, subject to adjustment in accordance with
Section 3(b)(v) below, to Executive with respect to each
Participation Year and shall be paid on a date or dates selected by
Buyer or the Company, as applicable, that results in the payment of
such Profit Participation Payment to Executive in full on or before
the fifth business day after the date on which the Final Statements
are deemed final, binding and conclusive for such Participation
Year (the “ Final Determination
|
4
|
|
|
|
|
Date ”). In the event the Final Determination
Date has not been set prior to April 1 st following such
Participation Year, Buyer shall pay to Executive an amount, in
cash, equal to eighty percent (80%) of its good faith estimate of
the Profit Participation Payment for such Participation Year (the
“ Partial Payment ”) on April 1 st
following such Participation Year. Following payment by Buyer of
the Partial Payment, if, upon the adoption of the Final Statements
for such Participation Year in accordance with Section 3(b)(iii),
such Final Statements set forth that no Profit Participation
Payment was due for such Participation Year, Executive shall
promptly return the Partial Payment to the Buyer. If, on the other
hand, such Final Statements set forth that a Profit Participation
Payment was due for such Participation Year, Buyer shall pay the
remaining portion of the Profit Participation Payment on or before
the fifth Business Day after the Final Determination Date. Each
Profit Participation Payment shall be paid in cash and in no event
shall a Profit Participation Payment be made later than the last
day of the calendar year in which the applicable Participation Year
ended. In the event that an amount due under this Section 3(b)
shall not be paid to Executive on or before its due date, such
amounts shall bear interest at a rate per annum equal to the Prime
Rate plus six and one-quarter percent (6 ¼%), calculated and
payable monthly, compounded monthly, and Executive shall be
entitled to pursue any remedies available to him under this
Agreement or applicable law.
|
|
|
|
|
|
(v)
Adjustment to Profit Participation Payment . Promptly
following the completion of the Buyer’s Audited Financial
Statements, but in no event more than ten (10) business days after
filing with the SEC by Cornerworld of its Annual Report on Form
10-K for the fiscal year ended April 30 th in the
applicable Participation Year or later than the last day of the
calendar in which the Participation Year ended:
|
|
|
|
|
|
|
(A)
|
if the Actual Audited EBITDA for
the periods covered in any Participation Year exceeds the EBITDA
set forth in such Participation Year’s Participation Payment
Statement, then Buyer shall pay to Executive a cash amount equal to
fifty percent (50%) of such excess amount, rounded to the nearest
dollar, by means of a wire transfer of immediately available funds
to the account directed by Executive;
|
|
|
|
|
|
|
(B)
|
if the Actual Audited EBITDA for
the periods covered in any Participation Year is equal to the
EBITDA set forth in such Participation Year’s Participation
Payment Statement, then no payment shall be made to either the
Buyer or the Executives at such time pursuant to this Section
3(b)(v); and
|
|
|
|
|
|
|
(C)
|
if the Actual Audited EBITDA for
the periods covered in any Participation Year is less than the
EBITDA set forth on such Participation Year’s Participation
Payment Statement, then Executive shall pay to Buyer a cash amount
equal to
|
5
|
|
|
|
|
|
|
fifty percent (50%) of such
shortfall amount, rounded to the nearest dollar, by means of a wire
transfer of immediately available funds to the account directed by
Buyer.
|
Notwithstanding anything to the
contrary herein, there shall be no adjustment to the Participation
Payment pursuant to this Section 3(b)(v) if disputed items were
submitted to an Independent Accounting Firm for resolution in
accordance with Section 3(b)(ii) and a binding resolution of all
disputes was made by the Independent Accounting Firm.
(c)
Medical Insurance . Executive shall be entitled to
participate in, to the extent Executive is otherwise eligible under
the terms thereof, the medical insurance plans generally provided
by the Company to executives of the Company (subject to applicable
employee contributions).
(d)
Business Expenses . The Company agrees to reimburse
Executive for all reasonable and necessary travel, business
entertainment and other business expenses incurred by Executive in
connection with the performance of his duties under this Agreement,
including but not limited to cell phone and high speed internet
service for each year during the Term, a laptop computer and a fax
machine. Such reimbursements shall be made by the Company on a
timely basis upon submission by Executive of vouchers in accordance
with the Company’s standard procedures.
(e)
No Other Compensation or Benefits; Payment . The
compensation and benefits specified in this Section 3 and in
Section 5 of this Agreement shall be in lieu of any and all other
compensation and benefits. Payment of all compensation and benefits
to Executive specified in this Section 3 and in Section 5 of this
Agreement (i) shall be made in accordance with the relevant Company
policies in effect from time to time to the extent the same are
consistently applied, including normal payroll practices, and (ii)
shall be subject to all legally required and customary
withholdings.
(f)
Cessation of Employment . In the event Executive shall cease
to be employed by the Company for any reason, then
Executive’s compensation and benefits shall cease on the date
of such event, except as otherwise specifically provided herein or
in any applicable employee benefit plan or program or as required
by law.
4.
Termination of Employment . Subject to Section 1 of this Agreement,
Executive’s employment hereunder may be terminated prior to
the end of the Term under the following circumstances.
(a)
Death . Executive’s employment hereunder shall
terminate upon Executive’s death.
(b)
Executive Becoming Totally Disabled . The Company may
terminate Executive’s employment hereunder at any time after
Executive becomes “Totally Disabled.” For purposes of
this Agreement, Executive shall be “Totally Disabled”
in the event Executive is unable to perform the duties and
responsibilities contemplated under this Agreement for a period of
90 consecutive days due to physical or mental incapacity or
impairment. During any period that Executive fails to perform
Executive’s duties hereunder as a result of
incapacity
6
due to physical or mental illness
(the “ Disability Period ”), Executive shall
continue to receive the compensation and benefits provided by
Section 3 of this Agreement until Executive’s employment
hereunder is terminated; provided, however, that the amount of base
compensation and benefits received by Executive during the
Disability Period shall be reduced by the aggregate amounts, if
any, payable to Executive under any disability benefit plan or
program provided to Executive by the Company.
(c)
Termination by the Company for Cause . The Company may
terminate Executive’s employment hereunder for Cause at any
time after providing written notice to Executive. For purposes of
this Agreement, the term “Cause” shall mean any of the
following: (i) the neglect or failure or refusal of Executive to
perform Executive’s duties hereunder (other than as a result
of total or partial incapacity due to physical or mental illness),
provided that the Company notifies Executive in writing of such
failure or refusal and Executive fails to cure same within ten (10)
days of such notice; (ii) the engaging by Executive in gross
misconduct which is injurious to the Company, monetarily or
otherwise; (iii) Executive’s perpetration of an intentional
and knowing fraud against or affecting the Company or any of its
affiliates or any customer, client, agent, or employee thereof;
(iv) any willful or intentional act by Executive that could
reasonably be expected to injure the reputation, business, or
business relationships of the Company or any of its affiliates or
Executive’s reputation or Company business relationships;
(v) Executive’s material failure to comply with, and/or
a material violation by Executive of, the internal policies of the
Company or any of its affiliates and/or procedures or any laws or
regulations applicable to Executive’s conduct as an employee
of the Company, provided that, if susceptible of cure, the Company
notifies Executive in writing of such failure or violation and
Executive fails to cure same within ten (10) days of such notice;
(vi) Executive’s indictment or conviction (including
conviction on a nolo contendere plea) of a felony or
any crime involving fraud, dishonesty or moral turpitude; (vii)
Executive’s breach of a covenant set forth in Section 6; or
(viii) any other material breach by Executive of this
Agreement.
(d)
Termination by the Company Without Cause . Subject to
Section 1 of this Agreement, the Company may terminate
Executive’s employment hereunder at any time for any reason
or no reason by giving Executive thirty (30) days prior written
notice of the termination. Following any such notice, the Company
may reduce or remove any and all of Executive’s duties,
positions and titles with the Company.
(e)
Termination by Executive for Good Reason . Executive may
terminate his employment hereunder for Good Reason at any time
after providing written notice to the Company. For purposes of this
Agreement, the term “Good Reason” shall mean any of the
following: (i) the Company fails to pay the compensation described
in Sections 3(a) and 3(b) (in accordance with, and subject to, such
provisions); (ii) a default by the Buyer of its obligations under
the Timmer Purchase Money Note (as defined in the Stock Purchase
Agreement); or (iii) Executive no longer holds the office of Chief
Operating Officer of the Woodland Group, or an office of equivalent
stature, or his functions and/or duties are materially diminished;
provided, however, that a termination by Executive for Good Reason
shall be effective only if, within 30 days following delivery of a
written notice by Executive to the Company that Executive is
terminating his employment for Good Reason (which notice must be
provided to the Company
7
by Executive within 30 days of
the event giving rise to Good Reason), the Company has failed to
cure the circumstances giving rise to Good Reason.
(f)
Termination by Executive Without Good Reason . Executive may
terminate his employment hereunder at any time for any reason or no
reason by giving the Company thirty (30) days prior written notice
of the termination. Following any such notice, the Company may
reduce or remove any and all of Executive’s duties, positions
and titles with the Company, and any such reduction or removal
shall not constitute Good Reason.
5.
Compensation Following Termination Prior to the End of the
Term . In the event
that Executive’s employment hereunder is terminated prior to
the end of the Term, for reasons other than as described in Section
5(c), Executive shall be entitled only to the following
compensation and benefits upon such termination:
(a)
General . On any t
