EXHIBIT (e)(11)
EMPLOYMENT AGREEMENT
This Employment Agreement("Agreement") is entered into effective as of the 1st
day of August 2002 (the "Effective Date") by and between T-NETIX, Inc. a
Colorado Corporation ("T-NETIX"), and Xxxxxx Xxxxxx ("Employee").
WHEREAS, T-NETIX desires to continue to have the benefits of Employee's
knowledge and experience as a full-time executive without distraction by
employment-related uncertainties and considers such employment a vital element
to protecting and enhancing the best interests of T-NETIX, and its subsidiaries
and shareholders, and Employee desires to continue to be employed full-time with
T-NETIX; and
WHEREAS, T-NETIX and Employee desire to enter into an agreement under which
Employee will be employed by T-NETIX for a one-year term commencing on the
Effective Date;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other good and valuable consideration, the parties agree as follows:
1. TERM. T-NETIX hereby agrees to employ Employee for a one-year
term commencing on the Effective Date and ending on the first
anniversary date of the Effective Date, provided a written
120-day notice is given to the Employee or unless earlier
terminated as provided in this Agreement. The term of this
Agreement may only be extended by the mutual agreement of the
parties hereto.
2. DUTIES. Employee shall serve at the direction of the EVP of
Sales and Field Operations and shall assume duties consistent
with a General Manager. Employee agrees to devote
substantially all his time, attention, and best efforts to the
performance of his duties.
3. COMPENSATION. T-NETIX shall compensate Employee for the
services rendered under this Agreement as follows:
(a) An annual base salary ("Base Salary") determined by
the EVP of Sales and Field Operations in its
discretion and consistent with its practices for
employees of T-NETIX, but not less than $165,000 per
year, payable in equal bi-weekly installments (less
applicable withholding) in accordance with the
customary payroll practices of T-NETIX for the
payment of Employees.
(b) Employee shall be entitled to an annual bonus of up
to 20% of his base salary upon achieving performance
objectives and T-NETIX meeting the profit objectives
established by the CEO. Additional bonus
compensation above the 20% may be approved at the
sole discretion of the CEO.
(c) If Employee's base salary is increased at any time,
it shall not thereafter be decreased during the term
of this Agreement, unless such decrease is the result
of a general reduction affecting the base salaries of
substantially all other employees of T-NETIX.
4. EMPLOYEE BENEFITS.
(a) Employee shall be entitled to full participation on a
basis commensurate with his position with T-NETIX, in
all plans of life, accident, medical payment, health
and disability insurance, bonuses, retirement,
pension, perquisites and other employee benefit and
pension plans which generally are made available to
employees of T-NETIX or its subsidiaries ("T-NETIX
Benefit Plans"), except for such plans which the
Board, in its sole discretion, shall adopt for select
employees to compensate them for special or
extenuating circumstances.
(b) Employee shall be entitled to an annual vacation
leave at full pay as may be provided for by T-NETIX's
vacation policies applicable to employees, but in any
event such paid vacation shall not be less than three
weeks in the aggregate.
5. TERMINATION AND RIGHTS UPON TERMINATION.
(a) DEATH, TOTAL DISABILITY OR RETIREMENT
(i) This agreement shall automatically terminate
upon the death, total disability, or
retirement of Employee.
(ii) Total disability shall be deemed to occur
if, as a result of his incapacity resulting
from physical or mental illness or disease
(including alcohol or other substance
addiction), which is likely to be permanent,
Employee shall have been unable to perform
his duties hereunder for a period of more
than 120 consecutive days during any twelve
month period. The CEO will determine if
Employee's termination is due to total and
permanent disability according to any
long-term disability plan then in effect for
executives of T-NETIX, and otherwise in good
faith consistent with generally prevailing
practices of employers.
(iii) Upon termination for Employee's death,
T-NETIX shall continue to pay Employee's
salary to a legal representative previously
designated in writing by Employee (the
"Legal Representative"), or if no such
designation has been made, to Employee's
estate, for the remaining term of this
Agreement in bi-weekly increments.
2
(iv) Upon termination for Employee's total
disability, T-NETIX shall continue to pay
Employee's salary to the Legal
Representative (or if no designation has
been made, to Employee or Employee's other
legal representative) and shall continue
Employee's participation in all T-NETIX
Benefit Plans, for a period of the greater
of twelve months or the remaining term of
this Agreement in monthly increments.
(v) Upon termination for Employee's retirement
at any time after Employee reaches the age
of 65, Employee's rights to compensation
shall end and Employee shall not be entitled
to continuation of salary.
(vi) Following any termination pursuant to this
section 5(a), the Legal Representative or
Employee, Employee's heirs, administrator,
or executor, as applicable, shall have a
period of one year from the date this
Agreement is terminated to exercise any
options previously granted to Employee. All
Options shall continue to vest during such
one-year period in accordance with the
vesting schedule included as part of the
grant of the applicable Options.
(b) TERMINATION FOR CAUSE
(i) T-NETIX may terminate this Agreement at any
time For Cause (as defined in the following
sentence). A Termination for Cause means any
of (A) the willful failure by Employee to
follow the reasonable instructions of the
EVP of Sales and Field Operations after
written notice of such failure has been
given to Employee by the EVP of Sales and
Field Operations, (B) the willful commission
by Employee of acts that are dishonest,
unethical, or inconsistent with the local
normal business standards, (C) the
commission by Employee of a felonious act,
(D) intentional wrongful disclosure of
confidential information of T-NETIX, (E)
Employee's engagement in any competitive
activity in violation of Section 12, or (F)
Employee's gross neglect of his duties.
(ii) Employee's right to compensation and
participation in T-NETIX Benefit Plans shall
end and Employee shall not be entitled to a
severance/separation payment, if T-NETIX
terminates this Agreement For Cause.
(c) TERMINATION WITHOUT CAUSE
(i) T-NETIX may terminate this Agreement at any
time Without Cause, upon 120 days notice to
Employee. The termination of Employee's
employment by T-NETIX for any reasons other
than those specified in Section 5(b)(i)
shall be deemed a Termination Without Cause.
3
(ii) Upon Termination Without Cause other than
following a Change of Control, Employee will
be entitled to a severance/separation
payment equal to the amount of the salary
that would be payable to Employee through
the term of this Agreement at his then
effective salary provided the Employee had
not been so terminated in equal monthly
installments for the remainder of the
Agreement.
(d) RESIGNATION. Employee may terminate this Agreement at
any time upon thirty days written notice to T-NETIX.
Employee's termination pursuant to this Section 5(d)
shall be deemed a Voluntary Resignation. In the event
of the Employee's Voluntary Resignation other than
following a Change in Control, Employee's right to
compensation and participation in T-NETIX Benefits
Plans shall end, and Employee shall not be entitled
to a severance/separation payment.
(e) TERMINATION FOLLOWING A CHANGE OF CONTROL. Employee's
termination rights following a Change of Control are
governed by the provisions of Section 7.
(f) The SEVERANCE/SEPARATION payments provided in parts
(C) (ii) and (d) (iii) of this Section 5 are intended
to be in lieu of an not in addition to any payment to
Employee on account of salary for the unexpired term
of this Agreement.
6. DEFINITION OF CHANGE OF CONTROL. For the purposes of this
Agreement, A Change of Control of T-NETIX shall be deemed to
have taken place if one or more of the following occurs:
(a) Any person or entity, as that term is used in Section
13 (d) and 14 (d)(2) of the Securities Exchange Act
of 1934 as emended (the "Exchange Act"), other than
(i) a qualified benefit plan of T-NETIX or an
affiliate of T-NETIX; (ii) any person who is a
stockholder or beneficial owner of stock as of the
Effective Date (a "Current Stockholder"); (iii) any
successor of a Current Stockholder who acquires his
shares by inheritance, devise, trust, or operation of
law directly from such Current Shareholder (a
"Successor"); or (iv) any person or group of which
Current Stockholders or Successors hold stock
representing an interest of one-third or more of the
person's or groups total stock, becomes a beneficial
owner (as defined in Rule 13d-3 under the Exchange
Act as n effect on the date hereof) directly or
indirectly of securities of T-NETIX representing
fifty percent (50%) or more of the combined voting
power of T-NETIX's then outstanding securities.
(b) T-NETIX's shares are publicly traded, and individuals
who, as of the date immediately following the date
T-NETIX shares are first publicly traded, constitute
the Board, cease for any reason to constitute at
least
4
a majority of the Board, unless any such change is
approved by a unanimous vote of the directors in
office immediately prior to such cessation.
(c) T-NETIX shall (in a single transaction or a series of
related transaction) issue share, sell or purchase
assets, engage in a merger or engage in any other
transaction immediately after which securities of the
merged company representing fifty percent (50%) or
more of the combined voting powers of the then
outstanding securities of the merged company shall be
ultimately owned by persons who shall not have owned
voting securities of T-NETIX prior to such
transaction or who shall be a party to such
transaction.
(d) T-NETIX and is affiliates shall sell or dispose of
(in a single transaction or series of related
transactions) business operations which generated a
majority of the consolidated revenues (determined on
the basis of T-NETIX's four most recently completed
fiscal quarters) of T-NETIX and its subsidiaries
immediately prior thereto.
(e) The Board shall approve the distribution to T-NETIX's
shareholders of all or substantially all of T-NETIX's
net assets or shall approve the dissolution of
T-NETIX.
(f) The definition of change in control does not apply to
the sale of a subsidiary or asset.
(g) Any other transaction or series of transactions
occurring which have substantially the effect of the
transaction specified in any of the preceding clauses
in this Section 6.
7. RIGHTS UPON CHANGE OF CONTROL.
(a) If a Change of Control shall occur, Employee shall be
entitled to a severance/separation payments, in an
amount equal to the amount of the salary at the
current rate payable in equal bi-weekly installments
for a 12 month period upon Employee's Voluntary
Resignation following a Change of Control.
(b) The severance/separation payment payable to Employee
under part (a) above shall not exceed the maximum
payment which, after taking into account all other
compensation and benefits which may be payable to
Employee, is permitted to be deducted as compensation
expense by T-NETIX and to be received by the Employee
without liability for the assessment of an excise tax
on such payment under the applicable provisions of
the Internal Revenue Code. In the event of any
disagreement between the parties regarding the
determination of the
5
amount under clause (i) or (ii) above (a "Section
7(b) Dispute"), the matter shall be resolved by
arbitration as provided in Section 14.
8. OTHER SEVERANCE/SEPARATION BENEFITS. If at any time during the
term of this Agreement, Employee is Terminated Without Cause,
or the Agreement is terminated by Employee's Voluntary
Resignation following a Change of Control as provided in
Section 7, then Employee shall be entitled to all of T-NETIX
Benefits Plans for the remainder of this Agreement.
9. TIMING OF PAYMENT. The parties agree that, in the event this
Agreement is terminated following a Change of Control, damaged
for delay in T-NETIX's paying Employee any amounts due
hereunder on the date required under Section 7 may be
difficult to ascertain precisely. T-NETIX and Employee
therefore agree that in such event, if the aggregate amount
not paid on any required date exceeds five percent (5%) of the
total amount due to Employee pursuant to parts (a) and (c) of
Section 7, Employee shall be entitled to an additional
payment, as liquidated damages and not as a penalty, an amount
not to exceed 10% of the amount owed the Employee.
10. OTHER BENEFITS. The provisions of Sections 5, 7, and 8 shall
not affect Employee's participation in, or termination of
distributions and vested rights under, any T-NETIX Benefits
Plan to which Employee is entitled pursuant to the terms of
such plan, except as otherwise expressly provided in Section
5, 7, and 8.
11. NON-DISCLOSURE AGREEMENT.
(a) In connection with his employment with T-NETIX,
Employee will have access to and become acquainted
with various trade secrets and other proprietary and
confidential information of T-NETIX. "Trade secrets
and other proprietary and confidential information"
include but are not limited to the following: (1)
business, pricing, marketing and cost data; (2)
technical information; (4) customer and supplier
lists; (5) contents of contracts and agreements with
customers; and (6) CUSTOMER REQUIREMENTS AND
SPECIFICATIONS. Employee acknowledges that the trade
secrets and other proprietary and confidential
expenditure of substantial time, effort and money and
provide T-NETIX with an advantage over competitors
who do not know or use such trade secrets and other
proprietary and confidential information.
(b) In Consideration for access to trade secrets and
other proprietary and confidential information,
Employee agrees that during the Non-competition
Period (as defined in Section 12) the employee will
not directly or indirectly disclose or use for any
reason whatsoever any trade secrets and other
proprietary and confidential information obtained by
the employee by reason of their employment with
T-NETIX, except as required to conduct the business
of T-NETIX or as
6
authorized by express written permission of the Board
or as otherwise required by law.
(c) Employee confirms that all trade secrets and other
proprietary and confidential information, and all
documents reflecting such information, remain the
exclusive properties of T-NETIX. All business record,
papers and documents kept or made by Employee
relation to the business of T-NETIX shall be and
remain the property of T-T-NETIX and shall be in the
possession of T-NETIX during the term of Employee's
employment and at all times thereafter. Upon the
termination of employment with T-NETIX or upon the
request of T-NETIX at anytime, Employee shall
promptly deliver to T-NETIX, and shall retain no
copies of any materials, records and documents (in
whatever form or medium) made by Employee or coming
into possession concerning the business or affairs of
T-NETIX.
(d) Employee acknowledges and agrees that the nature of
the trade secrets and other proprietary and
confidential information to which the Employee will
be given access would make it impossible for him to
perform in the capacity of officer, director,
employee, agent, consultant, or representative of any
Competitor (as defined in Section 12) without
disclosing or utilizing the trade secrets and other
proprietary and confidential information to which he
will be given access during the course of their
employment. Employee further acknowledges and agrees
that T-NETIX's products are marketed in a highly
competitive market.
12. NON-COMPETITION AGREEMENT. In consideration for access to
trade secrets and other proprietary information of T-NETIX,
for so long as Employee is employed by T-NETIX and for a
period of two-years thereafter (the "Non-competition Period"),
Employee will not:
(a) Accept a position as an officer, director, employee
agent, consultant, representative or (i) any other
proprietary call processing systems company or (ii)
any other entity that, as of the date of Employee's
termination, competes directly with T-NETIX. Or any
of its subsidiaries (an entity described in either
part (i) or (ii) is referred to in this Agreement as
a "Competitor");
(b) Acquire or fail to dispose of any stock or other
ownership interest in any Competitor, other than
investments equal to less than on percent of the
outstanding stock of any class issued by any publicly
traded company;
(c) Solicit or seek business from any of T-NETIX
customers, prospective customers, suppliers, or
prospective suppliers; or
(d) Hire or engage any T-NETIX employee or induce any
T-NETIX employee to leave their employment with
T-NETIX on behalf of any Competitor.
7
13. REMEDIES.
(a) Without intending to limit the remedies available to
T-NETIX, Employee acknowledges that a breach or
threatened breach of any of the covenants contained
in Sections 11 and 12 may result in material
irreparable injury to T-NETIX or on of its
subsidiaries for which there is no adequate remedy at
law that it may not be possible to measure damages
for such injuries precisely, and that in the event of
such a breach or threat thereof, T-NETIX shall be
entitled to obtain a temporary restraining order, a
preliminary or permanent injunction, or other
comparable provisional or equitable relief
restraining Employee for engaging in activities
prohibited by Sections 11 or 12, and such other
relief as may be required to enforce specifically nay
of the covenants in such Sections. Employee agrees to
personal jurisdiction of any state or federal court
in the State of Texas in any proceeding brought by
T-NETIX to enforce Employee's covenants under
Sections 11 and 12.
(b) Without limiting the relief specified in part (a)
above, and in addition to any other remedies
available hereunder, at law, or in equity, upon proof
of Employee's deliberate violation of him obligations
under Section 11 or 12, T-NETIX shall be entitled to
recover from Employee (i) any severance paid pursuant
to Section 5 or 7.
14. ARBITRATION.
(a) Any dispute or controversy arising under or in
connection with this Agreement shall be settled
exclusively by arbitration before a single arbitrator
in Dallas County, Texas, in accordance with the rules
of the American Arbitration Association then in
effect. The arbitrator shall be selected by the
American Arbitration Association, except that in a
Section 7(b) Dispute, the arbitrator shall be
selected in the manner provided in part (b) below.
Each party shall bear their own cost or arbitration,
except that if Employee is the prevailing party in
such arbitration, the Employee shall be entitled to
recover from T-NETIX as part of any award entered
reasonable expenses for attorneys and expert's fees
and disbursements. In any arbitration related to the
calculation of the amount of the severance pay due to
employee, each party shall submit a figure and
supporting documentation and the arbitrator shall
select the figure and supporting of the parties, but
no other figure. The arbitrator shall have no power
to award consequential or punitive damages, even if
such damages are permitted under applicable law.
(b) In a Section 7(b) Dispute, T-NETIX shall nominate a
proposed arbitrator, who may be the lawyer who
represented T-NETIX in the transaction that caused
the Change in Control. Within five days after
T-NETIX's nomination, Employee may accept T-NETIX's
nominee as
8
arbitrator, or may propose another lawyer shall serve
as arbitrator. If T-NETIX does not accept Employee's
counter-nominee, Employee's counter-nominee and
T-NETIX's nominee shall select a third lawyer, who
shall serve as arbitrator.
(c) Nothing in this Section 14 shall prevent T-NETIX form
seeking equitable relief pursuant to Section 13.
15. NOTICES. All notices, request, demands and other communication
called for or contemplated hereunder shall be in writing and
shall be deemed to have been duly given when delivered
personally or when mailed by United States certified or
registered mail, postage prepaid, addressed to the parties,
their successors in interest or assignees at the following
addresses or such other addresses as the parties may designate
by notice in the manner aforesaid:
If to T-NETIX: T-NETIX, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
If to Employee: Xxxxxx Xxxxxx
16. GOVERNING LAW: This Agreement shall be governed by the
construed in accordance with the laws of the State of Delaware
without giving effect to any principle of conflict-of-laws
that would require the application of the law of any other
jurisdiction.
17. VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement,
remain in full force and effect.
18. ENTIRE AGREEMENT. This Agreement constitute the entire
understanding between the parties with respect to the subject
matter hereof, superseding all negotiations, prior discussions
and preliminary agreements, and further superseding any and
all employment arrangements between Employee and T-NETIX or
any of T-NETIX's subsidiaries, affiliates or other related
entities. This Agreement may not be amended except in a
writing executed by the parties hereto.
19. EFFECT ON SUCCESSORS IN INTEREST. This Agreement shall inure
to the benefit of and be binding upon the heirs,
administrators, executors and successors of each of the
parties hereto. T-NETIX shall be in material breach of this
Agreement if any of its successors or assigns (including but
not limited to any Corporate Successor) fails expressly to
assume T-NETIX's obligations hereunder.
9
20. ASSIGNMENT. This Agreement is personal to Employee and
Employee may not assign this Agreement to any other person.
21. EFFECTIVENESS. This Agreement shall be effective upon the
Effective Date.
22. SURVIVAL OF SECTION. The provisions of Section 11 and 12 of
this Agreement shall survive the termination of the Agreement
for the period provided for therein, and Sections 13 and 14
shall survive for resolution of any dispute arising out of or
relating to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
T-NETIX, Inc. EMPLOYEE
BY: BY:
/s/ XXXXXX X. XXXXXX /s/ XXXXXX XXXXXX
------------------------------------ ------------------------------------
signature date signature date
Xxxxxx Xxxxxx Xxxxxx, CEO Xxxxxx Xxxxxx
10
RENEWAL OF EMPLOYMENT AGREEMENT
T-NETIX, Inc. and Xxxxxx X. Xxxxxx hereby agree to renew and extend that certain
Employment Agreement entered into between them effective the 1st day of August,
2002 for an additional term commencing August 1, 2003 and ending 6:00 P.M., CST,
on December 31, 2004, on the same terms and conditions of such Employment
Agreement.
Effective as of August 1, 2003.
T-NETIX, Inc.
/s/ XXXXX X. XXXXXXX XX
--------------------------------------------
Xxxxx X. Xxxxxxx XX, EVP/General Counsel
/s/ XXXXXX X. XXXXXX
--------------------------------------------
Xxxxxx X. Xxxxxx
11
