Exhibit 10.19
ELCOTEL, INC.
Employment Agreement of
Xxxxxx X. Xxxx
Agreement (this "Agreement") dated as of this 1/st/ day of October, 1997 by and
between Elcotel, Inc. (the "Company") and Xxxxxx X. Xxxx ("Xx. Xxxx") upon the
following terms and conditions:
Term:
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Commencement Date: Closing of merger between Elcotel Hospitality
Service, Inc. and Technology Service Group, Inc.
Termination Date: December 31, 1998 unless sooner terminated as
provided herein.
Renewal: Except as hereinafter provided, on the Termination Date and
on each anniversary of the Termination Date, this Agreement shall
automatically continue for an additional year unless the Company shall have
given Xx. Xxxx written notice of non-renewal at least one hundred eighty
(180) days in advance of the Termination Date or an anniversary thereof.
Non-Renewal: If such notice of non-renewal is given, Xx. Xxxx shall
continue as President and Chief Executive Officer of the Company for all or
any part of such 180-day period as the Company may request, but he shall
nevertheless be entitled to take reasonable time during such period to look
for other employment. At the end of such period, Xx. Xxxx'x employment
shall terminate, and the Company shall provide to Xx. Xxxx the Xxxxxxxxx
Benefits (as hereinafter defined).
Title & Responsibilities: Assuming merger of Elcotel Hospitality Service,
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Inc. and Technology Service Group, Inc., Xx. Xxxx shall be elected
President and Chief Executive Officer and he shall devote such time as he
deems necessary to carry out the responsibilities of those positions.
Salary: During the term of this Agreement, the salary paid to Xx. Xxxx
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shall not be less than one hundred seventy thousand dollars ($170,000) per
year, and shall be subject to annual review for merit or other increases in
the sole discretion of the board of directors of the Company.
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EXECUTIVE CONFIDENTIAL 1
Benefits: Xx. Xxxx shall be entitled to the same benefits as are made
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available to the Company's other senior executives and on the same terms
and conditions as such executives (the "Benefits").
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EXECUTIVE CONFIDENTIAL 2
Bonuses: Xx. Xxxx shall be paid an annual incentive bonus (the "Incentive
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Bonus") as provided in Exhibit A.
Stock Option: Xx. Xxxx shall be eligible for additional stock option grants
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to purchase shares of the Company's common stock pursuant to a Company
stock option plan as provided in Exhibit A. Xx. Xxxx shall retain all
options previously granted and unexercised which will vest in accordance
with their terms.
Business Expenses: Xx. Xxxx shall be reimbursed (in accordance with Company
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policy from time to time in effect) for all reasonable business expenses
incurred by him in the performance of his duties.
Indemnification: Xx. Xxxx shall be indemnified by the Company with respect
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to claims made against him as a director, officer and/or employee of the
Company and as a director, officer and/or employee of any subsidiary of the
Company to the fullest extent permitted by the Company's certificate of
incorporation, by-laws and the General Corporation Law of the State of
Delaware.
Termination By the Company: Xx. Xxxx'x employment may be terminated by the
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Company only as provided below:
For Cause: For Cause by written notice to Xx. Xxxx and payment to
him of salary accrued, but not paid through the date of termination;
provided however -
If the nature of such Cause involves dishonesty, fraud or serious
moral turpitude, such termination shall be effective upon the giving
of such notice.
If the nature of such Cause does not involve dishonesty, fraud or
serious moral turpitude, such termination shall be effective upon the
expiration of thirty (30) days after the giving of such notice unless
within such thirty-day period, Xx. Xxxx has cured the basis of such
Cause, or if a cure is not possible within a thirty-day period, if he
has diligently and in good faith commenced to effect such cure.
Without Cause: Without Cause by prior written notice of termination
given to Xx. Xxxx and by compliance with the following:
In the event that at the date the notice of a termination without
Cause is given there is at least twelve (12) months remaining in the
term, such notice of termination shall be sent to Xx. Xxxx no more
than seven (7) days prior to the effective date of termination, and
the Company (i) on the effective date shall pay to Xx. Xxxx his
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EXECUTIVE CONFIDENTIAL 3
salary in a lump sum for the balance of the term of this Agreement;
(ii) shall continue at its expense to provide the Benefits for the
balance of the term of this Agreement; and (iii) shall pay to Xx. Xxxx
the Incentive Bonus and shall satisfy its obligations regarding his
stock option when, as, and to the extent provided for in Exhibit A.
In the event that at the date the notice of a termination without
Cause is given there is less than twelve (12) months remaining in the
term, such notice of termination shall be sent to Xx. Xxxx six (6)
months prior to the effective date of termination, and during such
6-month period, Xx. Xxxx shall continue as President and Chief
Executive Officer of the Company for all or any part of such period as
the Company may request, but he shall nevertheless be entitled to take
reasonable time during such period to look for other employment. At
the end of such 6-month period, Xx. Xxxx'x employment shall terminate,
and the Company shall provide to Xx. Xxxx the Severance Benefits.
A reduction in Xx. Xxxx title, responsibilities or salary may, at
Xx. Xxxx option, be treated by him as a notice of termination of his
employment by the Company without Cause given as of the date of such
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reduction.
Death or Permanent Disability: Upon the death or permanent disability of
Xx.Xxxx, but only after providing him with the Severance Benefits.
Definition of "Cause": "Cause" for purposes of termination by the
Company shall be defined as (i) any act or acts by Xx. Xxxx of dishonesty
or fraud or that constitute serious moral turpitude; or (ii) misconduct of
a material nature or a material breach in connection with the performance
by him of his responsibilities hereunder that Xx. Xxxx knew or should have
known would be materially detrimental to the Company or its business.
Definition of "Severance Benefits": The "Severance Benefits" shall mean
the following: (i) the continuation by the Company for a period of six (6)
months of the payment of Xx. Xxxx'x salary in effect at the date of the
termination of his employment; (ii) the continuation by the Company at its
expense for a period of six (6) months of the Benefits; and (iii) the
payment by the Company of the Incentive Bonus and the satisfaction by the
Company of its obligations regarding Xx. Xxxx'x stock option when, as and
to the extent provided for in Exhibit A.
Termination By Xx. Xxxx:
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EXECUTIVE CONFIDENTIAL 4
Xx. Xxxx may terminate his employment under this Agreement by reason of
a breach hereof by the Company on twenty (20) days prior written notice to
the Company.
Xx. Xxxx may also terminate his employment under this Agreement by
giving the Company one hundred twenty (120) days notice of termination
effective on December 31, 1997 or on any date thereafter.
Notices: Notices that are required or permitted hereunder shall be given by
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hand delivery, by delivery to a courier service providing next day delivery
and proof of receipt, or by facsimile transmission (except to Xx. Xxxx), as
follows:
If to the Company at: Elcotel, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Chairman of the Board
Facsimile: 000-000-0000
If to Xx. Xxxx, to his most recent residence address on the books of the
Company:
or, to such other address of a party as to which that party shall notify the
other parties in the manner provided herein.
Proration: To the extent that proration is not otherwise provided for in
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this Agreement, all amounts payable to Xx. Xxxx under this Agreement shall be
deemed earned on a daily basis and shall be prorated based on a 365-day year.
Entire Agreement, etc.: This Agreement together with Exhibit A contains the
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entire understanding of the parties except as otherwise expressly
contemplated herein; shall not be amended except by written agreement of the
parties signed by each of them; shall be binding upon and inure to the
benefit of the parties and their successors, personal representatives and
assigns; and shall supersede all prior employment agreements between the
parties.
No representation, affirmation of fact, course of prior dealings, promise or
condition in connection herewith not incorporated herein shall be binding on
the parties.
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EXECUTIVE CONFIDENTIAL 5
No waiver of any term or condition contained herein shall be binding upon the
parties unless made in writing and signed by the party to be bound thereby.
In Witness Whereof, the parties have executed and delivered this Agreement as of
the date first set forth above.
EMPLOYEE: ELCOTEL, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/ C. Xxxxxxx Xxxxx
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Xxxxxx X. Xxxx C. Xxxxxxx Xxxxx, Chairman and
Chief Executive Officer
TGAGR.
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EXECUTIVE CONFIDENTIAL 6
EXHIBIT A
INCENTIVE BONUS PLAN
Xxxxxx X. Xxxx Employment Agreement
An annual incentive bonus will be paid equal to 50% of base salary if the
Company achieves its after tax profit plan for the year. If the Company is
profitable and earns less than its plan, then a bonus will be equal to the
percentage achievement of the annual plan times 50% of base salary. If the
Company achieves profits in excess of its annual plan then, at the discretion of
the Board, an additional bonus in excess of 50% of base salary may be paid.
TGAGR.
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EXECUTIVE CONFIDENTIAL 7
