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EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is made as of the
5th day of March, 1997 between J. Xxxx Xxxxx, an individual resident of the
State of Georgia ("Executive"), and Melita International Corporation, a Georgia
corporation with its principal place of business located in Norcross, Georgia
("the Company").
WHEREAS, the Company desires to employ Executive as the President and
Chief Operating Officer of the Company, and Executive desires to accept said
employment from the Company; and
WHEREAS, the Company and Executive have agreed upon the terms and
conditions of Executive's employment with the Company and the parties desire to
express the terms and conditions in this employment agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereby
agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Company hereby employs Executive, and
Executive hereby accepts such employment from the Company, under the terms of
this Agreement for a period beginning on the Effective Date and terminating on
July 31, 1999 (the "Term").
2. DUTIES. During the Term of this Agreement, Executive shall be employed as
the President and the Chief Operating Officer of the Company. Executive's
responsibilities as the President and Chief Operating Officer of the Company
shall be to take such action to involve himself in the general overall and day
to day management and operations of the Company in a manner as he and the Board
of Directors of the Company (the "Board of Directors") from time to time deem
appropriate under the circumstances.
3. BASE SALARY. Executive's base salary commencing on the Effective Date and
during the Term of this Agreement shall be $225,000 per fiscal year (the "Base
Salary"), which amount may be increased annually at the discretion of the Board
of Directors. The Base Salary shall be paid to Executive by the Company
monthly in arrears or in accordance with the Company's regular payroll practice
as in effect from time to time.
4. ANNUAL BONUS.
Immediately following completion of each fiscal year of the Company and no
later than four (4) months after such date, Executive shall receive, in
addition to the Base Salary, an annual performance bonus as determined by the
Board of Directors of up to $100,000 ("Annual Bonus").
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5. BENEFITS AND OTHER COMPENSATION.
Commencing on the Effective Date of this Agreement and during the Term of
this Agreement, the Company shall provide the benefits described below.
(a) Management Stock Incentive Program. The Executive shall participate in
the Company's stock option, stock purchase, or other stock incentive plan
generally available to executive officers of the Company and shall be eligible
for the grant of stock options, restricted stock and other awards thereunder.
In addition, the Board of Directors shall annually consider the Executive's
performance and determine if any additional bonus is appropriate for the
Executive. Furthermore, the Company confirms that the Executive has received
450,000 stock options (the "IPO Options") under the Melita International
Corporation 1992 Discounted Stock Option Plan (the "Stock Option Plan") to
purchase, subject to the terms and conditions of the Plan, shares of the
Company's common stock and that, in accordance with such plan and grant, all
stock options granted by the Company to the Executive pursuant to the Stock
Option Plan shall vest upon the occurrence of the Initial Public Offering. In
accordance with the terms of the Stock Option Plan, no such IPO Options are
exercisable by the Executive prior to 14 months after the Initial Public
Offering.
(b) Vacation. Executive shall have the right to vacation time in
accordance with the vacation policy of the Company.
(c) Medical Insurance and Other Benefits. The Company shall provide
Executive with medical insurance coverage for Executive in accordance with the
terms of the Company's medical insurance plan, if any, as it exists from time
to time and shall provide Executive with coverage under all other employee
benefit plans, programs and policies which the Company maintains from time to
time for the benefit of its executive employees.
(d) Expenses. Executive shall be reimbursed monthly by the Company for
the ordinary and necessary business expenses incurred by him in the performance
of his duties for the Company; provided that Executive shall first document
said business expenses in the manner generally required by the Company under
its standard employee business expense reimbursement policies and procedures.
6. TERMINATION; TERM.
(a) The term of this Agreement (the "Term") shall commence on the
Effective Date and end on July 31, 1999. The term shall be automatically
extended for successive two (2) year periods unless either party hereto
delivers to the other party written notice at least three (3) months prior to
the end of the Term of its desire to terminate this Agreement.
(b) Notwithstanding the terms of Section 6 (a) hereof, this Agreement and
the Executive's employment hereunder may be terminated as follows:
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(i) immediately, without any notice by or to either party hereto,
upon the death of the Executive;
(ii) immediately by the Company for the Disability of the Executive
upon delivery by the Company to the Executive of a Notice of Termination;
(iii) immediately by the Company for Cause upon delivery by the
Company to the Executive of a Notice of Termination; or
(iv) by the Executive for Good Reason upon delivery by the Executive
to the Company of a Notice of Termination.
(c) If the Executive's employment with the Company shall be terminated
during the Term (i) by reason of the Executive's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Executive (or in the case
of his death, the Executive's estate) within fifteen days after the Termination
Date a lump sum cash payment equal to the Executive's Accrued Compensation. In
addition, except as otherwise provided above in the case of the Executive's
death or Disability, if the Company terminates the Executive's employment with
the Company other than for Cause, the Company shall pay to the Executive within
fifteen days after the Termination date a lump sum cash payment equal to the
Executive's Base Salary plus the stock rights provided in Section 6 (d) (ii)
hereof. In the event of termination of this Agreement by reason of the death or
Disability of the Executive, he, his estate or legal representatives shall also
be entitled to the stock rights set forth in Section 6 (d) (ii) hereof.
(d) If the Executive's employment with the Company shall be terminated by
Executive for Good Reason, in addition to other rights and remedies available
in law or equity, the Executive shall be entitled to the following:
(i) the Company shall pay the Executive a lump sum cash payment
within fifteen days of the Termination Date of an amount equal to
Executive's Base Salary;
(ii) the restrictions on any outstanding incentive awards
(including stock options) granted to the Executive under any of the
Company's stock option, stock purchase or under any other incentive
plan or arrangement shall lapse and all stock options and stock
appreciation rights granted to the Executive shall become 100%
vested and immediately exercisable.
(e) In the event the Executive resigns from his employment with the
Company, other than for Good Reason pursuant to Section 6(b)(iv) hereof, or is
terminated by the Company for Cause, then the Executive shall receive Accrued
Compensation and all of the IPO Options according to the following schedule if
such resignation, or termination for Cause, occurs:
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(i) before July 1, 1997, 25% of the IPO Options shall be
vested and exercisable and the Executive shall exercise only such
amount and the balance shall not and cannot ever be exercised;
(ii) as of July 1, 1997, 50% of the IPO Options shall be
vested and exercisable and the Executive shall exercise only such
amount and the balance shall not and cannot ever be exercised;
(iii) as July 1, 1998, 75% of the IPO Options shall be
vested and exercisable and the Executive shall exercise only such
amount and the balance shall not and cannot ever be exercised; and
(iv) as of July 1, 1999, 100% of the IPO Options shall be
vested and exercisable.
(f) Should a person or persons other than the Executive assume day to day
operations of the Company, or substantially diminish the Executive's
effectiveness as President, the Executive may terminate this Agreement and
receive within fifteen days of the Termination Date, an amount equal to the
Executive's Base Salary and the IPO Options according to the Schedule set out
in Section 6(e) above.
(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent
employment.
(h) The severance pay and benefits provided for in this Section 6 shall be
in lieu of any other severance pay to which the Executive may be entitled under
any Company severance plan, program, practice or arrangement. The Executive's
entitlement to any other compensation or benefits shall be determined in
accordance with the Company's employee benefit plans and other applicable
programs, policies and practices then in effect.
(i) The benefits paid or provided herein shall be the only benefits paid
to the Executive or his estate.
7. EXECUTIVE WORKS. Executive agrees that Executive will promptly
disclose to the Company all Executive Works (defined below). Executive hereby
irrevocably assigns to the Company all right, title and interest in and to any
and all Executive Works, created by Executive at any time prior to Effective
Date and Executive will execute, without requiring the Company to provide any
further consideration therefor, such confirmatory assignments, instruments and
documents as the Company deems necessary or desirable in order to effect such
assignment. Executive further agrees that all Executive works created by him
during the course of his employment by the Company are the sole property of the
Company and hereby assigns such Executive Works to the Company, and Executive
will execute, without requiring the Company to provide any further
consideration therefor, such confirmatory assignments, instruments and
documents as the Company deems necessary or desirable in order to effect such
assignment. The term "Executive Works" as used in this Agreement means any and
all works of authorship, inventions, discoveries, improvements, designs,
techniques, and work product, whether or not patentable, and in whatever form,
which are created, made, developed or reduced to practice, or caused to be
created, made, developed or reduced to practice by Executive during the course
of
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the Executive's employment by the Company, including all worldwide copyrights,
trade secrets, patent rights, and all confidential, proprietary and property
rights therein, and that relate in any way to the current or future business of
the Company or that result from any work performed by Executive for the
Company.
8. WORKS MADE FOR HIRE. The Company and Executive acknowledge that in the
course of Executive's employment by the Company, Executive may have created, or
may create, for the Company or its customers certain works of authorship. Such
works may consist of manuals, documentation, pamphlets, instructional
materials, videodisks, computer programs, user interfaces, tapes or other
copyrightable material, or portions thereof, and may be created within or
without the Company's facilities and before, during or after normal business
hours. All such works related to or useful in the business of the Company are
specifically intended to be works made for hire by Executive and owned by the
Company or its customers, as applicable, and Executive shall cooperate with the
Company in the protection of the Company or its customer's, as applicable,
copyrights therein and, to the extent deemed desirable by the Company or its
customers, as applicable, the registration of such copyrights.
9. PRODUCTS, NOTES, RECORDS AND SOFTWARE. All memoranda, notes, records
and other documents and computer software made or compiled by Executive during
the course of Executive's employment by the Company or made available to him
during the course of his employment by the Company, including, without
limitation, all customer data, billing information, service data, and other
technical material, confidential information and trade secrets of the Company
and its affiliates, shall be the Company's property and Executive shall deliver
all such materials (and all copies thereof) to the Company within three (3)
days after any termination of his employment with the Company.
10. NONDISCLOSURE. Executive acknowledges and agrees that during his
employment by the Company, he has had, or will have, access to trade secrets
and other confidential or proprietary information peculiar to the Company, the
disclosure or use of which would injure the Company. Therefore, Executive
agrees that he will not use, reveal, or divulge any such trade secrets if such
use, revelation, or divulgence would violate the Georgia Trade Secrets Act of
1990, as amended. In addition, Executive agrees that during his employment by
the Company and after any termination thereafter, he will not, directly or
indirectly, use, reveal, or divulge any such confidential information,
proprietary information or trade secrets. However, Executive shall not be
required to keep confidential any trade secrets or confidential or proprietary
information of the Company which is or becomes publicly available, is
independently developed by Executive outside of the scope of his employment
relationship with the Company, or is rightfully obtained from third parties.
11. NONCOMPETITION. During the course of his employment by the Company
and for a period of two (2) years after termination of his employment by the
Company, Executive agrees that he shall not engage in or render services to any
entity engaged in, the predictive dialing computer software business or any
other business in which the Company is engaged during the course of his
employment (the "Business") within the United States of America ("Territory"),
and two (2) years thereafter.
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12. NONSOLICITATION.
(a) Customers. During his employment by the Company, Executive shall not,
directly or indirectly without the Company's prior written consent, contact any
customer of the Company, with whom Executive, in the ordinary course of his
employment by the Company, had a material contact ("Customer") for business
purposes unrelated to furthering the business of the Company. For a period of
two (2) years following his employment by the Company, Executive shall not,
directly or indirectly, (i) contact, solicit, divert or take away, any Customer
for purposes of, or with respect to, selling a product or service which
competes with the Business of the Company, or (ii) take any affirmative action
in regard to establishing or continuing a relationship with a Customer for
purposes of making, or which directly or indirectly results in, a sale of a
product or service which competes with the Business of the Company.
(b) Employees. During the employment of the Executive and for a period of
two (2) years following any termination of employment of Executive, Executive
shall not, directly or indirectly, recruit or hire, or attempt to recruit or
hire, any other employees of the Company who were employed by the Company
during the employment of the Executive and who are actively employed during the
employment of the Executive or such two (2) year period.
13. REMEDY FOR BREACH. Executive agrees that remedies at law of the
Company for any actual or threatened breach by Executive of any of the
covenants contained in Section 7 through 12 of this Agreement would be
inadequate and that the Company shall be entitled to specific performance by
Executive of the covenants in such paragraphs or injunctive relief against
activities in violation of such paragraphs, or both, by temporary or permanent
injunction or other appropriate judicial remedy, writ or order, in addition to
any damages and legal expenses (including attorney's fees) which the Company
may be legally entitled to recover. Executive acknowledges and agrees that the
covenants contained in Sections 7 through 12 of this Agreement shall be
construed as agreements independent of any other provision of this or any other
contract between the parties hereto, and that the existence of any claim or
cause of action by Executive against the Company, whether predicated upon this
or any other contract, shall not constitute a defense to the enforcement by the
Company of said covenants.
14. SURVIVAL. The provisions of Sections 7 through 13 shall survive
termination of this Agreement.
15. INVALIDITY OF ANY PROVISION. It is the intention of the parties
hereto that Sections 7 through 12 of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies of each state and
jurisdiction in which such enforcement is sought, but that the unenforceability
(or the modification to conform with such laws or public policies) of any
provision hereof shall not render unenforceable or impair the remainder of this
Agreement which shall be deemed amended to delete or modify, as necessary, the
invalid or unenforceable
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provisions. The parties further agree to alter the balance of this Agreement
in order to render the same valid and enforceable.
16. APPLICABLE LAW. This Agreement is being executed in the State of
Georgia and shall be construed and enforced in accordance with the internal
laws of the State of Georgia, without giving effect to the conflicts laws of
such state.
17. WAIVER OF BREACH. The waiver by the Company of a breach of any
provision of this Agreement by Executive shall not operate or be construed as a
waiver of any subsequent breach by Executive.
18. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns, and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal personal representative.
19. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties. This Agreement may not be changed orally but only by an agreement in
writing signed by the party against whom enforcement of any waiver, changes,
modification, extension, or discharge is sought.
20. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Accrued Compensation" shall mean an amount, including all amounts
earned or accrued through the Termination Date but not paid as of the
Termination Date including, (i) base salary of the Executive, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company as of the Termination Date, and (iii) incentive
compensation owed to the Executive.
(c) "Base Amount" shall mean the greater of the Executive's annual Base
Salary (i) at the rate in effect on the Termination Date or (ii) the highest
rate in effect at any time during the 90 day period prior to a Change in
Control, and shall include all amount of base salary that are deferred under
qualified and non-qualified employee benefit plans of the Company.
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(d) The termination of the Executive's employment shall be for "Cause" if
it is a result of:
(i) any act that the Board of Directors reasonably determines (A)
constitutes, on the part of the Executive, fraud, dishonesty, gross
malfeasance of duty, or conduct grossly inappropriate to the Executive's
office, and (B) is demonstrably likely to lead to material injury to the
Company or resulted or was intended to result in a material benefit to
the Executive at the Company's expense; or
(ii) the conviction (from which no appeal may be or is timely taken)
of the Executive of a felony;
provided, however, that in the case of clause (i) above, such conduct
shall not constitute Cause (x) unless (A) there shall have been delivered
to the Executive a written notice setting forth with specificity the
reasons that the Board believes the Executive's conduct constitutes the
criteria set forth in clause (i), (B) the Executive shall have been
provided the opportunity to be heard in person by the Board (with the
assistance of the Executive's counsel if the Executive so desires), and
(C) after such hearing, the termination for Cause is approved by a
resolution adopted in good faith by two-thirds of the members of the
Board (other than the Executive).
(e) A "Change in Control" shall mean the occurrence during the Term of any
of the following events:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of a majority
or more of the combined voting power of the Company's then outstanding
Voting Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) or the acquisition of
voting securities by a Person who, immediately prior to such acquisition,
had Beneficial Ownership of 20% or more of the combined voting power of
the Company's then outstanding voting securities shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee benefit plan
(or a trust forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its voting power
or its equity securities or equity interest is owned directly or
indirectly by
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the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3)
any Person in connection with a "Non-Control Transaction" (as hereinafter
defined).
(ii) The individuals who, as of the date of this Agreement, are
members of the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that if
the election, or nomination for election by the Company's stockholders,
of any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either
an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 0000 Xxx) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest; or
(iii) Approval by a majority of the stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the
Company, unless
(1) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly
or indirectly, immediately following such merger,
consolidation or reorganization, at least a majority of the
combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation
or reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least majority of the members of the board of
directors of the Surviving Corporation.
(A transaction described in clauses (1) and (2)
shall herein be referred to as a "Non-Control
Transaction.")
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
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(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated at any time prior
to a Change in Control and the Executive reasonably demonstrates that
such termination (A) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a
Change in Control (a "Third Party") or (B) otherwise occurred in
connection with, or in anticipation of, a Change in Control, then for all
purposes of this Agreement, the date of a Change in Control with respect
to the Executive shall mean the date immediately prior to the date of
such termination of the Executive's employment.
(f) "Disability" shall mean a physical or mental infirmity which
materially impairs the Executive's ability to substantially perform any of the
essential functions of his job with the Company for a period of 180 consecutive
days, as determined by an independent physician selected with the approval of
both the Company and the Executive.
(g) "Effective Date" shall mean the day that the Company closes its
Initial Public Offering.
(h) "Good Reason" shall mean the occurrence of any of the following
events or conditions:
(i) a change in the Executive's status, title, position or
responsibilities which, in the Executive's reasonable judgment, represents
an adverse change from his status, title, position or responsibilities
created by this Agreement, which is reasonably presented to the Board of
Directors and which is accepted by the Board of Directors after due
investigation and deliberation;
(ii) a reduction in the Executive's Base Salary or any failure to
pay the Executive any other compensation or benefits to which he is
entitled under this Agreement within five days of the date due;
(iii) the Company's requiring the Executive to be based at any place
outside a 30-mile radius from the Executive offices occupied by the
Executive immediately prior to a Change in Control, except for reasonably
required travel on the Company's business which is not materially greater
than such travel requirements prior to such Change in Control;
(iv) the failure by the Company to (A) continue in effect (without
reduction in benefit level and/or reward opportunities) any material
compensation or Executive benefit
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plan in which the Employee was participating at any time within ninety
days preceding the date of a Change in Control or at any time thereafter,
unless such plan is replaced with a plan that provides substantially
equivalent compensation or benefits to the Executive or (B) provide the
Executive with compensation and benefits, in the aggregate, at least
equal (in terms of benefit levels and/or reward opportunities) to those
provided for under each other Executive benefit plan, program and
practice in which the Executive was participating at any time within
ninety days preceding the date of a Change in Control or at any time
thereafter;
(v) the insolvency or the filing (by any party, including the
Company) of a petition for bankruptcy of the Company, which petition is
not dismissed within sixty days;
(vi) any material breach by the Company of any provision of this
Agreement;
(vii) any purported termination of the Executive's employment for
Cause by the Company which does not comply with the terms of this
Agreement; or
(viii) the failure of the Company to obtain an agreement,
satisfactory to the Executive, from any Successors and Assigns to assume
and agree to perform this Agreement, as contemplated in Section 6 hereof.
Any event or condition described in clause (i) through (viii) above which
occurs prior to a Change in Control but which the Executive reasonably
demonstrates (A) was at the request of a Third Party, or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control (whether or not it
actually occurs), shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the intended Change in Control. The
Executive's right to terminate his employment for Good Reason shall not be
affected by his incapacity due to physical or mental illness.
(i) "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Act in which the
aggregate proceeds to the Company, net of all underwriting discounts and
commissions and other expenses of issuance and distribution as stated in the
prospectus relating to such offering, are at least twenty-five million dollars
($25,000,000).
(j) "Notice of Termination" shall mean a written notice of termination
from the Company or the Executive which specifies an effective date of
termination, indicates the specific termination provision in this Agreement
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(k) "Successors and Assigns" shall mean, for a corporation, a corporation
or other entity acquiring all or substantially all the assets and business of
the Company (including this Agreement),and for any individual as the Executive,
the estate, successors or heirs, and/or the legal representative of the
Executive, whether by operation of law or otherwise.
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(l) "Termination Date" shall mean, in the case of the Executive's death,
his date of death, and in all other cases, the date specified in the Notice of
Termination.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE: COMPANY:
/s/ J. Xxxx Xxxxx MELITA INTERNATIONAL CORPORATION
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J. Xxxx Xxxxx By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, Chairman and Chief
Executive Officer
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