EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into as of
January 1, 1998 by and between Xxxxxxx X. Xxxxxxx ("EXECUTIVE") and TeleTech
Holdings, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, Executive and the Company are parties to that certain
Employment Agreement dated January 1, 1995 pursuant to which Executive
currently serves as the Chairman of the Board, President and Chief Executive
Officer of the Company and also serves as a director and/or officer of
various wholly owned subsidiaries of the Company (collectively,
"SUBSIDIARIES"); and
WHEREAS, the Company desires to retain the benefit of Executive's
services as its Chairman of the Board, President and Chief Executive Officer
following expiration of the Executive's existing employment agreement, and
Executive desires to be so employed, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and mutual agreement
set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ Executive on a full-time basis
as Chairman of the Board, President and Chief Executive Officer, and
Executive hereby accepts such employment, on the terms and subject to the
conditions set forth herein. The term of employment shall be from the date
hereof until and including December 31, 2000 ("TERM"), subject to earlier
termination as provided in Section 4.
2. DUTIES.
2.1 GENERAL DUTIES. Executive shall serve as the Chairman of the
Board, President and Chief Executive Officer of the Company. Subject to the
authority of the Company's Board of Directors, Executive shall have
supervision and control over, and responsibility for, the general management
and operation of the Company. Executive shall also have such other powers
and duties as the Board of Directors may prescribe, provided that such duties
are reasonable and customary for a Chairman of the Board, President and Chief
Executive Officer. No executive or other employee of the Company, the
Subsidiaries, or any Affiliates, as defined herein, of the Company, shall
hold a position, stature, title or powers higher or greater than or equal to
those of Executive, without Executive's prior written consent. "AFFILIATE"
shall be defined as any person or entity that the Company controls directly
or indirectly, through one or more intermediaries, or that is under common
control with the Company. Executive shall devote his entire working time,
attention and energies to the business of the Company. Notwithstanding
anything to the contrary in this Agreement, the Board of Directors of the
Company may, in their sole discretion, authorize Executive to accept
employment with other companies in addition to or in substitution of the
employment set forth
in this Agreement, provided that such authorization shall be approved by a
majority of the directors of the Company.
2.2 OTHER ACTIVITIES. Provided that such activities shall not
materially interfere with the proper performance of his duties and
responsibilities as the Chairman of the Board, President and Chief Executive
Officer of the Company, nothing in this Agreement shall preclude Executive
from:
2.2.1 serving on the boards of directors of a reasonable number
of other corporations with the consent of the Company's Board of Directors,
which consent will not be unreasonably withheld, or the boards or committees
of a reasonable number of trade associations and/or charitable organizations;
2.2.2 delivering lectures, fulfilling speaking engagements or
teaching at education institutions;
2.2.3 engaging in charitable activities and community affairs; or
2.2.4 managing his personal investments and affairs.
3. COMPENSATION.
3.1 BASE SALARY. During each year of the Term, the Company shall pay
to Executive $786,292 ("BASE SALARY AMOUNT"), payable in equal semi-monthly
installments on the fifteenth and final days of each month during the period
of employment. The Base Salary Amount shall be increased on each anniversary
of the date hereof ("ADJUSTMENT DATES") by the amount resulting from the
following computation: the Consumer Price Index (all items) for Urban Wage
Earners and Clerical Workers for the Denver xxxxxxxxxxxx xxxx
(0000-0000x000), published by the United States Department of Labor, Bureau
of Labor Statistics (the "INDEX") which is published for the date immediately
preceding an Adjustment Date (the "ADJUSTMENT INDEX") shall be compared with
the Index immediately preceding the previous Adjustment Date (the "BEGINNING
INDEX"), or for the first Adjustment Date shall be the Index published
immediately preceding the date of this Agreement. If the Adjustment Index
has increased over the Beginning Index, the Base Salary Amount payable after
the Adjustment Date shall be determined by multiplying the Base Salary Amount
previously in effect by a fraction, the numerator of which is the Adjustment
Index and the denominator of which is the Beginning Index. If the Index does
not exist at any Adjustment Date, the parties shall substitute an official
index published by the Bureau of Labor Statistics or successor or similar
governmental agency, as may then be most nearly equivalent thereto. The
adjustment described in this paragraph shall be referred to in this Agreement
as the "CPI ADJUSTMENT." In the event Executive, in his sole discretion,
elects to forgo a CPI Adjustment for any year of the Term, Executive shall be
entitled to have his Base Salary Amount increased by an amount equal to any
or all of the CPI Adjustments so foregone, which increase shall be applied
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prospectively beginning on any subsequent Adjustment Date selected by
Executive in his sole discretion.
3.2 ANNUAL PERFORMANCE BONUSES.
3.2.1 At the end of every fiscal year of the Company during the
Term, the Company shall pay Executive, in addition to his Base Salary Amount,
an annual performance bonus ("PERFORMANCE BONUS") not to exceed $250,000, as
adjusted by the CPI Adjustment for each year. Such Performance Bonus shall
be based on achieving certain corporate performance objectives ("PERFORMANCE
OBJECTIVES"), which Performance Objectives shall be set by the Compensation
Committee of the Board of Directors or, in the absence thereof, the Board of
Directors, and shall be reasonable and fair. Said Compensation Committee or
the Board of Directors, as applicable, shall comply with the following
procedure in determining said Performance Objectives for each fiscal year of
the Term:
(a) To determine the Performance Objectives for fiscal year
1998, said Compensation Committee shall meet no later than January 31, 1998
to analyze the Company's performance for fiscal year 1997; and to discuss
Executive's intentions, goals and objectives for 1998 and any Performance
Objectives proposed by Executive for 1998. Within seven days after said
meeting, the Compensation Committee shall deliver in writing to Executive its
proposed Performance Objectives for fiscal year 1998 along with its reasons
for modifying any of Executive's proposed Performance Objectives. Unless
Executive accepts said Performance Objectives in writing within seven days
after his receipt thereof, Executive and the Compensation Committee shall
meet as soon as reasonably possible at the Company's Denver facility to
discuss said proposed Performance Objectives. Within seven days after said
meeting, the Compensation Committee shall deliver in writing to Executive the
final Performance Objectives for that fiscal year.
(b) For each fiscal year after 1998, said Compensation
Committee shall meet no later than 90 days prior to the end of that fiscal
year to review the Company's performance for and to meet with Executive to
analyze the Company's performance over the first three fiscal quarters and
its projected performance in the fourth fiscal quarter; to examine
Executive's progress in achieving the prior year's Performance Objectives;
and to discuss Executive's intentions, goals and objectives for the next
fiscal year and any Performance Objectives proposed by Executive for that
year. Within seven days after said meeting, the Compensation Committee shall
deliver in writing to Executive its proposed Performance Objectives for that
fiscal year along with its reasons for modifying any of Executive's proposed
Performance Objectives. Unless Executive accepts said Performance Objectives
in writing within seven days after his receipt thereof, Executive and the
Compensation Committee shall meet as soon as reasonably possible at the
Company's Denver facility to discuss said proposed Performance Objectives.
Within seven days after said meeting, the Compensation Committee shall
deliver in writing to Executive the final Performance Objectives for that
fiscal year.
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3.2.2 In the event that the Company changes its fiscal year,
the computation and payment of the Performance Bonus shall be prorated and
adjusted on an allocable and equitable basis to reflect such change including
payment of a Performance Bonus for any shortened fiscal year. The
Performance Bonus for such year shall be paid no later than ten days after
the Company shall have completed consolidating and consolidated statements of
income and cash flows of Company and Subsidiaries for such year, and
consolidating and consolidated balance sheets of Company and Subsidiaries for
such year, and the Company's Board of Directors shall have approved the
opinion of the Company's independent certified public accounting firm with
respect to the consolidated portions of such statements. The Company shall
also pay to Executive such discretionary bonuses as may be granted by the
Compensation Committee of the Board of Directors or, in the event that the
Compensation Committee does not exist, the Board of Directors.
3.3 EXPENSES. Executive shall be entitled to receive prompt
reimbursement for all documented business expenses incurred by him in the
performance of his duties hereunder; provided that Executive properly
accounts therefor in accordance with the Company's reimbursement policy,
which policy shall be comparable to the Company's reimbursement policy and
practices in effect as of the date hereof.
3.4 OTHER BENEFITS. In addition to the Base Salary Amount, the
Performance Bonus and the discretionary bonuses granted to Executive, if any,
Executive shall be entitled to participate in and receive benefits under all
of the sick pay, retirement, welfare, medical, dental, disability, life
insurance, incentive compensation, or other benefit programs or arrangements
generally available to senior management of the Company ("BENEFIT PLANS").
Notwithstanding the foregoing, the Company shall at a minimum provide
Executive with the following:
3.4.1 MEDICAL BENEFITS. The Company will continue to provide
Executive and his wife and children with the same insurance for medical,
dental, hospitalization, convalescent, nursing and similar health expenses as
the Company provided to Executive immediately prior to the execution of this
Agreement, subject to applicable law.
3.4.2 LIFE INSURANCE. During the Term, the Company agrees to
maintain term or whole life insurance on Executive's life with coverage of
$24,000,000 (a) payable to his estate or his named beneficiary or
beneficiaries and (b) payable to the Company to the extent necessary to repay
the Company's payment of the premiums for said insurance. The ownership of
such insurance policies may, at the sole discretion of the Executive, be
transferred to a trust for the benefit of his spouse or family.
3.4.3 DISABILITY AND AD&D INSURANCE. The Company agrees to maintain
in effect during the Term disability insurance on Executive's behalf in an
amount equal to the lesser of: (a) an amount sufficient to pay Executive an
amount for each year of disability prior to age 65 equal to the Base Salary
Amount and the prior year's Performance Bonus; or (b) the maximum amount payable
to an insured generally available to insure an individual against
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disabliity with insurance companies qualifying for an "A" rating or higher by
the Best's Rating Service. During the Term, the Company also agrees to
maintain for Executive accident, death and dismemberment insurance on the
same terms and conditions as Executive presently enjoys. The parties
acknowledge that during the Term the Company will maintain key man life
insurance, disability, and accident, death and dismemberment insurance for
the Company's benefit, separate from the insurance described in this Section
3.4.3 or Section 3.4.2. The disability insurance, and accident, death and
dismemberment insurance provided in this Section 3.4.3, and the life
insurance provided in Section 3.4.2, including the proceeds therefrom, shall
be separate and distinct from other insurance on Executive for the benefit of
persons other than Executive, his estate, or his named beneficiary or
beneficiaries and shall be reserved for payment to Executive or his
designated beneficiaries under said insurance policy.
3.4.4 VACATIONS. During the Term, Executive shall be entitled to
sick leave, paid holidays and paid vacation consistent with the Company's
sick leave, holiday and vacation policy for senior management on the date
hereof, or as modified hereafter to the extent that such modification is not
to Executive's detriment. Any vacation time that Executive does not take in
a given year shall be carried forward to the following year or years;
provided, that Executive shall not take more than six weeks of vacation in
any fiscal year; provided, further, that Executive may elect in his sole
discretion, to cancel any vacation time that is not taken in a given year in
return for the Company paying Executive an amount equal to Executive's Base
Salary Amount for said unused vacation time, which amount shall be in
addition to Executive's standard salary for paid vacation.
3.4.5 ERRORS & OMISSIONS INSURANCE. During the Term, the
Company shall maintain errors and omissions insurance with a reputable
insurance company with a policy limit of no less than $1,000,000 protecting
Executive from any and all claims, actions, causes of action, arbitrations,
proceedings, losses, damages, liabilities and expenses ("CLAIMS') that arise
directly or indirectly from his duties with the Company, the Subsidiaries, or
Affiliate of the Company and that are customarily covered by errors and
omissions insurance issued by insurance companies of good reputation.
3.4.6 PERQUISITES. Executive shall be entitled to receive the
following perquisites:
(a) consistent with past practice, the Company shall furnish
Executive with the use of a recent model automobile comparable to the current
automobile that the Company furnishes to Executive, and shall pay or
reimburse Executive for all expenses pertaining to the ownership and
operation of such automobile, including gas and maintenance; and
(b) the Company shall pay or reimburse Executive for all
membership fees, dues and other expenses in connection with the membership
currently enjoyed by Executive and his spouse with Executive's existing
country club, or an equivalent membership at a comparable country club.
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4. EARLY TERMINATION.
4.1 TERMINATION FOR DEATH OR DISABILITY. In the event that Executive
is unable or fails to perform any of his duties hereunder as a result of his
death or as a result of illness or mental or physical disability for six
consecutive months, the Company will be entitled to terminate this Agreement
upon 30 days written notice to Executive that it intends to replace him if
Executive does not resume his duties within said 30 day notice period.
4.2 TERMINATION FOR CAUSE. Except as permitted under Section 4.1,
Executive's employment under this Agreement may be terminated by the Company
only for the following occurrences ("GOOD CAUSE"):
4.2.1 Executive's breach of any of the covenants contained in
Section 5 of this Agreement;
4.2.2 Executive's conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent and final jurisdiction for any
crime involving moral turpitude or any felony punishable by imprisonment in
the jurisdiction involved; or
4.2.3 Executive's commission of an act of fraud or dishonesty
upon the Company;
provided, however, that termination for any other reason or in any other
manner shall be deemed to be without Good Cause.
4.3 SEVERANCE PAYMENTS. If, before the end of the Term, the Company
terminates Executive's employment:
4.3.1 for Good Cause, the Company shall pay to Executive an
amount equal to the sum of the Base Salary Amount accrued as of the date of
termination; or
4.3.2 without Good Cause, the Company shall pay to Executive
the lesser of
(a) a lump sum amount equal to the sum of the Base Salary
Amount accrued as of the date of termination, the Performance Bonus prorated
for any portion of the year remaining and calculated as if the Company had
achieved its Performance Objectives, and the present value of all payments
(whether constituting Base Salary Amount or Performance Bonus) to be made to
Executive for the remainder of the Term using a per annum discount factor
equal to the prime rate as announced by Xxxxx Fargo Bank, N.A. at its Denver,
Colorado branch office on the date of such termination and calculated as if
the Company had achieved its target goals; or
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(b) three times the Base Salary Amount and Performance Bonus for
the year immediately preceding the year of termination.
5. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Executive recognizes that
he will occupy a position of trust with respect to business and technical
information of a secret or confidential nature which is the property of the
Company and which will be imparted to him from time to time in the course of
the performance of his duties hereunder. Executive agrees that for the Term
and for three years thereafter:
5.1 Executive shall not use or disclose to any person directly or
indirectly any Confidential Information or Trade Secrets (defined herein) of
the Company, except that Executive may use and disclose to authorized
personnel of the Company or Subsidiaries such Confidential Information and
Trade Secrets in the course of the performance of his duties hereunder; and
5.2 Upon termination of this Agreement or otherwise upon the request of
the Company, Executive shall return promptly any and all copies of any
documentation or materials containing any Confidential Information or Trade
Secrets of the Company.
5.3 "CONFIDENTIAL INFORMATION OR TRADE SECRETS" of the Company shall
include all information of any nature and in any form which was owned by the
Company prior to the Term or which is owned by the Company during the Term,
including, but not limited to, patents and patent applications; inventions
and improvements, whether patentable or not; development projects; computer
software and related documentation and materials; designs, practices,
recipes, processes, methods, know-how and other facts relating to the
business of the Company; practices, processes, methods, know-how and other
facts related to sales, advertising, promotions, financial matters,
customers, customer lists, supplier lists, vendor lists, or customers'
purchases of goods or services from the Company; and all other trade secrets
and information of a confidential and proprietary nature. Confidential
Information or Trade Secrets shall not include, however: (i) any information
that is or shall become generally known in the trade through no fault of
Executive, and (ii) any information received in good faith from a third party
who has the right to disclose such information and who has not received such
information, either directly or indirectly, from the Company.
6. INDEMNIFICATION. The Company shall indemnify, defend and hold harmless
Executive if he is made, or threatened to be made, a party to an action or
proceeding (including without limitation any and all suits, claims, actions,
investigations or proceedings whether civil, criminal or administrative), to
the full extent permitted by applicable law, including an action by or in the
right of the Company to procure a judgment in its favor, by reason of the
fact that Executive is or was an officer, director or employee of the
Company, against all costs and expenses (including but not limited to
attorney fees, amounts paid in settlement or satisfaction of any order or
judgment in, any action or proceeding, and fines, penalties and assessments
asserted or adjudged in any action or proceeding) resulting from or related
to such action or proceeding, or an appeal thereof, if Executive acted in
good faith for a purpose which he
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reasonably believed to be in the best interests of the Company. The
termination of any such action or proceeding by judgment, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create the presumption that Executive did not act in good faith for purposes
which he reasonably believed to be in the best interests of the Company.
7. NON-COMPETITION. Executive's non-competition covenants in this Section
7 shall apply only: for a three year period after the Company terminates
Executive's employment for Good Cause or for a three year period after
Executive voluntarily terminates his employment with the Company, and during
the Executive's employment with the Company (collectively "NON-COMPETE TERM").
7.1 Executive agrees that Executive shall not during any Non-Compete
Term, directly or indirectly, in any capacity, engage or participate in, or
become employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined herein.
7.2 Executive agrees that the Executive shall not during any
Non-Compete Term, make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Executive, however, shall be entitled to make any
investment in any company whose stock is listed on a national securities
exchange or actively traded in the over-the-counter market; provided that (a)
such investment does not give the Executive 15% or more of the equity
ownership or voting power with respect to such company, and (b) such
investment does not create a conflict of interest between the Executive's
duties hereunder and the Executive's interest in such investment.
7.3 For the purpose of this Section 7, "PROHIBITED BUSINESS" shall be
defined as any business that has as its primary business inbound or outbound
teleservices.
8. INJUNCTIVE RELIEF. Executive acknowledges that damages would be an
inadequate remedy for Executive's breach of any of the provisions of Sections
5 or 7 of this Agreement, and that breach of any of such provisions will
result in immeasurable and irreparable harm to the Company. Therefore, in
addition to any other remedy to which the Company may be entitled by reason
of Executive's breach of any such provision, the Company shall be entitled to
seek and obtain temporary, preliminary and permanent injunctive relief from
any court of competent jurisdiction restraining Executive from committing or
continuing any breach of Sections 5 or 7.
9. MISCELLANEOUS.
9.1 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or three days
after being mailed by certified or registered mail, postage prepaid, return
receipt requested, to the parties, their successors in
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interest or their assignees. All notices and other communications hereunder
to (a) the Company shall be sent to its principal executive offices, to the
attention of its Chief Executive Officer, and (b) Executive shall be sent to
his home address as then recorded on the books of the Company.
9.2 GOVERNING LAW. This Agreement shall be governed as to its validity
and effect by the laws of the State of Colorado, without regard to its choice
of law rules.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of (a) the heirs, executors and legal
representatives of Executive upon Executive's death and (b) any successor of
the Company and any such successor or permitted assign shall be deemed
substituted for the Company, as the case may be, under the terms hereof for
all purposes. As used in this Agreement, "SUCCESSOR" shall include any
person, firm, corporation or other business entity which at any time, whether
by purchase, merger, consolidation or otherwise, directly or indirectly
acquires a majority of the assets, business or stock of the Company.
9.4 ASSIGNMENT. This Agreement is personal to the Company and
Executive and may not be assigned by either party without the written consent
of the other, except as permitted by Section 9.3 (b).
9.5 ENTIRE AGREEMENT/MODIFICATION. This Agreement supersedes any and
all other agreements, either oral or written, between the parties hereto with
respect to the subject matter hereof. Executive and the Company agree that
no other agreement, statement or promise with respect to the subject matter
hereof not contained in this Agreement and the agreements and instruments
contemplated hereby shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing, signed by the party to
be charged.
9.6 COUNTERPARTS. This Agreement is being executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.7 SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions thereof in such jurisdiction or rendering that or
any other provisions of this Agreement invalid, illegal, or unenforceable in
any other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall
be modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
9.8 AGREEMENT FEES AND EXPENSES. The Company shall reimburse Executive
for all legal fees and expenses in negotiating this Agreement, advising
Executive with respect to this Agreement before the execution hereof, and
drafting this Agreement.
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9.9 ATTORNEY FEES. In the event that any action or proceeding is
commenced by any party hereto for the purpose of enforcing any provision of
this Agreement, the parties to such action, proceeding or arbitration may
receive as part of any award, settlement, judgment, decision or other
resolution of such action or proceeding, whether or not reduced to a court
judgement, their costs and reasonable attorneys fees as determined by the
person or body making such award, settlement, judgment, decision or
resolution.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TELETECH HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, President
and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx
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