EXHIBIT 10.9
EMPLOYMENT AGREEMENT
(H. XXXXXX XXXXXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of April 1,
1997 (the "Effective Date"), by and among APPLIED VOICE RECOGNITION, INC., a
Utah corporation ("Employer"), and H. XXXXXX XXXXXXX, an individual residing in
Xxxxxx County, Texas ("Employee").
W I T N E S S E T H:
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WHEREAS, Employer and Employee desire to enter into an agreement
regarding Employee's employment with Employer pursuant to the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties covenant and agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT. The term of Employee's employment hereunder
(the "Term") shall commence as of April 1, 1997 (the "Commencement Date") and
shall continue (subject to termination by either Employer or Employee as
hereinafter provided) for an initial term (the "Initial Term") expiring on March
31, 2000 (the "Expiration Date"). The Expiration Date shall be automatically
extended unless terminated by Employer or Employee for successive one-year
periods following the expiration of the Initial Term. If Employer desires to
terminate Employee's employment under this Agreement at the end of the Initial
Term or at the end of any succeeding one year term, Employer shall give written
notice of such desire to Employee at least one month prior to the expiration of
the Initial Term or any succeeding one year term. If Employee desires to
terminate Employee's employment under this Agreement at the end of the Initial
Term or at the end of any succeeding one year term, Employee shall give written
notice of such desire to Employer at least one month prior to the expiration of
the Initial Term or any succeeding one year term. At the expiration of the then
existing term, Employer shall have no further obligation to Employee other than
payment of any earned and unpaid Base Salary (as hereafter defined) under
Section 3(a) and Bonus (as hereafter defined) under Section 3(b), and Employee
shall have no further obligation to Employer except as set forth in Sections 7,
8, 9 and 10.
3. COMPENSATION AND OTHER BENEFITS.
a. As compensation for all services rendered by Employee in
performance of Employee's duties or obligations under this Agreement, Employer
shall pay Employee the following base salary (the "Base Salary"):
(1) from April 1, 1997 until September 15, 1997, a monthly
base salary of TEN THOUSAND AND 00/100 DOLLARS ($10,000.00);
(2) from September 16, 1997 until December 31, 1997, a
monthly base salary of ELEVEN THOUSAND AND 00/100 DOLLARS ($11,000.00)
(3) from January 1, 1998 until December 31, 1998, a monthly
base salary of TWELVE THOUSAND FIVE HUNDRED AND 00/100 DOLLARS
($12,500.00); and
(4) from January 1, 1999 until the Expiration Date, a
monthly base salary of FOURTEEN THOUSAND FIVE HUNDRED EIGHTY-THREE AND
33/100 DOLLARS ($14,583.33).
Employee's Base Salary shall be payable in equal semi-monthly installments or in
the manner and on the timetable which Employer's payroll is customarily handled
or at such intervals as Employer and Employee may hereafter agree to from time
to time.
b. In addition to receiving the Base Salary provided for in
Section 3(a), Employee shall be entitled to a quarterly bonus equal to six and
one-quarter percent (6-1/4%) of his Base Salary for the applicable year (the
"Bonus"). The Bonus shall be earned if, and only if, Employee has met the
criteria set by Employer for the applicable quarter. In connection therewith,
Employer agrees that prior to the end of each quarter, it shall set criteria for
Employee's Bonus to be earned during the following quarter and shall communicate
such criteria to Employee in writing. If Employee successfully meets the
criteria established by Employer (in the discretion of Employer), Employer shall
pay to Employee the quarterly Bonus within thirty (30) days of the end of the
applicable quarter.
c. Employee shall be entitled to be reimbursed by Employer
for all reasonable and necessary expenses incurred by Employee in carrying out
Employee's duties under this Agreement in accordance with Employer's standard
policies regarding such reimbursements.
d. Employee shall be entitled during the Term, upon
satisfaction of all eligibility requirements, if any, to participate in all
health, dental, disability, life insurance and other benefit programs now or
hereafter established by Employer which cover substantially all other of
Employer's employees and shall receive such other benefits as may be approved
from time to time by Employer.
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e. Employee shall be entitled to receive two weeks of paid
vacation for each year during the Term following the first anniversary of the
Commencement Date and shall be entitled to receive paid holidays as enjoyed by
all other employees of Employer.
f. Effective as of September 1, 1997, Employee shall be
entitled to receive an automobile allowance of $500 per month, payable on the
first day of each month during the remainder of the Term. Employee shall be
responsible for paying all costs related to ownership of Employee's vehicle,
including maintenance and repairs, insurance and fuel.
4. DUTIES.
a. Employee is employed to act as Chief Technical Officer of
the Employer and in such other office or position as shall be assigned to
Employee from time to time by Employer, and to perform such duties as are
commensurate with Employee's position with Employer.
b. Employee agrees that during the period of employment,
Employee shall devote full-time efforts to Employee's duties as an employee of
Employer and Employee shall use Employee's best efforts to perform the duties of
Employee's position in an efficient and competent manner and shall use
Employee's best efforts to promote the interests of Employer and any affiliated
companies.
c. During the period of employment, Employee agrees not to
(i) solely or jointly with others undertake or join any planning for or
organization of any business activity competitive with the business activities
of Employer, and (ii) directly or indirectly, engage or participate in any other
activities in conflict with the best interests of Employer.
d. Employee agrees that during the period of employment
Employee shall refer to Employer all opportunities in the computer industry
related to voice recognition software designs and applications to which Employee
might become exposed in carrying out Employee's duties and responsibilities
hereunder.
5. STOCK OPTION PLAN. As a further inducement to Employee to accept
employment upon the terms set forth herein and in consideration of Employee's
execution of this Agreement, Employee shall be granted options entitling
Employee to purchase 210,000 shares of Employer's common stock, par value $0.001
(the "Initial Options"), pursuant to, and Employee shall be entitled to
otherwise participate in, that certain Applied Voice Recognition, Inc. 1997
Incentive Plan, as amended from time to time. The granting instrument for the
Initial Options will provide, in addition to other terms set forth therein, that
(i) the purchase price for the Initial Options shall be the average bid and ask
price for Employer's shares of common stock on the NASDAQ OTCBB (or any national
securities exchange hereafter listing Employer's common stock) on the day prior
to the Commencement Date, and (ii) one third of the Initial Options (being
options to purchase 70,000 shares) will vest on each yearly anniversary date of
the Commencement Date for a total of three years.
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6. TERMINATION OF EMPLOYMENT. Employee's employment and this
Agreement shall terminate upon the earliest to occur of any of the following
events (the actual date of such termination being referred to herein as the
"Termination Date"):
a. The termination of the Agreement pursuant to Section 2.
b. Employee's employment pursuant hereto shall terminate in
the event of the death of Employee.
c. Employer may terminate Employee's employment under this
Agreement for cause without any prior notice, upon the occurrence of any of the
following events:
(1) any embezzlement or wrongful diversion of funds of
Employer or any affiliate of Employer by Employee;
(2) gross malfeasance by Employee in the conduct of
Employee's duties;
(3) material breach of this Agreement;
(4) gross neglect by Employee in carrying out Employee's
duties; or
(5) the failure of Employee to be able to perform
Employee's duties hereunder for a period of not less than thirty days
by reason of disability. For purposes of this Agreement, Employee
shall be deemed to have become disabled when the Board of Directors of
Employer, upon the advice of a qualified physician, shall have
determined that Employee has become physically or mentally incapable
(excluding infrequent and temporary absences due to ordinary illness)
of performing Employee's duties under this Agreement. Before making
any termination decision pursuant to this Section 6(c)(5), the Board
of Directors of Employer shall determine whether there is any
reasonable accommodation (within the meaning of the Americans with
Disabilities Act) which would enable Employee to perform the essential
functions of Employee's position under this Agreement despite the
existence of any such disability. If such a reasonable accommodation
is possible, Employer shall make that accommodation and shall not
terminate Employee's employment hereunder based on such disability.
d. If Employee's employment is terminated for any of the
reasons specified in Section 6(b), (c) or (f), Employer shall no longer be
obligated to make the payments specified under Section 3 or to pay to Employee
any other compensation or benefits whatsoever, except as may otherwise be
provided in Section 6(e) or (f). Notwithstanding the foregoing, if for any
reason Employee's employment is terminated hereunder, any compensation payable
under Sections 3(a) or 3(b) which shall have been earned but not yet paid shall
be paid by Employer to Employee or Employee's estate, as the case may be.
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e. Employee shall have the right to terminate Employee's
employment hereunder upon ninety days' notice to Employer after the occurrence
of any of the following events:
(1) a sale of all or substantially all of the assets of
Employer to a third party for which Employee does not continue in
employment; or
(2) a merger or consolidation of Employer with an entity for
which Employee does not continue in employment.
If this Agreement is terminated by Employee under this Section 6(e), any
then unvested Initial Options shall automatically become fully vested
immediately upon termination. The foregoing provisions of this Section 6(e)
shall not apply if the change of ownership that would otherwise trigger
Employee's termination right is caused by the registration by Employer or its
successors, of any class of equity securities pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended.
f. Employer shall have the right to terminate Employee's
employment hereunder without prior notice and without cause; provided, however,
in such event, Employee shall continue to receive his Base Salary for six (6)
months following the date of such termination. In such event, Employee shall
not be eligible to receive the Bonus for any quarter beyond the quarter in which
Employee's employment is terminated. If this Agreement is terminated by
Employer under this Section 6(f), any Initial Options that would otherwise vest
on or before the next anniversary date of the Commencement Date shall
automatically become fully vested immediately upon termination; however, any
additional unvested Initial Options shall be cancelled upon termination.
7. INVENTIONS AND CREATIONS BELONG TO EMPLOYER.
a. Any and all inventions, discoveries, improvements or
creations (collectively, "Creations") which Employee has conceived or made or
may conceive or make during the period of employment in any way, directly or
indirectly, connected with Employer's business shall be the sole and exclusive
property of Employer. Employee agrees that all copyrightable works created by
Employee or under Employer's direction in connection with Employer's business
are "works made for hire" and shall be the sole and complete property of
Employer and that any and all copyrights to such works shall belong to Employer.
To the extent any of the works described in the preceding sentence are not
deemed to be "works made for hire," Employee hereby assigns all proprietary
rights, including copyright, in these works to Employer without further
compensation.
b. Employee further agrees to (i) disclose promptly to
Employer all such Creations which Employee has made or may make solely, jointly
or commonly with others during the period of employment to the extent connected
with Employer's business, (ii) assign all such Creations to Employer, and (iii)
execute and sign any and all applications, assignments or other instruments
which Employer may deem necessary in order to enable Employer, at Employer's
expense, to apply for, prosecute and obtain copyrights, patents or other
proprietary rights in the United States and foreign countries or in order to
transfer to Employer all right, title and interest in said Creations.
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8. CONFIDENTIALITY; OWNERSHIP OF INFORMATION. Employer promises that
Employer will, during the Term, provide Employee with access to such
Confidential Information (as defined in Section 8(a)) owned by Employer and that
is used in the operation of Employer's business as reasonably necessary to allow
Employee to perform Employee's obligations hereunder. Employee acknowledges
that Employer has agreed to provide Employee with a definite term of employment
and with access to such Confidential Information of Employer during that term of
employment.
a. DEFINITION. For purposes of this Agreement,
"Confidential Information" means any and all information relating directly or
indirectly to Employer that is not generally ascertainable from public or
published information or trade sources and that represents proprietary
information to Employer, excluding, however, (i) Employees' business contacts,
(ii) information already known to Employee prior to Employee's employment with
Employer, and (iii) information required to be divulged in any legal or
administrative proceeding in which Employee is involved. Confidential
Information shall consist of, for example, and not intending to be inclusive,
(A) software (source and object codes), algorithms, computer processing systems,
techniques, methodologies, formulae, processes, compilations of information,
drawings, proposals, job notes, reports, records and specifications, and (B)
information concerning any matters relating to the business of Employer, any of
its customers, prospective customers, customer contacts, licenses, the prices it
obtains or has obtained for the licensing of its software products and services,
or any other information concerning the business of Employer and Employer's good
will.
b. NO DISCLOSURE. During the Term and at all times
thereafter, Employee shall not disclose or use in any manner, directly or
indirectly, and shall use Employee's best efforts and shall take all reasonable
precautions to prevent the disclosure of, any such trade secrets or other
Confidential Information, except to the extent required in the performance of
Employee's duties or obligations to Employer hereunder or by express prior
written consent of a duly authorized officer or director of Employer (other than
Employee).
c. OWNERSHIP OF INFORMATION. Such Confidential Information
is and shall remain the sole and exclusive property and proprietary information
of Employer or Employer's customers, as the case may be, and is disclosed in
confidence by Employer or permitted to be acquired from such customers in
reliance on Employee's agreement to maintain such Confidential Information in
confidence and not to use or disclose such Confidential Information to any other
person except in furtherance of Employer's business.
d. RETURN OF MATERIAL. Upon the expiration or earlier
termination of this Agreement for any reason, Employee shall immediately turn
over to Employer all documents, disks or other magnetic media, or other material
in Employee's possession or under Employee's control that (i) may contain or be
derived from Creations or Confidential Information, or (ii) are connected with
or derived from Employee's services to Employer. Employee shall not retain any
Confidential Information in any form (e.g., computer hard drive, microfilm,
etc.) upon the expiration or earlier termination of this Agreement.
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9. NONCOMPETE; WORKING FOR COMPETITOR. In consideration of
Employee's employment by Employer, Employee will not, at any time during the
Term or at any time for twenty-four (24) months subsequent to any termination of
Employee's employment pursuant to the provisions of Section 6(c) or the
voluntary termination of employment by Employee pursuant to Section 2, directly
or indirectly, within the United States, Canada, Mexico, South America or
Europe, for Employee's own account or on behalf of any direct competitors of
Employer, engage in any business or transaction involving the design,
installation, integration, service or consulting with respect to voice
recognition software designs and applications (whether as an employee, employer,
independent contractor, consultant, agent, principal, partner, stockholder,
corporate officer, director or in any other individual or representative
capacity), without the prior written consent of Employer, which consent may be
withheld by Employer in Employer's sole and absolute discretion.
10. NON-SOLICITATION OF EMPLOYEES. During the Term and for a period
of twenty-four (24) months after the date of termination of employment, Employee
will not in any way, directly or indirectly (i) induce or attempt to induce any
employee of Employer to quit employment with Employer; (ii) otherwise interfere
with or disrupt Employer's relationship with its employees; (iii) solicit,
entice or hire away any employee of Employer; or (iv) hire or engage any
employee of Employer or any former employee of Employer whose employment with
Employer ceased less than one year before the date of such hiring or engagement.
Employee acknowledges that any attempt on the part of Employee to induce others
to leave Employer's employ, or any effort by Employee to interfere with
Employer's relationship with its other employees would be harmful and damaging
to Employer.
11. EMPLOYEE'S ACKNOWLEDGEMENT. It is the express intention of
Employee and Employer to comply with sections 15.50 et seq. of the Texas
Business and Commerce Code in effect as of the date of execution hereof.
Employee stipulates that the provisions of this Agreement are not oppressive or
overly burdensome to Employee and will not prevent Employee from earning an
income following termination of this Agreement. Employee warrants and
represents that:
a. Employee is familiar with non-compete and non-
solicitation covenants;
b. Employee has discussed or acknowledges the opportunity to
discuss the provisions of the non-compete and non-solicitation covenants
contained herein with Employee's attorney and has concluded that such provisions
(including, without limitation, the right to equitable relief and the length of
time provided for herein) are fair, reasonable and just under the circumstances;
c. Employee is fully aware of the obligations, limitations
and liabilities included in the non-compete and non-solicitation covenants
contained in this Agreement;
d. The scope of activities covered hereby are substantially
similar to those activities to be performed by Employee under this Agreement;
e. The twenty-four (24) month non-compete and non-
solicitation period is a reasonable restriction, giving consideration to the
following factors: (1) Employee and Employer
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reasonably anticipate that this Agreement, although terminable under certain
provisions, will continue in effect for sufficient duration to allow Employee to
attain superior bargaining strength and an ability for unfair competition with
respect to the customers covered hereby; (2) the duration of the twenty-four
(24) month non-compete and non-solicitation period is a reasonably necessary
period to allow Employer to restore its position of equivalent bargaining
strength and fair competition with respect to those customers covered hereby;
and (3) historically, employees of all types have remained with Employee for a
duration of longer than the duration of the twenty-four (24) month non-compete
and non-solicitation period; and
f. The limitations contained in this Agreement with respect
to geographic area, duration and scope of activity are reasonable; however, if
any court shall determine that the geographic area, duration or scope of
activity of any restriction contained in this Agreement is unenforceable, it is
the intention of the parties that such restrictive covenants set forth herein
shall not thereby be terminated, but shall be deemed amended to the extent
required to render such covenants valid and enforceable.
12. REMEDIES; INJUNCTION. In the event of a breach or threatened
breach by Employee of any of the provisions of this Agreement, Employee agrees
that Employer, in addition to and not in limitation of any other rights,
remedies or damages available to Employer at law or in equity, shall be entitled
to a permanent injunction without the necessity of proving actual monetary loss
in order to prevent or restrain any such breach by Employee or by Employee's
partners, agents, representatives, servants, employees and/or any and all
persons directly or indirectly acting for or with Employee. It is expressly
understood between the parties that this injunctive or other equitable relief
shall not be Employer's exclusive remedy for any breach of this Agreement, and
Employer shall be entitled to seek any other relief or remedy which it may have
by contract, statute, law or otherwise for any breach hereof.
13. ARBITRATION. The parties agree that all disputes or questions
arising in connection with this Agreement and/or the termination of Employee's
employment hereunder shall be settled by a single arbitrator pursuant to the
rules of the American Arbitration Association in the City of Houston, Texas, and
the award of the arbitrators shall be final, non-appealable, conclusive and
enforceable in a court of competent jurisdiction; provided, however,
notwithstanding the foregoing, in no event shall any dispute, claim or
disagreement arising under Sections 7, 8, 9 and 10 of this Agreement that
requires injunctive or other equitable relief be required to be submitted to
arbitration pursuant to this provision or otherwise.
14. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to Employer and Employee as follows:
If to Employer, at: Applied Voice Recognition, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
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with a copy to: Xxxxx, Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or, if to Employee, at: Mr. H. Xxxxxx Xxxxxxx
00 Xxxxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxx 00000
Notices shall be deemed properly delivered and received when and if either: (i)
personally delivered; (ii) delivered by nationally-recognized overnight courier;
(iii) when deposited in the U.S. Mail, by registered or certified mail, return
receipt requested, postage prepaid; or (iv) sent via facsimile transmission with
confirmation mailed by regular U.S. mail. Any party may change its notice
address for purposes hereof to any address within the continental United States
by giving written notice of such change to the other parties hereto at least
fifteen days prior to the intended effective date of such change.
15. SEVERABILITY. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Employer and
Employee shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable, but all the remaining provisions
of this Agreement shall remain in full force and effect.
16. ASSIGNMENT. This Agreement may not be assigned by any party
without the prior written consent of the other parties.
17. BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective legal
representatives, heirs, successors and permitted assigns.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
19. ATTORNEYS FEES. In the event of any dispute between the parties
regarding this Agreement, the prevailing party shall be entitled to be
reimbursed for such prevailing party's attorneys fees and costs of court (or
cost of arbitration, as applicable) by the non-prevailing party.
20. AGREEMENT READ, UNDERSTOOD AND FAIR. Employee has carefully read
and considered all provisions of this Agreement and agrees that all of the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the interests of Employer.
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IN WITNESS WHEREOF, the parties have executed this Agreement on this
1st day of September, 1997, effective as of the Effective Date.
EMPLOYER:
APPLIED VOICE RECOGNITION, INC., a Utah
corporation
By: /S/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx, Chairman
EMPLOYEE:
/S/ H. XXXXXX XXXXXXX
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H. XXXXXX XXXXXXX
Signature Page to
Employment Agreement
(H. Xxxxxx Xxxxxxx)
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