Exhibit 10.2 EMPLOYMENT AGREEMENT
Agreement made this 27th day of February, 1987, by and between PHONE-A-GRAM
SYSTEMS, INC., a Delaware corporation (hereinafter referred to as the "Company")
and XXXXXX X. XXXX, of Wheeling, Illinois (hereinafter referred to as the
"Executive").
WHEREAS, the Company desires to employ the Executive and the Executive
desires to work for the Company upon the terms and conditions hereinafter
provided.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
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hereby accepts employment on the terms and conditions hereafter set forth, both
parties hereto expressly revoking any and all prior employment agreements to
which they may be mutually subject. The Executive represents and warrants to the
Company that he is free to accept employment hereunder and that he has no prior
or other obligations or commitments of any kind to anyone that would in any way
hinder or interfere with his acceptance of, or the full, uninhibited and
faithful performance of such employment. Executive agrees that during the term
hereof he shall devote his best efforts and full business time exclusively to
the business affairs of the Company and shall perform his duties faithfully and
efficiently subject to the direction of the Board of Directors of the Company;
provided, however, that Executive may become a director of other corporations
and engage in such other charitable, civic and similar pursuits to the extent
that such activities do not interfere with his devoting his best efforts to his
duties to the Company hereunder.
2. Duties.
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a. The Company shall employ Executive as the Chief Executive Officer
of the Company. Executive shall devote his best efforts to the performance
and faithful discharge of his duties, including the performance of any and
all duties consistent with his position, in such a manner as to best promote
the interests and business of the Company.
b. Executive shall be required to devote all of his working time to the
business of the Company, in accordance with the instructions, direction and
control of the Company's Board of Directors. Executive shall not, during the
term of this Agreement, engage in business which is competitive with the
Company or own any equity securities in any business which competes with the
Company, except that Executive may own an equity interest of up to three
percent (3%) in a competing business, if such equity securities are publicly
traded. Executive's duties shall include without limitation, the
establishment and management of the business affairs of the Company, business
development and hiring and training of staff, managing the day to day
business operations, and being accountable for the profit and loss from
operations of the Company.
c. The Company shall use its best efforts to have Executive included
among management's nominees for election to the Company's Board of Directors
during the term hereof and to have the Board of Directors elect Executive as
Chairman of the Board and Chief Executive Officer. If, without cause (as
defined in Section 7 hereof), the Board of Directors of the Company
determines not to elect or reelect Executive as Chief Executive Officer or if
Executive is not elected as a Director of the Company, or the provisions of
the
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Company's by-laws describing the relative duties and responsibilities of the
Chief Executive Officer or the Chairman of the Board as in effect this date
are changed without Executive's consent, then Executive may elect to treat
such event as a termination of his employment by the Company without cause
with the consequences provided in Section 7 hereof then becoming applicable.
Executive's right to so elect shall be exercised by notice to the Company
within thirty (30) days of the occurrence of the event which give rise
thereto.
d. Executive currently resides in the Chicago metropolitan area and
shall not be required to relocate his residence hereunder without Executive's
prior approval. In the event that Executive shall relocate, then the
provisions of Section 4(d) shall apply.
e. The Company, its principals and the Guarantors hereof hereby agree
to obtain, contribute or commit sufficient funds to enable the Company to
expand and diversify its business during the term hereof.
3. Term. The term of Executive's employment shall commence on March 2,
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1987, and shall continue for a period of sixty (60) months thereafter.
4. Compensation.
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a. As compensation for all services rendered by Executive while
working for the Company hereunder, Executive shall receive an annual base
salary not less than ONE HUNDRED SEVENTY THOUSAND DOLLARS ($170,000.00),
payable in equal installments in accordance with the Company's payroll
periods. Such base salary may be increased thereafter at the discretion of
the Board of Directors of the Company. If such annual base salary is
increased at any time or from time to time during the term hereof, the new
annual base salary shall, without further action by the parties, be deemed
substituted for the salary set forth herein and this Agreement shall be
deemed to be amended accordingly.
b. The Company shall pay Executive an annual bonus of not less than
EIGHTY THOUSAND DOLLARS ($80,000.00) per year during the term hereof, payable
during the first month immediately following the end of each of the Company's
fiscal years during the term hereof. Such bonus shall be determined in
accordance with a bonus arrangement to be agreed upon between the Company and
Executive. The bonus payable to Executive for the initial period beginning on
the effective date hereof through the end of the Company's current fiscal
year shall be prorated effective as of January 1, 1987, through the end of
the Company's current fiscal year.
c. In addition to the Executive's compensation set forth above, the
Company shall also provide to or on behalf of Executive, the following fringe
benefits:
i. an automobile allowance of at least Four Hundred Fifty Dollars
($450.00) per month during the term hereof;
ii. one hundred percent (100%) reimbursement of medical expenses,
including health, hospitalization, dental, eyes, and prescriptions;
iii. long-term disability payments in an amount equal to at least two-
thirds (2/3) of the Executive's compensation set forth
in Sections 4(a) and (b) above; and
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iv. the Company shall pay to Executive the cost of obtaining term life
insurance on Executive's life in the principal amount of Two Hundred
Sixty-Five Thousand Dollars ($265,000.00) for a five (5) year term.
d. The Company shall pay directly or reimburse Executive for all
moving expenses and costs of relocating his residence at the Company's
request, including:
i. all direct and indirect costs of selling Executive's residence,
including the commission upon sale of his residence (but not including
the commission upon sale of his Lake Forest, Illinois house);
ii. travel, meal and lodging expenses in moving from his old to his
new residence;
iii. travel, meal and lodging expenses in looking for a new
residence; and
iv. temporary housing expenses for up to six (6) months.
The Company shall also pay Executive an amount equal to the additional
federal income tax incurred by Executive as a result of the inclusion in
income by Executive of payments by the Company for Executive's moving
expenses which cannot be deducted by Executive in arriving at federal taxable
income.
e. The Company shall grant Executive the option to purchase two
hundred fifty-thousand (250,000) shares of stock of the Company at a price of
THREE DOLLARS ($3.00) per share, upon the terms and conditions more fully set
forth in the Stock Option Agreement executed simultaneously herewith .
5. Restrictive Covenant. Executive acknowledges that his services are of
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a special and unusual character with a unique value to the Company, the loss of
which cannot be adequately compensated by damages in an action at law. The
Company acknowledges that the restrictions on Executive's employment set forth
below may restrict Executive from earning a livelihood and, therefore, the
Company shall compensate Executive as set forth in Section 4 for the twelve (12)
month period following termination of employment. In lieu of compensating
Executive as set forth in Section 4 for said twelve (12) month period, the
Company may elect in writing delivered to Executive at any time prior to
termination to waive the provisions of this Section 5. The Executive covenants
and agrees that upon the termination of employment hereunder and for a period of
twelve (12) months thereafter, Executive shall not, in any county in which the
Company conducts its business as of the date of termination of employment,
directly or indirectly, either as an individual or on his own account, or as an
employee, agent, salesman, or member of any person, corporation, firm or
otherwise, provide services, call upon, solicit, enter into, or engage in the
business conducted by the Company on the date of termination of employment.
Executive shall not during the twelve (12) month period provided above, directly
or indirectly, (a) accept any order tendered to him by any account or
prospective account of the Company, or (b) solicit, direct, or take away,
directly or indirectly, any of the customers, business or patronage of the
business of the Company, (c) directly or indirectly induce or attempt to
influence an employee of the Company to terminate his employment herewith, or
(d) own any equity securities in any business which competes with the Company,
except that Executive may own an equity interest of up to three percent (3%) in
a competing business, if such equity securities are publicly traded.
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6. Vacations. The Executive shall be entitled, to four (4) weeks vacation
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time per year, or such greater amount as shall be agreed upon between the
parties, during which time Executive's compensation shall be paid in full.
7. Termination.
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a. If (and only if) Executive is discharged by the Company prior to
termination of the term hereof, other than for cause (which for all purposes
of this Agreement shall be limited solely to action by Executive involving
willful malfeasance or gross negligence, or failure to act involving material
nonfeasance; provided that in the case of such gross negligence or material
nonfeasance it would at the time have a material adverse effect on the
Company), Executive shall receive each of the following from the Company:
i. The compensation provided for in each of the subsections a. through
e. of Section 4 hereof shall be payable to Executive for the balance of
the term hereof as if his employment continued through such date.
ii. Any individual life insurance contract(s) on Executive's life owned
by the Company at the date of termination shall be transferred to
Executive.
b. Executive may elect to treat any of the following events as a
termination of his employment by the Company without cause, with the
consequences provided in Section 7(a) hereof becoming applicable:
i. Without cause (as defined in Section 7(a) hereof, the Board of
Directors of the Company determines not to elect Executive to the offices
of the Chief Executive Officer and Chairman of the Board of Directors of
the Company.
ii. Executive is not elected as a director of the Company.
iii. The provisions of the Company's by-laws describing the relative
duties and responsibilities of the office of Chairman of the Board of
Chief Executive Officer as in effect on this date are changed without
Executive's consent.
iv. The assignment to Executive of any duties inconsistent with his
status as Chairman of the Board of Directors and Chief Executive Officer
of the Company or a substantial adverse alteration in the nature or
status of Executive's responsibilities from those in effect as of the
date hereof.
v. A reduction by the Company in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time.
vi. The failure by the Company without Executive's consent, to pay to
Executive any portion of his current compensation, within seven (7) days
of the date such compensation is due.
viii. The failure by the Company, its principals or the Guarantors
hereof, to obtain, contribute or commit sufficient funds to enable the
Company to expand and diversify its business during the terms hereof.
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Executive's right to treat any of the foregoing events as a termination of
his employment shall be exercised by notice given to the Company within
thirty (30) days after the occurrence of such event.
8. Assignment. Neither this Agreement nor any of rights, duties or
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obligations of either party may be assigned or delegated by either party without
the prior written consent of the other party.
9. Construction. This Agreement shall be governed by, and be construed in
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accordance with, the laws of the State of Delaware, and, except as provided in
Section 8, shall be binding upon, and shall inure to the benefit of the heirs,
executors, assigns, transferees, and successors in interest of the parties
hereto .
10. Notices. Any notices required or permitted to be given hereunder shall
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be sufficient if in writing and if sent by registered mail to the Executive's
principal residence or to the Company's principal office, as the case may be.
11. Entire Agreement. This instrument contains the entire agreement of the
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parties. It may not be changed orally, but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Guarantee. Payments due to Executive from the Company pursuant to this
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Agreement are hereby guaranteed, as hereinafter set forth, jointly and
severally, by XXXXXXX XXXXXXXXXX, XXXXXX X. XXXXXX, and XXXX XXXXXX (said
individuals are collectively referred to herein as "Guarantors"), who shall
acknowledge such guarantee by affixing their signatures hereto. The Guarantors'
liability hereunder shall be limited to a maximum payment to Executive of Two
Hundred Fifty Thousand Dollars ($250,000.00) per year or pro rata if a portion
thereof, for the term of this Agreement. In the event that the Guarantors become
liable hereunder, then in such event, Executive's duties shall be expanded to
include the rendering of similar general management services as set forth herein
to the Guarantors. Notwithstanding the fact that the liability of the Guarantors
to Executive is joint and several, the Guarantors agree to allocate their
respective liability hereunder according to the following percentages:
Guarantor Percent of Liability
--------- --------------------
Xxxxxxx Xxxxxxxxxx 59%
Xxxxxx X. Xxxxxx 25%
Xxxx Xxxxxx 16%
13. Miscellaneous. Wherever necessary or proper herein the singular imports
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the plural, and the plural the singular, and masculine, feminine and neuter
expressions are interchangeable. Any reference to section numbers in this
Agreement shall be deemed to be of sections in this Agreement. The section
titles used herein are provided for informational purposes only and shall affect
neither the meaning of the terms nor the intent of the parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Executive: /s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Company: PHONE-A-GRAM SYSTEMS, INC.
By: /s/Xxxxxx X. Xxxxxx
---------------------------------
GUARANTORS:
We hereby agree to the provisions of Section 12 hereof:
/s/Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
/s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/Xxxx Xxxxxx
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Xxxx Xxxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
This is an Amendment to an Employment Agreement entered into the 27th day of
February, 1987 ("Employment Agreement") by AMSERV, INC., a Delaware corporation
formerly known as PHONE-A-GRAM SYSTEMS, INC. (hereinafter referred to as the
"Company") and XXXXXX X. XXXX (hereinafter referred to as the "Executive") and
this Amendment is entered into as of August 8, 1989.
The parties hereto agree as follows:
1. Section 3 of the Employment Agreement is amended to read as follows:
"3. Term. The term of Executive's employment commenced on March 2, 1987
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and shall continue until terminated by either party upon not less than 30
days' written notice."
2. Section 5 of the Employment Agreement is amended to read as follows:
"5. Restrictive Covenant. Executive acknowledges that his services are
--------------------
of a special and unusual character with a unique value to the Company,
the loss of which cannot be adequately compensated by damages in an
action at law. The Company acknowledges that the restrictions on
Executive's employment set forth below may restrict Executive from
earning a livelihood and, therefore, in the event Executive is not
otherwise entitled to compensation following termination of employment
pursuant to Section 7 hereof, the Company shall compensate Executive as
set forth in Section 4 for the 12-month period following termination of
employment. In lieu of compensating Executive as set forth in Section 4
for said 12-month period, the Company may elect, in writing delivered to
Executive at any time prior to termination, to waive the provisions of
this Section 5. The Executive covenants and agrees that, upon termination
of employment hereunder and for a period of 12 months thereafter,
Executive shall not, in any county in which the Company conducts its
business as of the date of termination of employment, directly or
indirectly, either as an individual or on his own account, or as an
employee, agent, salesman, or member of any person, corporation, firm or
otherwise, provide services, call upon, solicit, enter into, or engage in
the business conducted by the Company on the date of termination of
employment. Executive shall not, during the 12-month period provided
above, directly or indirectly, (a) accept any order tendered to him by
any account or prospective account of the Company; (b) solicit, direct or
take away, directly or indirectly, any of the customers, business or
patronage of the business of the Company; (c) directly or indirectly
induce or attempt to influence an employee of the Company to terminate
his employment therewith; or (d) own any equity securities in any
business which competes with the Company, except that Executive may own
an equity interest of up to 3% in a competing business if such equity
securities are publicly traded."
3. Section 7 of the Employment Agreement is amended to read as follows:
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"7. Termination.
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(a) If (and only if) Executive's employment is terminated by the Company
other than for cause (which, for all purposes of this Agreement, shall be
limited solely to action by Executive involving willful malfeasance or
gross negligence or failure to act involving material nonfeasance,
provided that in the case of such gross negligence or material
nonfeasance, it would at the time have a material adverse effect on the
Company), Executive shall receive each of the following from the Company:
(i) The compensation provided for in each of the subsections a. through
e. of Section 4 hereof shall be payable to Executive for a period of five
years from the date of termination of employment as if his employment
continued for such five-year period.
(ii) Any individual life insurance contract(s) on Executive's life
owned by the Company at the date of termination shall be transferred to
Executive.
(b) Executive may elect to treat any of the following events as a
termination of his employment by the Company without cause, with the
benefits provided in this Section 7 becoming applicable:
(i) Without cause (as defined in Section 7(a) hereof), the Board of
Directors of the Company determines not to elect Executive to the offices
of the Chief Executive Officer and Chairman of the Board of Directors of
the Company.
(ii) Executive is not elected as a director of the Company.
(iii) The provisions of the Company's Bylaws describing the relative
duties and responsibilities of the office of Chairman of the Board or
Chief Executive Officer as in effect on this date are changed without
Executive's consent.
(iv) The assignment to Executive of any duties inconsistent with his
status as Chairman of the Board of Directors and Chief Executive Officer
of the Company or a substantial adverse alteration in the nature or
status of Executive's responsibilities from those in effect as of the
date hereof, including without limitation increasing in a substantial way
the amount of travel required by Executive.
(v) A reduction by the Company in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time.
(vi) The failure by the Company without Executive's consent to pay to
Executive any portion of his current compensation within seven days of
the date such compensation is due.
(vii) The failure by the Company, its principals or the Guarantors
hereof to obtain, contribute or commit sufficient funds to enable the
Company to expand and diversify its business during the term hereof.
(viii) The failure by the Company to continue to provide Executive
with benefits at least as favorable to those enjoyed by Executive under
any of the Company's pension, life insurance, medical, health and
accident, disability, deferred compensation,
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incentive or bonus, incentive and other stock option, or savings plans in
which Executive was participating as of a date six months prior to the
giving of a notice of termination (including without limitation all
benefits described in Section 4 hereof), the taking of any action by the
Company which would, directly or indirectly, materially reduce any of
such benefits or deprive Executive of any such material fringe benefit,
or the failure by the Company to provide Executive with the number of
paid vacation days to which Executive is entitled; provided, however,
that the Company may amend any such plan or programs as long as such
amendments do not reduce any benefits to which Executive would be
entitled.
(ix) The failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
(x) The taking of any action by the Company that would materially
adversely affect the physical conditions in or under which Executive
performs his employment duties.
(xi) Any material breach of this Agreement by the Company.
Executive's right to treat any of the foregoing events as a termination
of his employment shall be exercised by notice given to the Company
within 30 days after the occurrence of such event.
(c) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Section 7 be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement benefits after
the date of termination, or otherwise except as specifically provided in
this Section 7.
(d) If, within ten days after any notice of termination is given, the
party receiving such notice of termination notifies the other party that
a dispute exists concerning the termination, the date of termination
shall be the date on which the dispute is finally determined, either by
mutual written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal having been
perfected); provided, that the date of termination shall be extended by a
notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Any litigation or other proceeding to resolve such
dispute shall be conducted in the jurisdiction where Executive resides at
the date the notice of termination is given. Notwithstanding the pendency
of any such dispute, the Company shall continue to pay Executive full
compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, base salary) and continue Executive
as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the
dispute was given until the dispute is finally resolved in accordance
with this subsection. The Company shall also pay to Executive all legal
fees and expenses incurred by Executive in connection with any such
dispute. Amounts paid under this subsection are in addition to all other
amounts due under this Agreement and shall not be offset against or
reduce any other amounts under this Agreement.
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(e) In order to assure the performance by the Company or its successor
of its obligations under this Agreement, the Company may deposit in trust
an amount equal to the maximum payment that will be due the Executive
under the terms hereof. Under a written trust instrument, the Trustee
shall be instructed to pay to the Executive (or the Executive's legal
representative, as the case may be) the amount to which the Executive
shall be entitled under the terms hereof, and the balance, if any, of the
trust not so paid or reserved for payment shall be repaid to the Company.
If the Company deposits funds in trust, payment shall be made by the
Trustee to the Executive in accordance with the provisions of this
Agreement. If and to the extent there are not amounts in trust sufficient
to pay Executive under this Agreement, the Company shall remain liable
for any and all payments due to Executive. In accordance with the terms
of such trust, at all times during the term of this Agreement, Executive
shall have no rights, other than as an unsecured general creditor of the
Company, to any amounts held in trust and all trust assets shall be
general assets of the Company and subject to the claims of creditors of
the Company."
4. Except as provided in this Amendment, the Employment Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
Executive: /s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Company: AMSERV, INC.
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BY:/s/Xxxxxx X. Xxxxxx
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ITS:Director
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