EXHIBIT 10.2
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made as of August 24,
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1999 by and among U.S. Audiotex Corporation, a Delaware corporation (the
"Company") and Xxxxxxx Xxxxx ("Executive").
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RECITALS
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WHEREAS, Executive has been previously employed by U.S. Audiotex, LLC
(the "LLC") pursuant to a written employment agreement dated as of July 8, 1996,
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and subsequently amended as of January 23, 1998 (the "LLC Agreement");
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WHEREAS, contemporaneously with this Agreement, the LLC and the
Company have entered into an agreement of merger;
WHEREAS, the Company desires to employ Executive to serve as President
and a member of the Board of Directors (the "Board") of the Company on the terms
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and conditions herein provided; and
WHEREAS, Executive desires to become an employee of the Company on the
terms and conditions herein provided:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Executive, subject to the
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terms and conditions herein provided. During the Employment Period (as defined
in Section 8.1 hereof), Executive (unless he is terminated or voluntarily
retires) shall faithfully and diligently perform his duties under this Agreement
and shall use his best efforts to promote the interests of the Company.
This Agreement shall supercede and replace the LLC Agreement as of the
Commencement Date hereof, provided that, in the event that the Company does not
consummate an initial public offering within one (1) year after the Commencement
Date, this Agreement shall be deemed terminated as of that date, and
Executive's employment thereafter shall be pursuant to the terms and conditions
of the LLC Agreement, for the remainder of the term of the LLC Agreement.
Executive shall be appointed to the Board for the duration of the
Employment Period, contingent upon continued ownership or control by Executive
and U.S. Audiotex, Inc. of a combined total of at least ten percent (10%) of the
Company's authorized and outstanding common shares.
The Executive's principal place of employment shall be located in or
around San Ramon, California.
2. Term. Subject to the terms and conditions hereof, the initial
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term of employment of Executive by each Company under this Agreement shall be
for the period commencing on the date hereof (the "Commencement Date") and
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expiring when terminated as provided in Section 8 hereof (the "Expiration
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Date").
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3. Executive's Obligations.
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Executive shall serve as President of the Company with such powers and
responsibilities as are customarily accorded to a president in companies of
comparable size within the same or similar industry. In his capacity as
President of the Company, Executive shall report directly to the Chief Executive
Officer of the Company. Executive shall at all times comply with and be subject
to the Company's policies, procedures, directives and regulations as established
by the Company from time to time. Executive accepts such employment,
responsibility and authority and agrees to perform the services of President of
the Company and such other services as shall from time to time be reasonably
assigned to him by or pursuant to authorization of the Board, and agrees to
devote all of his working time, skill and attention to such services.
Notwithstanding the foregoing, the parties agree that the Executive
may continue the educational, charitable and community activities (including
membership on the board of educational, charitable or community organizations)
in which he is engaged on the date hereof and may engage in other educational,
charitable and community activities (including membership on the board of
educational, charitable or community organizations) and serve on boards of
directors of other companies provided such activities do not materially
interfere with the performance of his duties to the Company.
4. Executive's Compensation and Benefits. During the Employment
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Period, as full compensation to the Executive for his performance of the
services hereunder and for his acceptance of the responsibilities described
herein, the Company agrees to pay the Executive, and the Executive agrees to
accept, the following salary and other benefits:
4.1 Base Salary. During the Term of this Agreement, the Company
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shall pay the Executive a salary at the annual rate of $215,000. The Board or
the compensation committee of the Board (the "Compensation Committee") shall
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periodically review Executive's base salary on an annual basis beginning on the
first anniversary of this Agreement and may increase but not decrease such base
salary, from time to time, in their sole discretion. The base salary due the
Executive hereunder (the "Base Salary") shall be payable in accordance with the
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Company's standard payment policy, less any amounts required to be withheld by
the Company from such Base Salary pursuant to the benefit plans in which
Executive participates pursuant to Sections 4.3 and 4.4 and applicable laws and
regulations.
4.2 Bonus. (a) The Executive shall be entitled to a minimum annual
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bonus of $100,000, payable annually. (b) The Executive shall also be eligible to
receive further
annual bonuses at the discretion of, and in the amounts and at the times
determined by, the Compensation Committee.
4.3 Maintenance of Prior Benefits. The benefits provided to Executive
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by the LLC during the term of the LLC Agreement shall be continued without
modification or reduction, unless agreed to in writing by Executive and the
Company.
4.4 Other Benefit Plans. Subject to all eligibility requirements, to
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Section 4.3 hereof, and to the extent permitted by law, the Executive shall be
entitled to participate in any and all employee benefit plans (including, but
not limited to, retirement, life insurance, medical, dental, disability, and
savings plans) established or maintained by the Company from time to time for
the benefit of their employees (or executives) in general. This Section shall
not be interpreted so as to require the Company to duplicate benefits already
provided as per Section 4.3 hereof.
4.5 Vacation. The Executive shall be entitled to four weeks paid
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vacation per annum.
4.6 Shareholder Rights. If, at any time, Imperial is granted "piggy-
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back" registration rights with respect to its shares of the Company's common
stock, Executive and U.S. Audiotex, Inc. shall, at such time, be granted "piggy-
back" registration rights similar to those granted to Imperial, subject to
customary underwriters carve-backs and a carve-back in proportion to such shares
sold by Imperial, if any. Executive and U.S. Audiotex, Inc. shall have "tag-
along" rights, on a proportionate basis, on any sales of Company shares by
Imperial prior to consummation of an initial public offering by the Company.
5. Reasonable Expenses. The Company will reimburse the Executive for
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all reasonable business expenses, including travel and lodging, which are
properly incurred by him in the performance of his duties hereunder, upon
presentation of proper vouchers therefor and in accordance with written policies
established from time to time by the Company for such reimbursements.
6. Assistance. Executive shall make himself reasonably available,
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upon the request of the Company, to testify or otherwise assist in litigation,
arbitration, or other disputes involving the Company, or any of its officers,
directors, employees, subsidiaries or affiliates, during the Employment Period
and at reasonable times and locations following the termination of this
Agreement.
7. Covenant Not to Compete.
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7.1 General Covenant. During the Employment Period and for a period
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of one year after the termination of this Agreement (the "Non-Compete Period"),
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except in pursuit of his services as an officer and employee of the Company,
Executive shall not, either individually or as a partner, joint venturer,
consultant, shareholder, member or Representative (as defined below) of another
Person (as defined below) or otherwise, directly or indirectly, participate in,
engage in, or have a financial or management interest in, promote, or assist any
other Person in any business operation or any enterprise if such business
operation or enterprise engages, or
would engage, in a Restricted Business in a Restricted Area; provided, however,
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the Executive may own up to one percent of the outstanding equity securities of
any Person.
For purposes of this Section 7.1: "Person" means an individual, a
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partnership, a limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization, a division or operating group of any of
the foregoing, a government or any department or agency thereof or any other
entity.
"Representative" means any officer, director, principal, agent,
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employee, consultant or other representative of a Person.
"Restricted Business" means any business involved in the processing of
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payments to government entities or any other business in which the Company is
actively engaged on the date of termination of the Employment Period.
"Restricted Area" means any country in which the Company or its
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subsidiaries conducts a Restricted Business on the date of termination of the
Employment Period.
7.2 Nonsolicitation. During the Non-Compete Period and for a period
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of one year following termination of this Agreement, Executive shall not,
directly or indirectly (i) employ or seek to employ any person who is at the
date of termination of this Agreement, or was at any time within the six-month
period preceding the date of termination of this Agreement, an officer, general
manager or director or equivalent or more senior level employee of the Company,
their subsidiaries or affiliates or otherwise solicit, encourage, cause or
induce any such employee of the Company, its subsidiaries or affiliates to
terminate such employee's employment with the Company, its subsidiaries or
affiliates for the employment of another company (including for this purpose the
contracting with any person who was an independent contractor (excluding
consultant) of the Company during such period) or (ii) take any action that
would interfere with the relationship of the Company, its subsidiaries and
affiliates with their respective suppliers and franchisees, except to the extent
permitted by the Board.
7.3 Enforcement. Executive agrees that all restrictions and
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agreements contained in this Section 7, including, without limitation, those
relating to duration and restricted territory, are necessary and fundamental to
the protection of the business of the Company, and are reasonable and valid, and
all defenses to the strict enforcement thereof by Executive are hereby waived.
Executive agrees that the remedy at law for any breach of this Agreement will be
inadequate, and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, Executive agrees
that upon breach of this Section 7, the Company shall be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened
further breach. Nothing in this Agreement shall be deemed to limit the Company's
remedies at law or in equity for any breach by Executive of any of the
provisions of this Agreement that may be pursued or availed of by the Company.
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of damages from the Executive.
Although the restrictions contained in Sections 7.1 and 7.2 are
considered by the parties to be fair and reasonable in the circumstances, it is
recognized that restrictions of such
nature may fail for technical reasons, and accordingly it is hereby agreed that
if any of such restrictions shall be adjudged to be void or unenforceable for
whatever reason, but would be valid if part of the wording thereof were deleted,
or the period thereof reduced or the area dealt with thereby reduced in scope,
the restrictions contained in Sections 7.1 and 7.2 shall be enforced to the
maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
Notwithstanding that the Executive's employment hereunder may be
terminated as provided in Section 8, this Agreement shall continue in full force
and effect insofar as is necessary to enforce the covenants and agreements of
the Executive contained in this Section 7.
8. Term and Termination.
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8.1 Employment Period. The term of this Agreement shall be for seven
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(7) years starting with the Commencement Date.
8.2 Early Retirement. Executive shall have the right, in his sole
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discretion, to elect to take early retirement at any time after the third
anniversary of the Commencement Date. In the event that Executive makes such
election, his base salary and minimum annual bonus (see Sections 4.1 and 4.2
hereof) shall continue without reduction or modification throughout the full
term of this Agreement.
8.3 Termination by the Company Without Cause. The Company may
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terminate the Employment Period upon thirty (30) days' prior written notice to
Executive for any reason. Upon termination of the Employment Period pursuant to
this Section 8.3, neither the Company on the one hand, nor Executive, on the
other hand, will have any liability or obligations to the other in respect of
this Agreement, except that Executive shall be entitled to continue to receive,
without modification or reduction (i) his full base salary and minimum annual
bonus (see Sections 4.1 and 4.2 hereof) for the balance of the seven (7) year
term of this Agreement, and (ii) his full benefits (see Sections 4.3 and 4.4
hereof) through December 31, 2002 or for a period of one (1) year from the date
of termination, whichever is later. Executive shall also be entitled to retain
his position on the Board for the balance of the Employment Period, contingent
upon the continued ownership or control by Executive and U.S. Audiotex, Inc. of
a combined total of at least ten percent (10%) of the Company's authorized and
outstanding common shares. Executive agrees that the right to receive the
benefits described in this Section 8.3 shall be full and adequate compensation
to Executive for all damages Executive may suffer as a result of termination of
his employment by the Company pursuant to this Section 8.3. Notwithstanding
anything contained herein to the contrary: (A) the Company's obligations under
this Section 8.3 shall be subject to Executive having executed and delivered an
instrument to the Company irrevocably waiving and releasing the Company from any
and all obligations or liabilities to Executive arising from or in connection
with Executive's employment with the Company or the termination and claims
Executive may have under federal, state or local statutes, regulations or
ordinances or under any common law principles or breach of contract or the
covenant of good faith and fair dealing, defamation, wrongful discharge,
intentional infliction of emotional distress or promissory estoppel (the
"Release and Waiver"); and (B) if the Company does not make the payments
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described in this Section 8.3, Executive shall be released from
Executive's obligations under Sections 7.1 and 7.2 to the Company; provided,
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however, that Executive shall not be so released if the sole reason for the
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Company's failure to make such payment is Executive's failure to execute and
deliver to the Company the Release and Waiver.
8.4 Death. If Executive dies during the first three (3) years of the
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Employment Period, this Agreement shall automatically terminate and all
obligations of the parties shall terminate effective as of the date of death. If
Executive dies during the final four (4) years of the Employment Period, all
obligations of the parties shall terminate effective as of the date of death,
except that the Company's obligation to pay base salary and minimum bonus (see
Sections 4.1 and 4.2 hereof) shall continue for the balance of the term of the
Agreement without modification or reduction.
8.5 Disability. If Executive becomes Disabled (as hereinafter
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defined) at any time during the Employment Period, the Company shall be entitled
to terminate his employment upon written notice to Executive or a person acting
on his behalf. In the event of such termination, Executive shall be released
from any duties hereunder, and for the four (4) year period following such
termination (but not beyond the end of the Employment Period) the Company shall
be required to pay Executive the base salary and minimum annual bonus (see
Sections 4.1 and 4.2 hereof). In such event, to the extent permitted by such
plans, Executive shall also continue to participate in the employee benefit
plans maintained by the Company in which Executive participates as of the date
of termination for a period of one (1) year from the date of termination.
For purposes of this Agreement, "Disabled" shall mean mental or
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physical impairment or incapacity rendering Executive substantially unable to
perform his duties under this Agreement for a period of longer than 180 days out
of any 360 day period during the Employment Period. A determination of whether
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative after obtaining certification from a duly licensed physician
or upon request of Executive or a person acting on his behalf.
8.6 Termination by the Company for Cause. The Company may terminate
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the Employment Period effective immediately upon written notice to Executive in
the event of any of the following:
(i) Executive's material breach of any material term or condition of
this Agreement, such breach continuing unremedied for 30 days after written
notice thereof from the Company specifying the acts constituting the breach and
requesting that they be remedied, it being understood that issues with respect
to the quality of Executive's performance or results thereof shall not be
grounds for termination under this Section 8.6;
(ii) Executive's
(A) personal dishonesty, fraud, misappropriation, willful
misconduct or breach of fiduciary duty, in each such case materially harmful to
the Company's property, personnel or business operations, or materially damaging
to the Company's relationships with its customers, clients or employees or
materially detrimental to the goodwill of the Company; or
(B) intentional failure to perform the duties of his employment
or his other obligations hereunder, or any continuing action by Executive
materially detrimental to the goodwill of the Company or materially damaging to
the Company's relationships with its customers, clients or employees, which non-
performance or actions remain unremedied for 30 days after written notice
thereof from the Company specifying in detail the non-performance or actions and
requesting that they be remedied, it being understood that issues with respect
to the quality of Executive's performance or results thereof shall not be
grounds for termination under this Section 8.4;
(iii) Executive's pleading guilty or no-contest to, or conviction of,
a felony or a crime involving moral turpitude or fraud;
(iv) misappropriation (or attempted misappropriation) of any of the
Company's funds or property or of a business opportunity of the Company,
including attempting to secure or securing any personal profit in connection
with any transaction entered into on behalf of the Company;
(v) Executive's conviction of any criminal offense involving
dishonesty or breach of trust or money laundering, or Executive's agreement to
enter into a pretrial diversion or similar program in connection with a
prosecution for such offense;
(vi) Executive's gross negligence in connection with the performance
of Executive's obligations hereunder;
(vii) Executive's excessive drunkenness, use of illegal drugs or
abuse of any controlled substance; or
(viii) Executive's excessive absenteeism not related to Executive's
illness.
Upon termination of the Employment Period pursuant to this Section
8.6, the Executive will be bound by the provisions of Section 7 and the Company
will not have any liability to Executive in respect of this Agreement,
including, without limitation, claims for damages or liability to the Company by
Executive for compensation, severance payments and other benefits which would
have accrued to Executive hereunder after termination; provided, however, that
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all compensation, benefits and reimbursements accrued through the date of
termination shall be paid to Executive at the times normally paid by the
Company.
8.7 Termination by Executive.
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8.7.1 Voluntary Termination. Executive may terminate the Employment
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Period prior to the third anniversary of the Commencement Date upon one hundred
and twenty (120) days' written notice to the Company and, upon such termination,
the provisions of the last paragraph of Section 8.6 shall apply, except in the
event that Executive terminates this Agreement pursuant to Section 8.7.2.
Executive agrees, in connection with the termination of the Employment Period
pursuant to this Section 8.7.1, not to publicly disclose his intent to resign.
8.7.2 Termination for Good Reason. Executive may terminate the
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Employment Period at any time for Good Reason. "Good Reason" shall mean (i) a
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material change of Executive's duties and responsibilities as would render such
duties and responsibilities inconsistent with those of a senior executive of the
Company, (ii) a reduction in or failure to pay timely Executive's base salary,
minimum annual bonus, or benefits, (iii) any relocation of the Executive's
principal place of employment to a place 90 miles or more outside of San Ramon,
California, and (iv) the Company's breach of any material term or condition of
this Agreement; provided, however, that each of the reasons set forth in (i)
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through (iv) of the preceding sentence shall be identified in written notice
thereof delivered by Executive to the Company specifying the nature of the
reason and the Company shall have been afforded a period of thirty (30) days to
respond to such notice and cure the condition set forth in such notice if
capable of being cured. If Executive terminates this Agreement for Good Reason,
the provisions of Section 8.3 shall apply and Executive will be bound by the
provisions of Section 7.
9. Insurance. The Company will have the right at its own cost and
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expense to apply for and secure in its own name, or otherwise, life, health or
accident insurance or any or all of them covering Executive, and Executive
agrees to submit to the usual and customary medical examination and otherwise to
cooperate with the Company in connection with the procurement of any such
insurance, and any claims thereunder.
10. Confidentiality; Books and Records; Company Property. Except in
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accordance with the provisions of this Agreement, during the Employment Period
and thereafter, Executive shall keep secret and retain in strictest confidence,
and shall not use for the benefit of Executive or others, all confidential
matters and affairs relating to the Company. Upon any termination of this
Agreement, Executive shall promptly deliver to the Company all confidential
information theretofore supplied to him, and each copy thereof, whether in his
possession or otherwise available to him, and shall certify in writing to the
Company that all analysis, studies and other documents that discuss or analyze
the business of the Company have been destroyed. All papers, books and records
of every kind and description relating to the business and affairs of the
Company, whether or not prepared by Executive, and all property owned by the
Company shall be the sole and exclusive property of the Company and Executive
shall surrender them to the Company upon request, during and after the
Employment Period.
11. Miscellaneous.
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11.1 Notices. All notices, requests, demands and other
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communications which are required to be or may be given under this Agreement to
any of the other parties shall be in writing and shall be deemed to have been
duly given when (a) delivered in person, the day following dispatch by an
overnight courier service (such as Federal Express or UPS, etc.) or (b) five
days after dispatch by certified or registered first class mail, postage
prepaid, return receipt requested, to the party to whom the same is so given or
made:
If to the Company,
addressed to: U.S. Audiotex Corporation
00 Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
If to Executive,
addressed to him at: Xxxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
11.2 Amendments. This Agreement cannot be altered or otherwise
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amended except pursuant to an instrument in writing signed by each of the
parties.
11.3 Assignment. Executive acknowledges that the services required
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of Executive hereunder are personal and that Executive may not assign this
Agreement or any rights or duties under this Agreement. The Company may not
assign or otherwise transfer this Agreement to any other entity without the
prior written consent of Executive, which consent shall not be unreasonably
withheld.
11.4 Entire Agreement. This Agreement contains the entire agreement
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between the parties with respect to the transactions contemplated herein and
supersedes all previous written or oral negotiations, commitments and
understandings.
11.5 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
11.6 Headings. All headings are inserted for convenience of
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reference only and shall not affect the meaning or interpretation of any such
provisions or of this Agreement, taken as an entirety.
11.7 Severability. If and to the extent that any court of competent
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jurisdiction holds any provision (or any part thereof) of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity or
enforceability of the remainder of this Agreement, but shall be confined in its
operation to the jurisdiction in which made and to the provisions of this
Agreement directly involved in the controversy in which such judgment shall have
been rendered.
11.8 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of California without
reference to the conflicts of laws and principles thereof.
11.9 Binding Effects. This Agreement shall be binding upon and inure
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to the benefit of the parties hereto and their respective successors, legal
representatives and assigns.
11.10 Acquisitions, Mergers, Etc. Nothing herein contained shall be
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construed to prevent or limit any acquisition, consolidation, or merger of the
Company.
11.11 Covenants, Etc. Executive hereby covenants, warrants and
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represents that (i) the execution of this Agreement and the discharge of his
obligations hereunder will not breach or conflict with any other contract,
agreement or understanding between Executive and any other
party or parties; (ii) there are no agreements or arrangements, whether written
or oral, in effect which would prevent Executive from rendering services to the
Company during the term of this Agreement; (iii) Executive has not made and will
not make any commitment to do any act in conflict with this Agreement; and (iv)
the terms of this Agreement have been fully explained to him, that he
understands the nature and extent of the rights and obligations provided under
this Agreement, and that he has been given the opportunity to be represented by
legal counsel in the negotiation and preparation of this Agreement. The Company
hereby covenants, warrants and represents that (i) the execution of this
Agreement and the discharge of its obligations hereunder will not breach or
conflict with any other contract, agreement or understanding between the Company
and any other party or parties; (ii) the execution and delivery of this
Agreement have been duly and validly authorized by the Company; and (iii) this
Agreement is binding upon and enforceable against the Company in accordance with
its terms.
11.12 Waiver. No consent or waiver, express or implied, by any party
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to or of any breach or default by another party in performance by the breaching
party of its obligations under this Agreement shall be deemed or construed to be
a consent or waiver to or of any breach or default by the breaching party in the
performance by such breaching party of any other obligations of such breaching
party under this Agreement. Failure on the part of any party to object to or
complain of any act or failure to act of any of the other parties or to declare
any of the other parties in default shall not constitute a waiver of any right
or remedy or the ability to object or complain or to declare any default at any
time in the future.
11.13 Survival. The provisions of Sections 5, 6, 7, 8 and 10 shall
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survive the termination of this Agreement.
11.14 Legal Fees. Each party will be responsible for their own legal
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fees and costs of counsel incurred in connection with negotiation and
preparation of this Agreement.
11.15 Other Employment. Executive hereby represents and warrants to
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the Company that Executive is not prohibited from accepting employment with the
Company by any non-competition or other restriction contained in any employment
agreement with any other entity. Executive understands and agrees that any
breach of this representation or warranty that results in Executive being
prohibited from performing his duties under this Agreement will constitute a
material breach for purposes of Section 8.6(i) this Agreement, and on or at any
time after it is determined that Executive is so prohibited, the Company will be
permitted to terminate Executive's employment pursuant to Section 8.6.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
U.S. AUDIOTEX CORPORATION
By: /s/ XXXXX XXXXX
________________________________
Name: Xxxxx Xxxxx
Title: Director
/s/ XXXXXXX XXXXX
___________________________________
Xxxxxxx Xxxxx
