EXHIBIT 4.3
FIRST AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
(XXXXX X. XXXXXXX)
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Amended
Agreement") is made effective as of January 1, 2000 (the "Effective Date"), by
and between APPLIED VOICE RECOGNITION, INC., a Delaware corporation
("Employer"), and XXXXX X. XXXXXXX, an individual residing in Xxxxxx County,
Texas ("Employee").
W I T N E S S E T H:
WHEREAS, Employer, as successor by merger of Applied Voice
Recognition, Inc., originally a Utah corporation, and Employee executed that
certain Employment Agreement dated effective as of July 1, 1997 (the
"Agreement");
WHEREAS, prior to Employee's termination, Employer and Employee orally
agreed to allow any remaining salary payments due to Employee under the
Agreement to be paid in common stock of the Company at the Employee's option;
and
WHEREAS, Employer and Employee now desire to amend and restate the
Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and 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 hereby covenant and agree to modify and
restate the Agreement as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment with Employer on the terms and conditions set forth in this
Amended Agreement.
2. TERM OF EMPLOYMENT. The term of Employee's employment hereunder
(the "Term") shall commence as of August 1, 1998 (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 July
31, 2002 (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 Amended 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 Amended 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
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succeeding one year term. At the expiration of the then existing term, Employer
shall have no further obligation to Employee other than payment of earned and
unpaid Base Salary (as hereafter defined) and bonuses under Sections 3(a) and
3(b), respectively, 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 Amended Agreement,
Employer shall pay Employee a monthly base salary of TWELVE THOUSAND FIVE
HUNDRED AND 00/100 DOLLARS ($12,500.00) (the "Base Salary"). 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.
Employer agrees to review Employee's performance on a quarterly basis and to
consider an increase in Employee's Base Salary on an annual basis, beginning on
the first anniversary of the Commencement Date. Employee's salary may, but is
not required to, be increased from time to time, based upon Employee's
performance and other relevant factors, as Employer may deem appropriate,
without affecting any other provisions of this Amended Agreement.
b. In addition to receiving the Base Salary provided for in Section
3(a), for the portion of the calendar year beginning with the Commencement Date
and each calendar year thereafter during the Term hereof, Employee shall be
entitled to a bonus of up to $100,000 per year (or pro rata for portions of a
year) if, and only if, Employee has met the performance criteria set by Employer
for the applicable year. In connection therewith, Employer agrees that by
September 1, 1998 and by January 31 of each year thereafter, it shall set the
performance criteria for Employee's bonus to be earned during the applicable
year and shall communicate such criteria to Employee in writing. If Employee
successfully meets the performance criteria established by Employer (in the
discretion of Employer), Employer shall pay to Employee the bonus within thirty
(30) days of the end of the applicable year.
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 Amended Agreement in accordance with Employer's
standard policies regarding such reimbursements.
d. Beginning within thirty (30) days of the Commencement Date,
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.
4. DUTIES.
a. Employee is employed to act as Chief Operating 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 Amended Agreement, Employee shall be granted options entitling
Employee to purchase 300,000 shares of Employer's common stock, par value $0.001
(the "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 Options
will provide, in addition to other terms set forth therein, that (i) the
purchase price for the 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 fourth (1/4th) of the Options (being
options to purchase 75,000 shares) will vest on the first anniversary date of
the Commencement Date, and one thirty-sixth (1/36th) of the remaining Options
(being options to purchase 6,250 shares) will vest on the last day of each month
following the first anniversary date of the Commencement Date
6. TERMINATION OF EMPLOYMENT. Employee's employment and this
Amended 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"):
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a. The termination of the Amended 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
Amended Agreement for cause without any prior notice (except as set
forth in subparagraph (3) below), 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) breach of this Amended Agreement and the failure to cure
such breach following reasonable notice thereof;
(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 ninety (90) days by
reason of disability. For purposes of this Amended 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 Amended 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 Amended 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, 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).
Notwithstanding the foregoing, if for any reason Employee's employment is
terminated hereunder, any salary or bonus 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. 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 or, at the Employee's Option, any amount
of the severance may be paid to Employee in shares of the Company's common
stock, par value $.001 per share (the "Common Stock"), at a 35% discount to the
Nasdaq Over-the-Counter Bulletin Board closing bid price on the day before the
filing of a Form S-8 covering such shares of Common Stock. If this Amended
Agreement is terminated by Employer under this Section 6(e), any Options that
would otherwise vest on or before the next vesting period (be it annual or
monthly) shall automatically become fully vested immediately upon termination;
however, any additional unvested Options shall be cancelled upon termination.
Notwithstanding the foregoing, the prior provisions of this Section 6(e) shall
be void and of no force or effect in the event of (i) the sale of substantially
all of the assets of Employer, (ii) the merger of Employer into another entity,
or (iii) the merger of another entity into Employer if, as a result of any
transaction described in clause (i), (ii) or (iii), the shareholders of Employer
do not control a majority of the shares of the surviving entity. In the event of
any such sale or merger, any of the Options that have not yet vested shall
immediately vest.
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.
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
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employment and with access to such Confidential Information of Employer during
that term of employment.
a. DEFINITION. For purposes of this Amended 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 Amended 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 Amended 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 Amended Agreement.
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
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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 Amended Agreement are not
oppressive or overly burdensome to Employee and will not prevent Employee from
earning an income following termination of this Amended 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 Amended Agreement;
d. The scope of activities covered hereby are substantially similar to
those activities to be performed by Employee under this Amended 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 reasonably anticipate that this Amended Agreement,
although terminable under certain
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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 Amended 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 Amended 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 Amended 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 Amended
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 Amended 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
this Amended Agreement arising under Sections 7, 8, 9 and 10 of this Amended
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 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chairman
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: Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or, if to Employee, at: Xx. Xxxxx X. Xxxxxxx
0000 Xxxx Xxx 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 Amended 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 Amended Agreement shall remain in full force and effect.
16. ASSIGNMENT. This Amended Agreement may not be assigned by any
party without the prior written consent of the other parties.
17. BINDING AMENDED AGREEMENT. This Amended 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 Amended 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 Amended Agreement, the prevailing party shall be entitled to be
reimbursed for such prevailing party's attorneys fees and costs of court by the
non-prevailing party.
20. AMENDED AGREEMENT READ, UNDERSTOOD AND FAIR. Employee has
carefully read and considered all provisions of this Amended 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.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties have executed this Amended Agreement
on this 14th day of February, 2000, effective as of the Effective Date.
EMPLOYER:
APPLIED VOICE RECOGNITION, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx, Chairman
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
----------------------
XXXXX X. XXXXXXX
Signature Page to
First Amended and Restated
Employment Agreement
(Xxxxx X. Xxxxxxx)
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