EXHIBIT 10.3
ELCOTEL, INC.
Employment Agreement of Xxxxx X. Xxxxxxxx
Agreement (this "Agreement") dated as of the 10th day
of December, 1998 by and between Elcotel, Inc. (the "Company")
and Xxxxx X. Xxxxxxxx ("Employee") upon the following terms and
conditions:
1. Term: This Agreement shall commence on December
10th, 1998 and shall continue until either party terminates this
Agreement by giving the other party at least 60 days prior
written notice or until sooner terminated as provided in this
Agreement.
2. Employment. Employee shall be employed by the
Company and he shall devote his full business time to carrying
out the responsibilities of his position with the Company.
Employee's position with the Company on the date of this
Agreement shall be Senior Vice President, Business Development &
Technology System Development.
3. Salary: During the term of this Agreement, the
salary paid to Employee shall not be less than One Hundred Fifty
Thousand Dollars ($150,000.00) per year, and shall be subject to
annual review for merit or other increases in the sole discretion
of the board of directors of the Company.
4. Benefits: Employee shall be entitled to the same
benefits as are made available to the Company's other senior
executives and on the same terms and conditions as such
executives (the "Benefits").
5. Bonuses: Employee shall be entitled to receive
such annual bonus, if any, as the board of directors of the
Company or the Compensation Committee of the board determines or
has approved prior to the date hereof through the Company's
Incentive Compensation Plan (the "Bonus").
6. Stock Options:
(a) Employee shall be eligible for additional
stock option grants to purchase shares of the Company's common
stock pursuant to the Company's stock option plans. Employee
shall retain all options previously granted and unexercised.
(b) All of Employee's stock options shall
immediately vest in their entirety in the event of a Change of
Control (as defined below). In addition, in the event of a
termination by the Company of Employee's employment (including by
60 days prior written notice pursuant to Section 1) other than
for Cause (in accordance with Section 9(a) of this Agreement) or
upon the death or disability of Employee (in accordance with
Section 9(d) of this Agreement), all of Employee's employee stock
options shall continue in effect for 30 days after the effective
date of such termination except that (x) for all options granted
after the date of this Agreement and for all other existing
options that can be amended without increasing the exercise price
in order to maintain incentive stock option status for federal
income tax purposes, shall continue in effect until the
termination of such option in accordance with its terms absent
any termination of employment but not to exceed one year from the
date of termination of employment and (y) for all options to
which (x) does not apply, shall, if not exercised within such 30
day period, be automatically extended until the termination of
such option in accordance with its terms absent any termination
of employment but not to exceed one year from the date of
termination of employment.
(c) The occurrence of any one or more of the
following events shall be deemed to be a "Change of Control":
(i) If any transaction occurs whereby
substantially all of the assets of the Company are
transferred, exchanged or sold to a non-affiliated third
party other than in the ordinary course of business;
(ii) If a merger or consolidation involving
the Company occurs and the stockholders of the Company
immediately before such merger or consolidation do not own
immediately after such merger or consolidation at least
fifty percent (50%) of the outstanding common stock of the
surviving entity or the entity into which the common stock
of the Company is converted; or
(iii) If any person (including, without
limitation, any individual, partnership or corporation),
other than Fundamental Management Corporation and its
affiliates or other than Wexford Management LLC and its
affiliates, becomes the owner, directly or indirectly, of
securities of the Company or its successor (or a parent
company thereof) representing thirty-five (35%) or more of
the combined voting power of the Company's or its
successor's (or a parent's, as the case may be) securities
then outstanding.
7. Business Expenses: Employee shall be reimbursed
(in accordance with Company policy from time to time in effect)
for all reasonable business expenses incurred by him in the
performance of his duties.
8. Indemnification: Employee shall be indemnified
by the Company with respect to claims made against him as an
officer and/or employee of the Company and as an officer and/or
employee of any subsidiary of the Company to the fullest extent
permitted by the Company's certificate of incorporation, by-laws
and the General Corporation Law of the State of Delaware.
9. Termination By the Company: Employee's
employment may be terminated by the Company only as provided
below:
(a) For Cause: For Cause (as defined below) by
written notice to Employee and payment to him of salary accrued,
but not paid through the date of termination; provided however -
(i) If the nature of such Cause involves
dishonesty, fraud or serious moral turpitude, such
termination shall be effective upon the giving of such
notice.
(ii) If the nature of such Cause does not
involve dishonesty, fraud or serious moral turpitude, such
termination shall be effective upon the expiration of thirty
(30) days after the giving of such notice unless within such
thirty-day period, Employee has cured the basis of such
Cause, or if a cure is not possible within a thirty-day
period, if he has diligently and in good faith commenced to
effect such cure.
(b) Without Cause: Without Cause by prior
written notice of termination given to Employee and by compliance
with the following:
(i) The Company shall pay to Employee his
salary accrued, but not paid through the date of termination
and shall pay to Employee his salary and provide, at the
Company's expense, the Benefits (excluding participation in
the Company's 401(k) plan and any other benefits to which
COBRA does not apply) for a period of (x) six months from
the date of termination of employment and thereafter (y)
until such date that the Employee locates employment
comparable to his employment with the Company at the date of
termination of employment but not beyond the date that is
twelve months from the date of termination of employment.
If the Employee's employment is terminated without Cause
during a fiscal year effective on a date that is on or after
6 months after the beginning of such fiscal year, then the
Company shall pay to Employee in a lump sum within 30 days
after the termination of employment the Pro Rata portion of
the Employee's bonus from the Company with respect to the
fiscal year prior to the termination of employment; provided
however with respect to a termination of employment without
Cause that is effective during the fiscal year ending March
31, 1999, the Company shall pay to Employee on or before
June 30, 1999 the Pro Rata portion of the Employee's bonus
from the Company with respect to the fiscal year ending
March 31, 1999, such bonus (but not the Pro Rata portion
thereof) shall be calculated as if he had been employed
through the end of such fiscal year. Pro Rata shall mean
the number of days from the beginning of the Company's
fiscal year during which the termination of employment
occurred up to and including the date of termination of
employment divided by 365 days.
(ii) If without Employee's written
consent, (x) there is a material reduction in Employee's
responsibilities or a reduction in his salary or (y)
Employee is required to perform his duties (other than for
normal travel, consistent with performance of his services
hereunder) from a geographic location other than the area
consisting of Sarasota, Florida, and its surrounding
counties, the reduction or requirement may, at Employee's
option by notice given to the Company within ninety (90)
days after the date of such reduction or requirement, be
treated by him as a notice of termination of his employment
by the Company without Cause.
(c) Termination on 60 Days Notice: If the
Company terminates this Agreement by 60 days prior written notice
pursuant to Section 1 and if Employee's employment is thereafter
terminated by the Company without Cause, such termination shall
be treated as a termination without Cause pursuant to Section
9(b) and Employee's stock options shall be subject to the
provisions of Section 6(b). The obligations of the Company
contained in this Section 9(c) shall survive the termination of
this Agreement by the Company pursuant to Section 1.
(d) Death or Permanent Disability: Upon the
death or permanent disability of Employee, but only after
providing him with salary accrued through the effective date of
death or disability.
(e) Definition of "Cause": "Cause" for
purposes of termination by the Company shall be defined as (i)
any act or acts by Employee of dishonesty or fraud or that
constitute serious moral turpitude; or (ii) misconduct of a
material nature or a material breach in connection with the
performance by him of his responsibilities hereunder that
Employee knew or should have known would be materially
detrimental to the Company or its business.
10. Termination By Employee:
(a) Employee may terminate his employment under
this Agreement by reason of a breach hereof by the Company on
twenty (20) days prior written notice to the Company, if such
breach is not cured within such twenty day period.
(b) Employee may also terminate his employment
under this Agreement by giving the Company at least sixty (60)
days prior written notice of termination.
11. Proprietary Information. Unless otherwise
expressly agreed by Company in writing, any inventions, ideas,
reports, discoveries, developments, designs, improvements,
inventions, formulas, processes, techniques, "know-how," data,
and other creative ideas concerning the manufacture, design,
marketing or sale of pay phones (all of the foregoing to be
hereafter referred to as "Proprietary Information"), whether or
not patentable or registrable under copyright or similar
statutes, hereinafter generated by Employee either alone or
jointly with others in the course of his employment hereunder
with Company relating or useful to the manufacture, design,
marketing or sale of pay phones by the Company, shall be the sole
property of Company. Employee hereby assigns to Company any
rights which he may acquire or develop in such Proprietary
Information. Employee shall cooperate with Company in patenting
or copyrighting any such Proprietary Information, shall execute
any documents tendered by Company to evidence its ownership
thereof, and shall cooperate with Company in defending and
enforcing its rights therein. Employee's obligations under this
Section 11 to assist Company in obtaining and enforcing patents,
copyrights, and other rights and protections relating to such
Proprietary Information in any and all countries shall continue
beyond the termination of his employment. Company agrees to
compensate Employee at a reasonable rate for time actually spent
by Employee at Company's request on such assistance after
termination of Employee's employment with Company. If Company is
unable, after reasonable effort, to secure Employee's signature
on any document or documents needed to apply for or prosecute any
patent, copyright, or right or protection relating to such
Proprietary Information, whether because of the Employee's
physical or mental incapacity or for any other reason whatsoever,
Employee hereby irrevocably designates and appoints Company and
its duly authorized officers and agents as Employee's agent and
attorney-in-fact, to act for and on his behalf to execute and
file any such application or applications and to do all other
lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, or similar protections thereon with the
same legal force and effect as if executed by Employee.
12. Covenants Not To Disclose Confidential Information.
(a) Employee agrees that he will not at any
time or place during his employment or for three years after
termination of such employment directly or indirectly disclose to
any person or firm other than Company or make, use or sell any
records, ideas, files, drawings, documents, improvements,
equipment, customer lists, sales and marketing techniques and
devices, formulas, specifications, research, investigations,
developments, inventions, processes and data, and without
limiting the generality of the foregoing, anything not within the
public domain (ideas in the process of being disclosed to
customers shall not be considered in the public domain),
belonging to Company, whether or not patentable or copyrightable,
other than for the sole and exclusive benefit of Company, without
the prior written consent of Company. Employee agrees that both
during the course of his employment with Company and for three
years thereafter he will keep confidential from persons not
associated with Company any and all Proprietary Information,
special techniques, and trade secrets of Company. Upon
termination of his employment for any reason whatsoever, Employee
agrees to return to Company any property belonging to it,
including but not limited to any and all records, notes,
drawings, specifications, programs, data and other materials, and
copies thereof, pertaining to Company's business and generated or
received by Employee in the course of his employment duties with
Company.
(b) Employee agrees that during the course of
his employment with the Company and the Restricted Period (as
defined in Section 13) he will not directly or indirectly entice
or hire away or in any other manner persuade an employee,
consultant, dealer or customer of Company to discontinue that
person's or firm's relationship with or to Company as an
employee, consultant, dealer or customer, as the case may be.
(c) Employee agrees that he will not, during
the course of his employment with the Company and the Restricted
Period (as defined in Section 13), engage in any employment or
business activity in which it might reasonably be expected that
confidential Proprietary Information or trade secrets of Company
obtained by the Employee during the course of his employment with
Company would be utilized.
(d) The Employee recognizes and agrees that his
violation of any terms contained in paragraphs (a), (b), or (c)
of this Section 12 will cause irreparable damage to Company, the
amount of which will be impossible to estimate or determine.
Therefore, Employee further agrees that Company shall be
entitled, as a matter of course, to an injunction restraining any
violation or further violation of any such covenant or covenants
by Employee, his employees, partners, agents or associates, such
right to an injunction to be cumulative and in addition to any
other remedies, at law or otherwise, which Company might have.
Company hereby waives any right to require a bond in connection
with obtaining such an injunction. Employee further agrees that
his violation of any of the terms of paragraphs (a), (b), or (c)
of this Section 12 during the course of his employment with
Company shall be a cause for his termination without notice of
any rights of the Employee under this Agreement. Such covenants
shall be severable, and if the same be held invalid by reason of
length of time, area covered, or activity covered, or any or all
of them, shall be reduced to the extent necessary to cure such
invalidity.
13. Covenant Not To Compete Unreasonably With
Company. Employee further covenants and agrees that:
(a) During the course of his employment with
Company and the Restricted Period, Employee shall not undertake
any employment or financial involvement with or assistance of any
person, firm, association, partnership, corporation or enterprise
which is engaged in the manufacture, design, marketing or sale of
pay phones. "Restricted Period" shall mean (i) if this Agreement
is terminated For Cause, one year; (ii) if this Agreement is
terminated by the Company without Cause or by either party by 60
days prior written notice pursuant to Section 1, the time period
following termination of employment during which the Employee is
entitled to receive salary and Benefits, but not to exceed one
year; and (iii) if this Agreement terminates for any other
reason, there shall be no Restricted Period.
(b) Employee recognizes and agrees that his
violation of any terms contained in paragraph (a) of this Section
13 will cause irreparable damage to Company the amount of which
will be impossible to estimate or determine. Therefore, Employee
further agrees that Company shall be entitled, as a matter of
course, to an injunction restraining any violation or further
violation of any such covenant or covenants by Employee, his
employees, partners, agents or associates, such right to an
injunction to be cumulative and in addition to any other
remedies, at law or otherwise, which Company might have.
Employee further agrees that his violation of any of the terms of
paragraph (a) of this Section 13 during the course of his
employment with Company shall be a cause for his termination
without notice of any rights of Employee under this Agreement.
Such covenants shall be severable, and if the same be held
invalid by reason of length of time, area covered, or activity
covered, or any or all of them, shall be reduced to the extent
necessary to cure such invalidity.
14. Notices: Notices that are required or permitted
hereunder shall be given by hand delivery, by delivery to a
courier service providing next day delivery and proof of receipt,
or by facsimile transmission (except to Employee), as follows:
If to the Company at: Elcotel, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: President
Facsimile: 000-000-0000
If to Employee, to his most recent residence address
on the books of the Company, or, to such other address of a party
as to which that party shall notify the other parties in the
manner provided herein.
15. Proration: To the extent that proration is not
otherwise provided for in this Agreement, all amounts payable to
Employee under this Agreement shall be deemed earned on a daily
basis and shall be prorated based on a 365-day year.
16. Entire Agreement, etc.:
(a) This Agreement contains the entire
understanding of the parties except as otherwise expressly
contemplated herein; shall not be amended except by written
agreement of the parties signed by each of them; shall be binding
upon and inure to the benefit of the parties and their
successors, personal representatives and assigns; and shall
supersede and replace all prior employment agreements between the
parties.
(b) No representation, affirmation of fact,
course of prior dealings, promise or condition in connection
herewith not incorporated herein shall be binding on the parties.
(c) No waiver of any term or condition
contained herein shall be binding upon the parties unless made in
writing and signed by the party to be bound thereby.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first set forth above.
EMPLOYEE:
ELCOTEL, INC.
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxx
---------------------- By:--------------------------
Xxxxx X. Xxxxxxxx Xxxxxx X. Xxxx, President
