Exhibit 10.55
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of October 1,
2003, to be effective as of October 1, 2003 (the "Effective Date") by and
between VODAVI TECHNOLOGY, INC., a Delaware corporation ("Employer") and XXXXXXX
X. XXXXXX ("Employee").
RECITALS
Employer desires to employ Employee and Employee desires to
accept such employment, all on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants set forth in this Agreement, the parties hereto agree as
follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby accepts such employment, as President and Chief Executive Officer of
Employer and in such other executive capacities and for such other executive
duties and services as shall from time to time be mutually agreed upon by
Employer and Employee.
2. FULL TIME OCCUPATION. Employee shall devote Employee's entire
business time, attention, and efforts to the performance of Employee's duties
under this Agreement, and shall serve Employer faithfully and diligently and
shall not engage in any other employment while employed by Employer.
3. COMPENSATION AND OTHER BENEFITS.
(a) SALARY. Employer shall pay to Employee, as compensation
for the services rendered by Employee during Employee's employment under this
Agreement, a base salary at a rate of (1) $182,500 during the period commencing
on the Effective Date until December 31, 2003; and (2) $200,000 per annum during
the period commencing on January 1, 2004 through the remainder of the term of
this Agreement (the "Base Salary"). Employer shall pay the Base Salary in
accordance with Employer's established payroll procedures.
(b) BONUS. In addition to the Base Salary, Employee shall be
eligible to receive annual bonus compensation (the "Bonus") in an amount to be
set by the Compensation Committee of Employer's Board of Directors, at the
committee's sole and exclusive discretion.
(c) REIMBURSEMENT. Employer shall reimburse Employee for all
travel and entertainment expenses and other ordinary and necessary business
expenses incurred by Employee in connection with the business of Employer and
Employee's duties under this Agreement. The term "business expenses" shall not
include any item not at least partially deductible by Employer for federal
income tax purposes. Reimbursements shall be made by Employer in accordance with
Employer's normal expense policies and procedures.
(d) FRINGE BENEFITS. Employee shall be entitled to
participate in any group insurance, pension, retirement, vacation, expense
reimbursement, and other plans, programs, and benefits approved by the Board of
Directors and made available from time to time to executive employees of
Employer generally during the term of Employee's employment hereunder. The
foregoing shall not obligate Employer to adopt or maintain any particular plan,
program, or benefit.
4. TERM OF EMPLOYMENT.
(a) EMPLOYMENT TERM. The term of Employee's employment
hereunder shall commence on the Effective Date and shall continue until
December 31, 2004. The term of Employee's employment hereunder shall
automatically renew for successive one-year terms, unless and until terminated
by either party giving written notice to the other not less than 30 days prior
to the end of the then-current term or as otherwise set forth in SECTION 4(B).
(b) TERMINATION UNDER CERTAIN CIRCUMSTANCES. Notwithstanding
anything to the contrary herein contained:
(i) DEATH. Employee's employment and this Agreement
shall be automatically terminated, without notice, effective upon the date of
Employee's death.
(ii) DISABILITY. If Employee shall fail to perform any of
Employee's essential job duties under this Agreement as the result of illness or
other incapacity, with or without reasonable accommodation, for a period of more
than 12 consecutive weeks, or for more than 12 weeks within any 12-month period,
as determined by Employer for purposes of compliance with the Family and Medical
Leave Act, Employer may, at its option, and upon notice to Employee, terminate
Employee's employment and this Agreement effective on the date of that notice.
(iii) UNILATERAL DECISION OF EMPLOYER. Employer may, at
its option, upon notice to Employee, terminate Employee's employment and this
Agreement effective on the date of that notice. A reduction in Employee's
responsibilities, as such responsibilities are described in Section 1 of this
Agreement, by Employer shall constitute a termination under this Section
4(B)(iii). Employer's failure to renew this Agreement upon expiration of the
term shall constitute a termination under this Section 4(B)(iii).
(iv) UNILATERAL DECISION BY EMPLOYEE. Employee may, at
his option and upon notice to Employer, terminate Employee's employment and this
Agreement effective on the date of that notice.
(v) TERMINATION "FOR CAUSE". Employer may terminate
Employee's employment and this Agreement, and the rights and obligations of the
parties hereunder at any time, effective upon written notice to Employee, if the
termination of Employee's employment is "for cause." For purposes of this
SECTION 4(B)(V), "for cause" shall mean discharge resulting from a determination
by Employer that Employee: (A) has been convicted of a felony involving
dishonesty, fraud, theft, or embezzlement; (B) has performed an act or failed to
act, which if he were prosecuted and convicted, would constitute a crime or
offense involving money or property of Employer, or which would constitute a
felony in any
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jurisdiction involved; (C) has violated Employer's policies prohibiting sexual
harassment or discrimination or harassment or discrimination of any other
protected basis under federal, state, or local law; or (D) has willfully and
persistently breached or violated any of the provisions of this Agreement, and
such breach or violation shall have continued for a period of 10 days after
Employer shall have given Employee written notice specifying the nature thereof
in reasonable detail.
(vi) CHANGE OF CONTROL. In the event of a Change of
Control (as defined below), Employer or Employee may, at their respective
option, upon notice to the other, terminate Employee's employment by providing
the other party with 30 days' written notice after the effective date of the
Change of Control. For the purposes of this Agreement, the term "Change of
Control" shall mean:
(1) The approval by a majority of Employer's Board
of Directors of (A) any merger or consolidation in which Employer is not the
surviving entity; (B) any reverse merger in which the Company is the surviving
entity; or (C) any transaction involving the sale of all or substantially all of
Employer's assets to any person other than a wholly or majority owned direct or
indirect subsidiary of Employer; or
(2) Individuals who, as of the Effective Date,
constitute the Board of Directors of the Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board.
(c) RESULT OF TERMINATION. In the event of the termination of
Employee's employment pursuant to SECTIONS 4(B)(I), (IV), or (v) above, Employee
shall receive no further compensation under this Agreement and all of Employee's
unvested options shall be cancelled. In the event of the termination of
Employee's employment pursuant to SECTION 4(B)(II) or (III) above,
(i) Employee shall receive his Base Salary plus benefits
for a one-year period following the date of termination of Employee's employment
pursuant to this Agreement. Such Base Salary payments will be payable in one
lump-sum amount within 10 days of the event of termination. Should Employee
become eligible for benefits in connection with a new employer during the
one-year period, Employers obligation for benefits shall cease;
(ii) Employee's vested options as of the date of
termination shall remain outstanding through the 120-day period following the
then-current term of this Agreement. All of Employee's unvested options as of
the date of termination shall be cancelled; and
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(iii) Employer shall forgive any balance owed by Employee
pursuant to Employer's funding of Employee's Group Life Insurance policy.
(d) RESULT OF CHANGE OF CONTROL. As incentive for Employee to
actively pursue the best interests of Employer's stockholders, in the event of a
Change of Control (as that term is defined in SECTION 4(B)(VI) of this
Agreement), then (i) Employee shall earn a minimum bonus of $100,000, which
shall be paid in one lump sum payment within ten business days from the
effective date of the Change of Control in the event of a Change of Control; and
(ii) any options held by Employee that remain unvested as of the effective date
of the Change of Control shall become fully vested and exercisable as of such
effective date.
In addition, in the event of the termination of Employee's employment pursuant
to SECTION 4(B)(VI) above Employee shall continue to receive his Base Salary and
benefits for a one-year period following the date of termination of Employee's
employment pursuant to this Agreement. Such Base Salary payments will be payable
in one lump-sum amount within 10 days of the event of termination. Should
Employee become eligible for benefits in connection with a new employer during
the one-year period, Employers obligation for benefits shall cease.
5. COMPETITION AND CONFIDENTIAL INFORMATION.
(a) INTERESTS TO BE PROTECTED. For purposes of this
Section 5, the term "Employer" shall include Vodavi Technology, Inc. and any
entity that is a direct or indirect subsidiary of Vodavi Technology, Inc. during
the term of this Agreement. The parties acknowledge that Employee will perform
essential services for Employer during the term of Employee's employment with
Employer. Employee will be exposed to, have access to, and be required to work
with a considerable amount of Confidential Information (as defined below). The
parties also expressly recognize and acknowledge that the personnel of Employer
have been trained by and are valuable to Employer and that Employer will incur
substantial expense in recruiting and training personnel if it must hire new
personnel or retrain existing personnel to fill vacancies. The parties also
expressly recognize that it could seriously impair the goodwill and diminish the
value of Employer's business should Employee compete with Employer in any manner
whatsoever. The parties acknowledge that this covenant has an extended duration;
however, they agree that this covenant is reasonable, and it is necessary for
the protection of Employer, its stockholders, and employees. For these and other
reasons, and the fact that there are many other employment opportunities
available to Employee if his employment with Employer is terminated, the parties
are in full and complete agreement that the following restrictive covenants are
fair and reasonable and are entered into freely, voluntarily, and knowingly.
Furthermore, each party was given the opportunity to consult with independent
legal counsel before entering into this Agreement.
(b) NON-COMPETITION. During the term of Employee's employment
with Employer and for the period ending 12 months after the termination of
Employee's employment with Employer, or, in the alternative, in the event any
reviewing court finds 12 months to be overbroad or unenforceable, for a period
of nine months after the termination of Employee's employment with Employer, or,
in the alternative, in the event any reviewing court finds nine months to be
overbroad or unenforceable, for a period of six months after the termination of
Employee's employment with Employer, or, in the alternative, in the event any
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reviewing court finds six months to be overbroad or unenforceable, for a period
of three months after the termination of Employee's employment with Employer,
regardless of the reason therefor, Employee shall not (whether directly or
indirectly, as owner, principal, agent, stockholder, director, officer, manager,
employee, partner, participant, or in any other capacity) engage in or become
financially interested in any competitive business conducted within the
Restricted Territory (as defined below). As used herein, the term "competitive
business" shall mean any business that designs, develops, markets, or supports
commercial telephone systems, commercial grade telephones, voice processing
systems (including, but not limited to, automated attendant, voice mail, or fax
mail), computer-telephony integration products, and related computer software
products; and the term "Restricted Territory" shall mean any area in which
Employer conducts its business during Employee's employment hereunder.
(c) NON-SOLICITATION OF EMPLOYEES. During the term of
Employee's employment and for a period of 12 months after the termination of
Employee's employment with Employer, or, in the alternative, in the event any
reviewing court finds 12 months to be overbroad or unenforceable, for a period
of nine months after the termination of Employee's employment with Employer, or,
in the alternative, in the event any reviewing court finds nine months to be
overbroad or unenforceable, for a period of six months after the termination of
Employee's employment with Employer, or, in the alternative, in the event any
reviewing court finds six months to be overbroad or unenforceable, for a period
of three months after the termination of Employee's employment with Employer,
regardless of the reason therefor, Employee shall not directly or indirectly,
for himself, or on behalf of, or in conjunction with, any other person, company,
partnership, corporation, or other entity, seek to hire or hire any of
Employer's personnel or employees, with the exception of his Executive
Assistant, for the purpose of having such employee engage in services that are
the same, similar, or related to the services that such employee provided for
Employer.
(d) CONFIDENTIAL INFORMATION. Employee shall maintain in
strict secrecy all confidential or trade secret information, whether patentable
or not, relating to the business of Employer (the "Confidential Information")
obtained by Employee in the course of Employee's employment, and Employee shall
not, unless first authorized in writing by Employer, disclose to, or use for
Employee's benefit or for the benefit of any person, firm, or entity at any time
either during or subsequent to the term of Employee's employment, any
Confidential Information, except as required in the performance of Employee's
duties on behalf of Employer. For purposes hereof, Confidential Information
shall include without limitation any technical plans and drawings or other
reproductions or materials of any kind; any financial information with respect
to Employer or its business; any trade secrets, knowledge, or information with
respect to products, processes, inventions, formulae, software, source codes,
object codes, algorithms, and services provided; any operating procedures,
techniques, or know-how; any business methods or forms; any names, addresses, or
data on suppliers or customers; and any business policies or other information
relating to or dealing with the purchasing, sales, advertising, promotional, or
distribution policies or practices of Employer.
(e) RETURN OF BOOKS AND PAPERS. Upon the termination of
Employee's employment with Employer for any reason, Employee shall deliver
promptly to Employer all samples or demonstration models, catalogues, manuals,
memoranda, drawings, software, source or object code, formulae, and
specifications, and operating procedures; all cost,
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pricing, and other financial data; all supplier and customer information; all
other written or printed materials that are the property of Employer (and any
copies of them); and all other materials which may contain Confidential
Information relating to the business of Employer, which Employee may then have
in his possession whether prepared by Employee or not.
(f) DISCLOSURE OF INFORMATION. Employee shall disclose
promptly to Employer, or its nominee, any and all ideas, designs, processes, and
improvements of any kind relating to the business of Employer, whether
patentable or not, conceived or made by Employee, either alone or jointly with
others, during working hours or otherwise, during the entire period of
Employee's employment with Employer, or within six months thereafter.
(g) ASSIGNMENT. Employee hereby assigns to Employer or its
nominee the entire right, title, and interest in and to all inventions,
discoveries, and improvements, whether patentable or not, that Employee may
conceive or make during Employee's employment with Employer, or within six
months thereafter, and which relate to the business of Employer. Whenever
requested to do so by Employer, whether during the period of Employee's
employment or thereafter, Employee shall execute any and all applications,
assignments, and other instruments that Employer shall deem necessary or
appropriate to apply for, obtain, or maintain Letters Patent of the United
States or of any foreign country, or to protect otherwise the interest of
Employer therein.
(h) EQUITABLE RELIEF. In the event a violation of any of the
restrictions contained in this SECTION 5 is established, Employer shall be
entitled to preliminary and permanent injunctive relief as well as damages and
an equitable accounting of all earnings, profits, and other benefits arising
from such violation, which right shall be cumulative and in addition to any
other rights or remedies to which Employer may be entitled. In the event of a
violation of any provision of SECTIONS 5(B), 5(C), 5(F), or 5(G) of this
Agreement, the period for which those provisions would remain in effect shall be
extended for a period of time equal to that period beginning when such violation
commenced and ending when the activities constituting such violation shall have
been finally terminated in good faith.
(i) RESTRICTIONS SEPARABLE. If the scope of any provision of
this Section 5 is found by a Court to be too broad to permit enforcement to its
full extent, then such provision shall be enforced to the maximum extent
permitted by law. The parties agree that the scope of any provision of this
Section 5 may be modified by a judge in any proceeding to enforce this
Agreement, so that such provision can be enforced to the maximum extent
permitted by law. Each and every restriction set forth in this Section 5 is
independent and severable from the others, and no such restriction shall be
rendered unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part.
(j) SURVIVAL. Employer and Employee acknowledge and agree
that the obligations and rights set forth in this SECTION 5 shall survive the
termination of this Agreement and Employee's employment by either Employer or
Employee under SECTION 4 of this Agreement.
6. MISCELLANEOUS.
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(a) NOTICES. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made, and received (i) if
personally delivered, on the date of delivery, (ii) if by facsimile
transmission, 24 hours after transmitter's confirmation of the receipt of such
transmission, (iii) if mailed, three days after deposit in the United States
mail, registered or certified, return receipt requested, postage prepaid and
addressed as provided below, or (iv) if by a courier delivery service providing
overnight or "next-day" delivery, on the next business day after deposit with
such service addressed as follows:
(1) If to Employer:
Vodavi Technology, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chairman of the Board
Fax: (000) 000-0000
with a copy given in the manner
prescribed above, to:
Xxxxxxxxx Xxxxxxx, LLP
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
(2) If to Employee:
Xxxxxxx X. Xxxxxx
0000 X. 00xx Xxxxxx, Xxxx 00
Xxxxxxxxxx, Xxxxxxx 00000
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this paragraph for the giving of notice.
(b) INDULGENCES; WAIVERS. Neither any failure nor any delay
on the part of either party to exercise any right, remedy, power, or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power, or privilege preclude any other or
further exercise of the same or of any other right, remedy, power, or privilege,
nor shall any waiver of any right, remedy, power, or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power, or
privilege with respect to any other occurrence. No waiver shall be binding
unless executed in writing by the party making the waiver.
(c) CONTROLLING LAW. This Agreement and all questions
relating to its validity, interpretation, performance, and enforcement shall be
governed by and construed in
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accordance with the laws of the state of Arizona, notwithstanding any Arizona
or other conflict-of-interest provisions to the contrary.
(d) BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors, and assigns;
provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by
Employee. For purposes of this Agreement, successors and assigns shall include,
but not be limited to, any individual, corporation, trust, partnership, or other
entity that acquires a majority of the stock or assets of Employer by sale,
merger, consolidation, liquidation, or other form of transfer. Employer will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of Employer to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that Employer would be required to
perform it if no such succession had taken place.
(e) EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of the parties reflected hereon as the signatories.
(f) PROVISIONS SEPARABLE. The provisions of this Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
(g) ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and understandings, inducements and conditions, express or implied, oral or
written, except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing.
(h) PARAGRAPH HEADINGS. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
(i) NUMBER OF DAYS. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays, and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday, or holiday, then the final day shall be
deemed to be the next day that is not a Saturday, Sunday, or holiday.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
VODAVI TECHNOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Xxxxxxx X. Xxxx
Chairman of the Board
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
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