EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
June 2, 1997, (the "Effective Date"), by and between Xxxxxx Holdings, Inc., a
Delaware corporation (the "Company"), and Xxxx X. Xxxxxx, Xx., a resident of the
State of Texas (the "Executive").
RECITALS
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WHEREAS, the Company is the owner of all of the outstanding shares of
capital stock of Xxxxxx Telecommunications Corporation, an Alabama corporation
("TTC"), all of the outstanding shares of capital stock of AmeriTel Pay Phones,
Inc., a Missouri corporation ("AmeriTel") and all of the outstanding shares of
capital stock of Xxxxxx STC, Inc., a Delaware corporation ("Xxxxxx STC") (the
Company, TTC, AmeriTel, Xxxxxx STC and their respective affiliates and
subsidiaries are sometimes referred to herein individually as a "Xxxxxx Entity"
and collectively as the "Xxxxxx Entities");
WHEREAS, the Company desires to employ the Executive and the Executive
desires to furnish services to the Company and/or the other Xxxxxx Entities on
the terms and conditions hereinafter set forth;
WHEREAS, the parties desire to enter into this Agreement in order to set
forth the terms and conditions of the employment relationship of the Executive
with the Company;
WHEREAS, the Executive and the Company each acknowledge and agree that the
terms and conditions set forth below are reasonable and necessary in order to
protect the legitimate business interests of the Xxxxxx Entities and to
compensate the Executive for information, knowledge and experience brought to
the Xxxxxx Entities;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by the
Company hereunder (the "Employment Period") shall commence on the Effective Date
and shall end on December 31, 1998 (unless earlier terminated in accordance with
Section 5 of the Agreement); provided that prior to December 31, 1997, the
parties agree to negotiate in good faith to establish Executive's annual
compensation for 1998, to be in an amount no less than set
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forth on Exhibit 4 attached hereto. Commencing on January 1, 1999, the
Employment Period shall be extended for successive one-year periods
(individually, a "Renewal Period"), unless a notice not to extend this Agreement
shall have been given by either party hereto to the other not later than thirty
(30) days immediately preceding the commencement of the Renewal Period (or
unless earlier terminated in accordance with Section 5 of this Agreement).
Unless the context otherwise requires, the Employment Period hereunder shall for
purposes of this Agreement be deemed to include the current Renewal Period (if
any).
3. POSITION AND DUTIES. The Executive shall, within reason, devote his
full time, attention, skills and energies during the Employment Period to the
business of the Xxxxxx Entities, performing such specific functions on behalf of
the Xxxxxx Entities and holding such positions as the Board of Directors or
senior management of the Company may direct, all of which shall be substantially
consistent with executive functions within the industry in which the Xxxxxx
Entities are engaged. In particular, the Executive shall serve as President and
Chief Operating Officer of the Company.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Employment Period, the Company shall pay the
Executive a base salary at an annual rate specified in Exhibit 4 (the "Base
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Salary"), which Base Salary shall be paid in equal installments in accordance
with the Company's payroll policy, subject to Section 5 below.
(b) BONUS. During the Employment Period, the Company shall pay the
Executive the bonus specified in Exhibit 4.
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(c) OTHER BENEFITS. During the Employment Period, the Executive shall be
entitled to and eligible for group health insurance coverage and any other
fringe benefits in accordance with policies applicable generally to salaried
employees of the Company. The Executive shall also be entitled to paid vacation
and other paid absences during the Employment Period in accordance with policies
applicable generally to salaried employees of the Company.
5. TERMINATION.
(a) COMPANY'S TERMINATION FOR CAUSE. Prior to the end of the Employment
Period, the Company may terminate the Executive's employment under this
Agreement for "Cause". For purposes of this Agreement, the Company shall have
Cause to terminate the Executive's employment hereunder in the event the
Executive: (i) has committed any act of willful misconduct, embezzlement or
wrongful conversion of money or property belonging to any Xxxxxx Entity, or any
act of fraud or dishonesty that materially affects the business of or relates to
any of the Xxxxxx Entities; (ii) is convicted of a felony at any time hereafter;
(iii) has failed to
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comply with any material directive of the Board of Directors of the Company; or
(iv) has willfully and continually failed to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's death or
disability). If the Executive's employment is terminated by the Company for
Cause, the Company shall pay the Executive any Base Salary accrued or owing to
the Executive hereunder through the date of termination, less any amounts owed
by the Executive to any Xxxxxx Entity, and the Company shall have no further
liability or obligation to the Executive hereunder. Notwithstanding the
preceding, the Company acknowledges and agrees that any termination pursuant to
subsection (iii) or (iv) above shall only be after the Company has given written
notice to the Executive of the occurrence of such breach and if the Executive
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does not cure such breach within ten (10) days after such notice is given.
(b) COMPANY'S TERMINATION WITHOUT CAUSE. Prior to the end of the
Employment Period, the Company may terminate the Executive's employment under
this Agreement for a reason other than Cause or no reason whatsoever (i.e.,
without Cause). If (i) the Company terminates the Executive's employment
without Cause prior to the expiration of the Employment Period, or (ii) the
Company elects not to extend the Employment Period as provided in Section 2, the
Company's liability to the Executive is limited to an amount equal to the
Executive's annual Base Salary. The Company may, at its option, pay this amount
in a lump sum within thirty (30) days after the date of termination of
employment, or pay this amount over a twelve month period (commencing effective
as of the date of termination of employment) at the same rate Base Salary would
have been due and owing to the Executive if he had remained a full time
employee. If the Company terminates employment of the Executive because he has
become disabled such that he is unable to perform the essential functions of his
job (with reasonable accommodation), any such termination shall be deemed to be
a termination without Cause pursuant to this Agreement. Similarly, the
Executive's employment shall terminate upon his death, and shall be deemed a
termination by the Company without Cause, with payments hereunder to be made to
the Executive's estate.
(c) EXECUTIVE'S TERMINATION FOR CAUSE. Prior to the end of the Employment
Period, Executive may terminate this Agreement for "Cause". For purposes of
this Agreement, Executive shall have Cause to terminate this Agreement in the
event the Company: (i) causes a substantial and/or material reduction in the
nature or scope of Executive's duties and/or responsibilities, which result in
Executive no longer holding the position of President and Chief Operating
Officer of the Company, which reduction remains in place and uncorrected for
thirty (30) days following written notice of such breach to the Company by
Executive; (ii) a reduction in Executive's base pay or an exclusion from a
benefit plan or program offered to similar executives of the Company; or (iii) a
change in the location for the primary performance of Executive's services under
this Agreement from the city in which
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Executive was serving at the time of notification to a city which is more than
50 miles away from such location, which change is not approved by Executive. If
the Executive terminates this Agreement for Cause, the Company shall pay to
Executive, as a severance amount, an amount equal to Executive's then annual
Base Salary. The Company may, at its option, pay this amount in a lump sum
within thirty (30) days after the date of termination, or pay this amount over a
twelve month period (commencing effective as of the date of termination) at the
same rate Base Salary would have been due and owing to Executive if he had
remained a full time employee.
(d) EXECUTIVE'S TERMINATION WITHOUT CAUSE. Prior to the end of the
Employment Period, Executive may, upon thirty (30) days written notice,
terminate this Agreement for a reason other than Cause or no reason whatsoever
(i.e., without Cause). If Executive terminates this Agreement without Cause,
the Company shall pay Executive any Base Salary accrued or owing to Executive
hereunder through the date of termination, less any amounts owed by Executive to
any Xxxxxx Entity, and the Company shall have no further liability or obligation
to Executive hereunder.
6. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS,
DEVELOPMENTS AND NON-COMPETITION, RELEASE.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company and the other Xxxxxx Entities all trade
secrets, confidential information, proprietary information, knowledge and data
relating to the Xxxxxx Entities and/or the businesses or investments of the
Xxxxxx Entities, which may have been obtained by the Executive during the
Executive's employment by the Company or any other Xxxxxx Entity, including such
information with respect to any products, improvements, formulas, designs or
styles, processes, services, customers, suppliers, marketing techniques,
methods, know-how, data, future plans or operating practices ("Confidential
Information"). Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to
anyone other than the Company and those designated by the Company. The parties
acknowledge that "Confidential Information" shall not include information that:
(i) is now or subsequently becomes generally available to the public (other than
as a result of the Executive's disclosure of such information in violation of
this Agreement), (ii) is released by the Company for general publication; (iii)
is independently developed by Executive without the use of any Confidential
Information; or (iv) Executive lawfully obtains from a third party who has the
lawful right, in writing, to transfer or disclose such information, without
restriction. Notwithstanding anything contained herein to the contrary, it
shall not be a breach of this provision for Executive to disclose
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Confidential Information required to be disclosed in connection with an
administrative, regulatory or judicial process or proceeding, provided that, the
Executive agrees to immediately notify the Company of such process or proceeding
and to allow the Company an opportunity to contest the disclosure of
Confidential Information in such process or proceeding prior to any disclosure
of Confidential Information by the Executive.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings, letters,
memoranda, reports, computer data, computer disks, electronic storage media,
documents, models and the like relating to the business of any of the Xxxxxx
Entities, which the Executive prepares, uses or comes into contact with and
which contain Confidential Information shall be the exclusive property of the
Company to be used by the Executive only in the performance of his duties for
the Company and shall not be removed by the Executive from the premises of any
Xxxxxx Entity (without the written consent of the Company) during or after the
Employment Period unless such removal shall be required or appropriate in
connection with his carrying out his duties under this Agreement, and, if so
removed by the Executive, shall be returned to such Xxxxxx Entities immediately
upon termination of the Executive's employment hereunder, or earlier request by
the Company (with the Executive retaining no copies thereof nor any notes or
other records relating thereto).
(c) DEVELOPMENTS. The Executive will make full and prompt disclosure to
the Company of all inventions, improvements, discoveries, methods, developments,
software and/or works of authorship relating in any way to the business,
activities or affairs of any of the Xxxxxx Entities, whether patentable or not,
which are created, made, conceived or reduced to practice (in whole or in part)
by the Executive or under his direction or jointly with others prior to or
during the Employment Period, whether or not during normal working hours or on
the premises of the Company (collectively, "Developments"). The Executive
agrees to assign and does hereby assign to the Company all of his right, title
and interest in and to all Developments and related patents, copyrights and
applications therefor. The Executive shall do all permissible things, and take
all permissible action, necessary or advisable, in the Company's sole discretion
and at the Company's expense, to cause any other person related to the Executive
or an entity controlled by the Executive having an interest in a Development to
assign to the Company all of such person's or entity's right, title and interest
in and to such Development and related patents, copyrights and applications
therefor. At the Company's sole cost and expense, the Executive agrees to
reasonably cooperate with the Company, both during and after the termination of
the Employment Period, with respect to the procurements, maintenance and
enforcement of copyrights and patents (both in the United States and foreign
countries) relating to Developments.
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(d) NON-COMPETITION. During (i) the Executive's employment with the
Company and (ii) the two-year period immediately following the termination of
the Executive's employment, the Executive (A) shall not engage, anywhere within
the geographical areas in which any Xxxxxx Entity is then conducting its
business operations, directly or indirectly, alone, in association with or as a
shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any Competitive Business; (B) shall not
solicit or encourage any officer, employee, independent contractor, vendor or
consultant of any of the Xxxxxx Entities to leave the employ of, or otherwise
cease his relationship with, any of the Xxxxxx Entities; and (C) shall not
solicit, divert or take away, or attempt to divert or to take away, the business
or patronage of any of the customers or accounts, or prospective customers or
accounts, of any Xxxxxx Entity, which were contacted, solicited or served by any
Xxxxxx Entity during the time the Executive was employed by any Xxxxxx Entity.
If the Executive violates any of the provisions of this Section 6(d), following
his termination of employment, the computation of the time period provided
herein shall be tolled from the first date of the breach until the earlier of
(i) the date judicial relief is obtained by the Company, (ii) the Company states
in writing that it will seek no judicial relief for said violation, or (iii) the
Executive provides satisfactory evidence to the Company that such breach has
been remedied. If, at any time, the provisions of this Section 6(d) shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 6(d) shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Executive agrees that this Section 6(d) as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein. For purposes of this Section 6, Executive and the Company agree that
Competitive Business shall mean (i) the inmate telephone business, (ii) the
business of selling, leasing or otherwise providing law enforcement management
systems, jail management systems, victim notification systems and/or other
tracking or record systems to inmate, jail or correctional facilities, and/or
(iii) any business that any of the Xxxxxx Entities is engaged in as of the date
of this Agreement and/or is engaged in (or is in the process of implementing the
engagement in) at the time of the termination of Executive's employment.
(e) NON-COMPETITION IN EXPANSION MARKETS. Executive acknowledges that a
valuable asset of the Xxxxxx Entities is the plan of the Company and the other
Xxxxxx Entities to extend and expand their business, by acquisition or
otherwise, to areas of the United States of America which the Xxxxxx Entities do
not yet serve as of the Effective Date. Accordingly, during (i) the Executive's
employment with the Company and (ii) the two-year period immediately following
the termination of the Executive's
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employment, the Executive shall not engage, anywhere in the United States of
America in which Company has reasonable expectations of expansion, directly or
indirectly, alone, in association with or as a shareholder, principal, agent,
partner, officer, director, employee or consultant of any other organization, in
any Competitive Business. If the Executive violates any of the provisions of
this Section 6(e), following his termination of employment, the computation of
the time period provided herein shall be tolled from the first date of the
breach until the earlier of (i) the date judicial relief is obtained by the
Company, (ii) the Company states in writing that it will seek no judicial relief
for said violation, or (iii) the Executive provides satisfactory evidence to the
Company that such breach has been remedied. If, at any time, the provisions of
this Section 6(e) shall be determined to be invalid or unenforceable, by reason
of being vague or unreasonable as to area, duration or scope of activity, this
Section 6(e) shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and the Executive agrees that this Section 6(e) as so amended
shall be valid and binding as though any invalid or unenforceable provision had
not been included herein.
(f) CONTINUING OPERATION. Any termination of the Executive's employment
or of this Agreement shall have no effect on the continuing operation of this
Section 6, or any amounts required to be paid to Executive under Section 5(b) or
(c), if applicable.
(g) LEGITIMATE BUSINESS INTERESTS. The Executive has carefully read and
considered the provisions of this Section 6 and, having done so, agrees that the
restrictions set forth herein, including, without limitation, the time and
geographic restrictions set forth above, are fair and reasonable and are
reasonably required for the protection of the legitimate business interests and
goodwill of the Company.
(h) REMEDIES. The Executive acknowledges that any violation of any of the
covenants and agreements contained in this Section 6 would result in irreparable
and continuing harm and damage to the Company and the other Xxxxxx Entities
which would be extremely difficult to quantify and for which money damages alone
would not be adequate compensation. Consequently, the Executive agrees that, in
the event he violates or threatens to violate any of these covenants and
agreements, the Company shall be entitled to: (1) entry of an injunction,
temporary and permanent, enjoining such violation and/or requiring the Executive
to return all materials or other proprietary information of the Company and (2)
money damages insofar as they can be determined. Nothing in this Agreement
shall be construed to prohibit the Company and the other Xxxxxx Entities from
also
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pursuing any other legal or equitable remedy, the parties having agreed
that all remedies are cumulative.
7. SEVERABILITY. Whenever possible, each provision and term of this
Agreement will be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement.
8. WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement will operate as
a waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company and its affiliates, successors and assigns,
and the Executive and his assigns, heirs and legal representatives. Each of the
Xxxxxx Entities (and their respective affiliates, successors and assigns) shall
be third party beneficiaries of this Agreement and may independently enforce and
benefit from the terms hereof.
10. OTHER AGREEMENTS; INDEMNIFICATION. Except with regard to that
certain MCI Telecommunications Corporation Employment Termination Agreement (the
"MCI Agreement"), which terms Executive is bound to keep confidential, the
Executive hereby represents that the Executive is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information of such
previous employer or other party in the course of the Executive's employment
with the Company or to refrain from competing, directly or indirectly, with the
business of such previous employer or any other party. The Executive further
represents that his performance of all of the terms of this Agreement does not
and will not breach the MCI Agreement (including without limitation any non-
competition provisions contained therein) nor any other agreement to keep in
confidence proprietary information, knowledge or data acquired by
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the Executive in confidence or in trust prior to the date of this Agreement, and
the Executive will not disclose to the Company or any other Xxxxxx Entity or
induce the Company or any other Xxxxxx Entities to use any confidential or
proprietary information or material belonging to any previous employer or
others. The Executive hereby indemnifies and agrees to defend and hold the
Company and the other Xxxxxx Entities harmless from and against any and all
damages, liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees and the costs of investigation) resulting or arising
directly or indirectly from (i) any breach of the foregoing representations,
(ii) any allegations, claims, proceedings or actions by third parties relating
to the confidential information belonging to them and disclosed by the Executive
to the Company or any other Xxxxxx Entity, or (iii) any allegations, claims,
proceedings of actions against the Company and/or the other Xxxxxx Entities
relating to any violation or breach (or alleged violation or breach) by the
Executive of the MCI Agreement.
11. WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable withholding of taxes required under federal, state or
local law.
12. RECITALS; HEADINGS; CONSTRUCTION. The Recitals set forth in the
preamble of this Agreement shall be deemed to be included and form an integral
part of this Agreement. The headings of Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation.
All references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms. All references herein to the word "or"
shall mean "and/or." The parties, in acknowledgment that all of them have been
represented by counsel and that this Agreement has been carefully negotiated,
agree that the construction and interpretation of this Agreement and other
documents entered into in connection herewith shall not be affected by the
identity of the party or parties under whose direction or at whose expense this
Agreement and such documents were prepared or drafted.
13. TIME OF ESSENCE. With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
14. GOVERNING LAW. This Agreement shall be governed by the substantive
laws of the State of Texas, without regard to its conflicts of laws principles.
In particular, Texas substantive law will govern any controversy or claim
between or among the parties hereto, including any claim arising out of or
relating to this Agreement or based on or arising from an alleged tort.
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Exclusive venue for any action related to this Agreement shall be in Dallas
County, Texas.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements and understandings between the
parties with respect to the subject matter of this Agreement. This Agreement
may not be amended except by a written agreement executed by both parties.
16. NOTICES. Any notice, demand or other communication which may or is
required to be given under this Agreement shall be in writing and shall be: (a)
personally delivered; (b) transmitted by United States postage prepaid mail,
registered or certified mail, return receipt requested; (c) transmitted by
reputable overnight courier service such as Federal Express; or (d) transmitted
by legible facsimile (with answer back confirmation) to the parties' respective
addresses as set forth opposite their signatures hereto). Except as otherwise
specified herein, all notices and other communications shall be deemed to have
been duly given on (i) the date of receipt if delivered personally, (ii) two (2)
calendar days after the date of posting if transmitted by registered or
certified mail, return receipt requested, (iii) the first (1st) business day
after the date of deposit if transmitted by reputable overnight courier service
or (iv) the date of transmission with confirmed answer back if transmitted by
facsimile, whichever shall first occur. A notice or other communication not
given as herein provided shall only be deemed given if and when such notice or
communication is actually received in writing by the party to whom it is
required or permitted to be given. The parties may change their address for
purposes hereof by notice given to the other parties in accordance with the
provisions of this Section, but such notice shall not be deemed to have been
duly given unless and until it is actually received by the other party.
17. COMMON LAW OR OTHER DUTIES. The Executive's duties obligations, and
agreements hereunder are in addition to (and not in limitation of) any duties or
obligations under common law or statute owed to the Company or the other Xxxxxx
Entities by the Executive by reason of his position as officer, director or
employee, as applicable, of the Company or the other Xxxxxx Entities.
18. ATTORNEYS' FEES. In the event of any litigation or proceeding
brought with respect to this Agreement in which the parties to this Agreement
(or any other Xxxxxx Entity or Entities) is a party, the prevailing party(ies)
shall be entitled to recover from non-prevailing party(ies) any reasonable
attorneys' fees and expenses incurred therein.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an
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original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
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XXXXXX HOLDINGS, INC., a
Delaware corporation
By: /s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx,
Vice President
Address: 0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
EXECUTIVE:
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/s/ XXXX X. XXXXXX, XX.
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XXXX X. XXXXXX, XX.
Address: 0000 Xxxxxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (972) _________
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EXHIBIT 4
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to Crooks Employment Agreement
(a) Base Salary: $170,000 per year.
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(b) Bonus: Guaranteed bonus of $50,000 to be paid on or before December 31,
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1997.
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