EXHIBIT 10.2
ELCOTEL, INC.
Amended and Restated
Employment Agreement of C. Xxxxxxx Xxxxx
Agreement (this "Agreement") dated as of the 20th day of
October, 1998 by and between Elcotel, Inc. (the "Company") and C.
Xxxxxxx Xxxxx ("Xx. Xxxxx" or "Employee") upon the following terms and
conditions:
1. Term:
(a) Commencement Date: This Agreement shall commence
on October 20, 1998 and supersedes and replaces in its entirety the
Employment Agreement dated October 1, 1997 between the Company and Xx.
Xxxxx.
(b) Termination Date: December 31, 1999 unless
sooner terminated as provided in this Agreement.
(c) Renewal: Except as hereinafter provided, on the
Termination Date and on each anniversary of the Termination Date, this
Agreement shall automatically continue for an additional year unless the
Company shall have given Xx. Xxxxx written notice of non-renewal at least
one hundred eighty (180) days in advance of the Termination Date or an
anniversary thereof.
(d) Non-Renewal: If such notice of non-renewal is
given, Xx. Xxxxx shall continue as Chairman of the Board of the Company
for all or any part of such 180-day period as the Company may request,
but he shall nevertheless be entitled to take reasonable time during such
180 day period to look for other employment. At the end of such 180 day
period, Xx. Xxxxx'x employment shall terminate, and the Company shall
provide to Xx. Xxxxx the Severance Benefits (as hereinafter defined).
2. Title & Responsibilities: Xx. Xxxxx shall be elected
Chairman of the Board of Directors and an employee of the Company, and he
shall devote such time as he deems necessary to carry out the
responsibilities of this position.
3. Salary: During the term of this Agreement, the salary
paid to Xx. Xxxxx shall not be less than ninety-four thousand ($94,000)
per year, and shall be subject to annual review for merit or other
increases at the sole discretion of the board of directors of the
Company.
4. Benefits: Xx. Xxxxx 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: Xx. Xxxxx shall be paid an annual incentive
bonus (the "Incentive Bonus") as provided in Exhibit A.
6. Stock Option:
(a) Xx. Xxxxx shall be eligible for grants of stock
options to purchase shares of the Company's common stock pursuant to the
Company's stock option plan(s). Xx. Xxxxx shall retain all options
previously granted and unexercised.
(b) All of Xx. Xxxxx' employee 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 termination of Xx.
Xxxxx' employment after or as part of a Change of Control, all of Xx.
Xxxxx' employee stock options shall continue in effect for 30 days after
the effective date of such termination, except that (i) 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 and
(ii) for all options to which (i) 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.
(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 a
substantial portion 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 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: Xx. Xxxxx 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: Xx. Xxxxx shall be indemnified by the
Company with respect to claims made against him as a director, officer
and/or employee of the Company and as a director, 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: Xx. Xxxxx' employment may
be terminated by the Company only as provided below:
(a) For Cause: For Cause by written notice to Xx.
Xxxxx 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, Xx.
Xxxxx 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 Xx. Xxxxx and by compliance with the
following:
(i) In the event that at the date the notice
of a termination Without Cause is given there is at least twelve (12)
months remaining in the term, such notice of termination shall be
sent to Xx. Xxxxx no more than seven (7) days prior to the
effective date of termination, and the Company (i) on the effective
date shall pay to Xx. Xxxxx his salary in a lump sum for the
balance of the term of this Agreement; (ii) shall continue at its
expense to provide the Benefits for the balance of the term of this
Agreement; and (iii) shall pay to Xx. Xxxxx an amount in a lump sum
equal to the product of (x) the amount of the Incentive Bonus (or
for the fiscal year prior to the Commencement Date of this
Agreement, Xx. Xxxxx' actual bonus for such fiscal year) paid to or
accrued for Xx. Xxxxx with respect to the Company's fiscal year
ending prior to the effective date of such termination and (y) the
number of days elapsed in the current Term Year through the
effective date of such termination divided by 365. "Term Year"
shall mean a 365 day year commencing on April 1 of each calendar
year.
(ii) In the event that at the date the
notice of a termination Without Cause is given there is less than twelve (12)
months remaining in the term, such notice of termination shall be
sent to Xx. Xxxxx six (6) months prior to the effective date of
termination, and during such 6-month period, Xx. Xxxxx shall
continue as Chairman of the Board of the Company for all or any
part of such six month period as the Company may request, but he
shall nevertheless be entitled to take reasonable time during such
six month period to look for other employment. At the end of such
6-month period, Xx. Xxxxx employment shall terminate, and the
Company shall provide to Xx. Xxxxx the Severance Benefits.
(iii) A reduction in Xx. Xxxxx' title,
responsibilities or salary may, at Xx. Xxxxx' option, be treated by
him as a notice of termination of his employment by the Company
without Cause given as of the date of such reduction.
(c) Death or Permanent Disability: Upon the death or
permanent disability of Xx. Xxxxx, but only after providing him with the
Severance Benefits.
(d) Definition of "Cause": "Cause" for purposes of
termination by the Company shall be defined as (i) any act or acts by Xx.
Xxxxx 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 Xx. Xxxxx knew or should have known would be materially detrimental
to the Company or its business.
(e) Definition of "Severance Benefits": The
"Severance Benefits" shall mean the following: (i) the continuation by
the Company for a period of six (6) months of the payment of Xx. Xxxxx'
salary in effect at the date of the termination of his employment; (ii)
the continuation by the Company at its expense for a period of six (6)
months of the Benefits; and (iii) the payment in a lump sum by the
Company of an amount equal to the Incentive Bonus (or for the fiscal year
prior to the Commencement Date of this Agreement, Xx. Xxxxx' actual bonus
for such fiscal year) paid to or accrued for Xx. Xxxxx with respect to
the Company's fiscal year ending prior to the effective date of such
termination.
10. Termination By Xx. Xxxxx:
(a) Mr. Xxxxx xxx 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) Mr. Xxxxx xxx also terminate his employment under
this Agreement by giving the Company one hundred twenty (120) days notice
of termination effective on December 31, 1998 or on any date thereafter.
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 for a period commencing on
the date hereof and ending six months after the date of termination of
his employment with Company 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 term
of his employment and for a period of six months thereafter, 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 for a period of six months following termination of Employee's
employment with Company, for whatever reason, 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.
(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, to a courier service providing
next day delivery and proof of receipt, or by facsimile transmission
(except to Xx. Xxxxx), as follows:
If to the Company at: Elcotel, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: President
Facsimile: 000-000-0000
If to Xx. Xxxxx, 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 Xx.
Xxxxx 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.: This Agreement together with
Exhibit A 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 all prior
employment agreements between the parties, including the Employment
Agreement dated October 1, 1997.
17. No representation, affirmation of fact, course of prior
dealings, promise or condition in connection herewith not incorporated
herein shall be binding on the parties.
18. 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/ C. Xxxxxxx Xxxxx /s/ Xxxxxx X. Xxxx
---------------------- By:--------------------------
C. Xxxxxxx Xxxxx Xxxxxx X. Xxxx, President and
Chief Executive Officer
EXHIBIT A
INCENTIVE BONUS PLAN
C. Xxxxxxx Xxxxx Employment Agreement
An annual incentive bonus will be paid equal to 50% of base salary if the
Company achieves its after tax profit plan for the year. If the Company
is profitable and earns less than its after tax profit plan, then such
bonus shall equal 50% of base salary times a fraction the numerator of
which is the actual after tax profit of the Company for the year and the
denominator of which is the amount of the after tax profit in such plan.
If the Company achieves profits in excess of its after tax profit plan,
then, at the discretion of the Board, an additional bonus in excess of
50% of base salary may be paid to Employee.
