1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of September 5, 1996 by and between Advanced Telemarketing Corporation, a
Nevada corporation (the "Company"), ATC Communications Group, Inc., a Delaware
corporation and the Company's parent corporation (the "Parent") and Xxxxxx
Xxxxxxx ("Employee").
R E C I T A L S
The Company and the Parent have special expertise in their businesses
that has enabled them to provide unique career opportunities for their
employees.
The Company's and the Parent's growth depends, to a significant degree,
on their possession of more and better information than that available to their
competitors concerning a number of matters, including but not limited to,
research, systems, development, marketing, management and other information not
generally known to others in the Company's industry. To obtain such
information and use it successfully, the Company and the Parent have made
significant investments in research, business development, customer
satisfaction methods and techniques, business process improvements and other
developments in marketing methods and providing services to their customers.
This unique and special expertise in pooling this information has enabled the
Company and the Parent to conduct their businesses successfully and thus
provide potential employment opportunities for their employees.
The parties acknowledge that Employee has his own valuable knowledge and
training in certain of the areas in which the Company and the Parent conduct
their businesses but that his knowledge will be enhanced by this employment.
Employee recognizes that unless the Company and the Parent impart to him
their special expertise, he would be less effective and of less benefit to the
Company and the Parent. Employee further acknowledges that without the
additional knowledge to be imparted to him by the Company and the Parent, he
will be less valuable than would otherwise be the case in the Company's and the
Parent's businesses.
Employee understands and acknowledges that a covenant not to compete and
a restriction on disclosure of confidential information is essential to the
continued growth and stability of the Company's and the Parent's business and
to the continuing viability of such businesses in the event the Employee's
employment is terminated as expressly permitted under the terms and limitations
of this Agreement.
The Employee desires employment as an Employee of the Company and the
Parent under the terms and conditions of this Agreement and further desires to
be given access to the Company's and the Parent's proprietary information.
2
The Company and the Parent desire to employ Employee under the terms and
conditions of this Agreement, Employee hereby representing that Employee is
free from any other obligation of continuing employment with his former
employer.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the parties agree as follows:
1. Employment. Subject to the terms and conditions set forth in
this Agreement, each of the Company and the Parent hereby employ Employee, and
Employee hereby accepts such employment by the Company and the Parent.
2. Duties of Employee.
(a) Employee shall serve in the capacities of President and
Chief Executive Officer of each of the Company and the Parent, subject in each
case to the supervision of the Board of Directors of such corporation. In such
capacities, Employee shall have all necessary powers to discharge his
responsibilities, including general supervision of the affairs of the Company
and the Parent and active control of their businesses, again subject in each
case to the respective Board's supervision and control. Employee shall have
all the powers granted by the Bylaws of each of the Company and the Parent to
the President and Chief Executive Officer of such corporation, and Employee
shall report to the Board of Directors of such corporation. For so long as
Employee serves in the capacities of President and Chief Executive Officer of
each corporation, Parent and the Company shall nominate and support the
election of Employee as a member of the Board of Directors of each corporation.
(b) Commencing September 23, 1996 and during the remaining
term of this Agreement, Employee shall devote his full business time and effort
to the performance of his duties and responsibilities as President and Chief
Executive Officer of the Company and the Parent. Notwithstanding the
foregoing, Employee may spend reasonable amounts of time on his personal civic
and charitable activities that do not interfere with the performance of his
duties and responsibilities to the Company and the Parent.
(c) Employee shall observe and comply with the written rules
and regulations of the Company and the Parent respecting their businesses and
shall carry out and perform the directives and policies of the Company and the
Parent as they may from time to time be stated to Employee in writing by the
Chairman of the Board or the Board of Directors of each corporation.
(d) Employee shall maintain accurate business records as may
from time to time be required by the Company or the Parent. Such records may
be examined by the Company or the Parent, as the case may be, at all reasonable
times after written request is delivered to Employee. Any such document shall
be delivered to the Company or the Parent, as the case may be, promptly upon
request.
2
3
(e) Employee agrees not to solicit or receive any income or
other compensation from any third party in connection with his employment with
the Company and the Parent. The Employee agrees, upon written request by the
Company or the Parent, to render an accounting of all transactions relating to
his business endeavors during the term of this employment hereunder.
3. Term. The term of this Agreement (the "Term") shall commence
effective as of September 5, 1996 (the "Effective Date") and continue until the
fifth anniversary of the Effective Date; provided, however, that at the end of
such initial term, and on each subsequent anniversary of the Effective Date,
the term shall automatically extend for an additional year unless a party
provides, at least 90 days prior to the end of such initial term or such
subsequent anniversary, written notice that it does not wish to extend the
term. Notwithstanding the foregoing, this Agreement may be earlier terminated
in accordance with Section 8 of this Agreement.
4. Salary. Commencing on September 23, 1996, the Parent will pay
Employee a minimum base annual salary during the term of this Agreement for his
services as President and Chief Executive Officer of the Parent of $400,000,
which shall be payable in accordance with the Parent's standard payroll
practice, but not less than monthly. Such base salary shall not include any
benefits made available to Employee or any contributions or payments made on
his behalf pursuant to any employee benefit plan or program of the Parent,
including any health, disability or life insurance plan or program, 401-K plan,
cash bonus plan, stock incentive plan, retirement plan or similar plan or
program of any nature. The Parent shall review Employee's salary on a semi-
annual basis in connection with the performance review referred to in Section
12 hereof. The Parent shall increase the annual salary of Employee from time
to time as may be warranted in accordance with the Parent's compensation
policies. The Company shall have no separate salary obligation to Employee.
5. Bonus Compensation. The Parent shall pay Employee annual
performance-based cash bonuses in accordance with Exhibit A attached to this
Agreement. The Parent shall review and revise Exhibit A on an annual basis
thereafter to provide for comparable annual cash bonuses payable during the
remaining term of this Agreement. The Company shall have no separate bonus
obligation to Employee.
6. Employee Benefits. During the term of this Agreement, the Parent
shall provide Employee with all benefits made available from time to time by
the Parent to its employees generally and to employees who hold positions
similar to that of Employee (including the benefits granted to other officers
of the Parent), such benefits to be in accordance with the Parent's policies.
Specifically, Employee's benefits shall include participation in medical,
dental and vision benefit plans or programs (providing coverage for Employee's
immediate family); disability insurance; 401-K plans (full match) to be
provided within 90 days from the Effective Date; life insurance payable to
Employee's designated beneficiary (two times base salary); on-going personal
development (executive education); an annual physical exam at the Xxxxxx Clinic
(or equivalent); a Cadillac STS every three (3) years (including coverage of
taxes, insurance and maintenance); paid vacation; membership, dues and
reasonable expenses at the Las Colinas Sports Club; spouse travel when Employee
travels for business purposes; and first-class air travel (when available).
The Company shall have no separate obligations to Employee with respect to
employee benefits.
3
4
7. Office Set-Up; Reimbursement of Expenses. The Company shall
provide Employee with appropriate and adequate personal computer and
telecommunications equipment for his office, home, car and travel, including a
personal computer with fax capability for home use, a laptop computer for
travel use and a car telephone. The Company shall reimburse Employee for all
expenses actually and reasonably incurred by him in the business interests of
the Company. Such reimbursement shall be made to Employee upon appropriate
documentation of such expenditures in accordance with the Company's written
policies.
8. Early Termination. It is the desire and expectation of each
party that the employer-employee relationship shall continue for the full term
specified herein and be a pleasant and rewarding experience for the parties
hereto. The Company or the Parent shall, however, be entitled to terminate
Employee's employment at any time with or without Cause (as defined in this
Section 8). If Employee's employment is terminated without Cause, however, the
Parent shall pay Employee severance compensation equal to two times Employee's
then current base annual salary plus the bonus paid to Employee for the prior
year. The Company shall have no separate obligation to Employee in this
regard.
If Employee dies, is unable to perform his duties and responsibilities
as a result of disability that continues for 90 consecutive days or more
("Disability"), voluntarily resigns from the Company or the Parent, or is
terminated for Cause, the Parent shall pay Employees (or his estate, executor
or legal representative, as appropriate) any salary and bonus that has accrued
to the date employment ceases, and the Parent's obligations to pay additional
salary or cash compensation or benefits shall terminate as of such date.
"Cause," for the purpose of this Agreement, shall mean the occurrence of
any of the following events:
(a) Performance by Employee of illegal or fraudulent acts,
criminal conduct or willful misconduct relating to the activities of the
Company or the Parent;
(b) A conviction of or nolo contendere plea by Employee for
any criminal acts involving moral turpitude having or reasonably likely to have
a material adverse effect upon the Company or the Parent, including, without
limitation, upon their profitability, reputation or goodwill;
(c) Willful or grossly negligent failure by Employee to
perform his duties in a manner contrary to the Company's or the Parent's best
interests;
(d) Willful refusal by Employee to carry out reasonable
written instructions of the Company's or the Parent's Boards of Directors not
inconsistent with the provisions of this Agreement;
(e) Violation by Employee of any of Employee's covenants and
agreements contained in Sections 9, 10 or 11 of this Agreement;
4
5
(f) Any other material breach of Employee's obligations
hereunder, which he fails to cure within thirty (30) days after receiving
written notice thereof.
9. Non-Competition Agreement. Employee understands that during the
course of his employment by the Company and the Parent, Employee will have
access to and the benefit of the information referred to in the Recitals above,
and will represent the Company and the Parent and their affiliates and develop
contacts and relationships with other persons and entities on behalf of such
entities, including but not limited to customers, potential customers and other
employees of such entities. To protect such entities' interest in this
information and in these contacts and relationships, Employee agrees and
covenants that during the term of his employment by the Company and the Parent,
and for a period of two years after the termination of such employment for any
reason, without prior written approval of the Company and the Parent, Employee
will not, in connection with any business that is engaged in, or is about to be
engaged in, by the Company or the Parent, which includes but is not limited to
inbound and outbound telecommunications-based marketing services and customer
service functions, and the consulting, design and implementation of these
services, including organization and investment in related industries or
professions (the "Business"), directly or indirectly, either as an individual
or as an employee, partner, officer, director, shareholder, advisor, or
consultant or in any other capacity whatsoever, of any person (other than
ownership of less than 5% of the issued and outstanding voting securities of a
publicly held corporations): (a) recruit, hire, assist others in recruiting or
hiring, discuss employment with, or refer to others for employment any person
who is, or within the 12 month period immediately preceding the date of any
such activity was, an employee of the Company or the Parent or their
affiliates; or (b) conduct or assist others in conducting any business or
activity that competes with the Business in the United States, its territories
or possessions.
It is understood and agreed that the scope of the foregoing covenant is
reasonable as to time, area and persons and is necessary to protect the
legitimate business interests of the Company, the Parent and their affiliates.
It is further agreed that such covenant will be regarded as divisible and will
be operative as to time, area and persons to the extent that it may be so
operative, and if any part of such covenant is declared invalid, unenforceable,
or void as to time, area or persons, the validity and enforceability of the
remainder will not be affected.
If Employee violates the restrictive covenants of this Section 9 and the
Company or the Parent brings legal action for injunctive or other relief,
neither the Company nor the Parent shall be deprived of the benefit of the full
period of the restrictive covenant, as a result of the time involved in
obtaining the relief. Accordingly, Employee agrees that the restricted period
following the term of employment shall have a duration of two years, and the
regularly scheduled expiration date of such covenant shall be extended by the
same amount of time that Employee is determined to have violated such covenant.
10. Confidentiality. Employee acknowledges that he has learned and
will learn Confidential Information (as defined herein) relating to the
business conducted and to be conducted by the Company, the Parent or their
affiliates. Employee agrees that he will not, except in the normal and proper
course of his duties hereunder, disclose or use or authorize any third party to
5
6
disclose or use any such Confidential Information, without prior written
approval of the Company or the Parent. As used in this Section 10,
"Confidential Information" shall mean information disclosed to or known to
Employee as a direct or indirect consequence of or through his employment with
the Company or the Parent, about any customer's, supplier's or the Company's or
the Parent's business, methods, business plans, operations, products,
processes, and services, including, but not limited to, information relating to
research, development, inventions, recommendations, programs, systems, and
systems analyses, flow charts, finances, and financial statements, marketing
plans and strategies, merchandising, pricing strategies, merchandise sources,
client sources, system designs, procedure manuals, automated data programs,
financing methods, financial projections, terms and conditions of arrangements
of any business, computer software, terms and conditions of business
arrangements with clients or suppliers, reports, personnel procedures, supply
and services resources, names and addresses of clients, the Company's or the
Parent's contacts, names of professional advisors, and all other information
pertaining to clients and suppliers, including, but not limited to assets,
business interests, personal data and all other information pertaining to the
Company or the Parent, clients or suppliers whatsoever, including all
accompanying documentation therefor. All information disclosed to Employee, or
to which Employee has access during the period of his employment, for which
there is any reasonable basis to be believed is, or which appears to be treated
by the Employer as Confidential Information, shall be presumed to be
Confidential Information hereunder. Confidential Information shall not,
however, include information that (i) is publicly known or becomes publicly
known through no fault of Employee, or (ii) is generally or readily obtainable
by the public, or (iii) constitutes general skills, knowledge and experience
acquired by Employee before and/or during his employment with the Company and
the Parent .
Employee agrees that all documents of any nature pertaining to
activities of the Company, the Parent or their affiliates, or that include any
Confidential Information, in his possession now or at any time during the term
of his employment, including without limitation, memoranda, notebooks, notes,
data sheets, records and computer programs, are and shall be the property of
such entity and that all copies thereof shall be surrendered to the appropriate
entity upon termination of his employment.
11. Inventions; Developments. Employee agrees to notify the Company
and the Parent of any discovery, invention, innovation, or improvement which is
related to the Business or to the business of any customer or supplier
(collectively called "Developments") conceived or developed by Employee during
the term of the Employee's employment. Developments shall include, without
limitation, developments in computer software, logical systems, algorithms, and
any or all other intellectual properties related to the Business. All
Developments, including but not limited to all written documents pertaining
thereto, shall be the exclusive property of the Company or the Parent, as the
case may be, and shall be considered Confidential Information subject to the
terms of this Agreement. Employee agrees that when appropriate, and upon
written request of the Company or the Parent, as the case may be, the Employee
will acknowledge that Developments are "works for hire" and will file for
patents or copyrights with regard to any or all Developments and will sign
documentation necessary to evidence ownership of Developments in the Company or
the Parent, as the case may be.
6
7
12. Performance Review. In April and September of each year during
the term of this Agreement, Employee and representatives of the Company and the
Parent will meet to review and discuss Employee's performance during the
preceding six months. Employee and the representatives will discuss in good
faith Employee's positive contributions to the Company's and the Parent's
business, areas in which improvement in performance is expected, and to the
extent possible, objective metrics for the measure of improvement over the
ensuing six months. The Parent shall review Employee's salary and bonus
compensation in connection with this review and provide for such increases from
time to time as may be warranted in accordance with the Parent's compensation
policies. The Company and the Parent shall deliver to Employee a written
summary of the meeting, no later than seven (7) days after the meeting, which
summary shall include, among other things, the objective metrics that Employee
shall be expected to satisfy, and the salary and bonus compensation to be paid
to Employee.
13. Exit Interview. To insure a clear understanding of this
Agreement, including but not limited to the protection of the Company's and the
Parent's business interests, Employee agrees, at no additional expense to the
Company and the Parent, to engage in an exit interview with the Company and the
Parent prior to Employee's departure from the Company and the Parent at a time
and place designated by the Company and the Parent.
14. Right of Setoff. The Company and the Parent shall be entitled,
at their option and not in lieu of any other remedies to which they may be
entitled, to set off any amounts due Employee or any affiliate of Employee
against any amount due and payable by Employee or any affiliate of Employee to
the Company and the Parent ("Set-Offs") pursuant to this Agreement or
otherwise, provided that the Set-Offs are set forth in detail in writing with
supporting evidence to substantiate each Set-Off.
15. Miscellaneous.
(a) Any notice, demand or request required or permitted to be
given or made under this Agreement shall be in writing and shall be deemed
given or made when delivered in person, when sent by United States registered
or certified mail, or postage prepaid, or when telecopied to a party at its
address or telecopy number specified below:
If to the Company:
Advanced Telemarketing Corporation
0000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopy number: (000) 000-0000
7
8
If to the Parent:
ATC Communications Group, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy number: (000) 000-0000
If to Employee:
Xxxxxx Xxxxxxx
0 Xxxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopy number: (000)-000-0000
The parties to this Agreement may change their addresses for notice in
the manner provided above.
(b) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions
hereof.
(c) Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
(d) The parties shall execute all documents, provide all
information and take or refrain from taking all actions as may be reasonably
necessary or appropriate to achieve the purposes of this Agreement.
(e) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their representatives and permitted successors
and assigns. Except for the provisions of Sections 9, 10 and 11 of this
Agreement, which are intended to benefit the Company's and the Parent's
affiliates as third party beneficiaries, or as otherwise expressly provided in
this Agreement, nothing in this Agreement, express or implied, is intended to
confer upon any person other than the parties to this Agreement, their
respective representatives and permitted successors and assigns, any rights,
remedies or obligations under or by reason of this Agreement.
(f) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the specific subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
8
9
(g) None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the parties, except as otherwise
expressly provided herein.
(h) No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
(i) This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
(J) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW. All claims, disputes, and controversies arising out of or
relating to this Agreement or the performance, breach, validity,
interpretation, application or enforcement hereof, including any claims for
equitable relief or claims based on contract, tort, statute, or any alleged
breach, default, or misrepresentation in connection with any of the provisions
hereof, will be resolved by binding arbitration. A party may initiate
arbitration by sending written notice of its intention to arbitrate to the
other party and to the American Arbitration Association ("AAA") office located
in Dallas, Texas (the "Arbitration Notice"). The Arbitration Notice will
contain a description of the dispute and the remedy sought. The arbitration
will be conducted at the offices of the AAA in Dallas, Texas before an
independent and impartial arbitrator who is selected by mutual agreement, or,
in the absence of such agreement, before three independent and impartial
arbitrators, of whom each party will appoint one, with the third being chosen
by the two appointed by the parties. In no event may the demand for
arbitration be made after the date when the institution of a legal or equitable
proceeding based on such claim, dispute, or other matter in question would be
barred by the applicable statute of limitations. The arbitration and any
discovery conducted in connection therewith will be conducted n accordance with
the Commercial Rules of arbitration and procedures established by AAA in effect
at the time of the arbitration, including without limitation the expedited
procedures set forth therein (the "AAA Rules"). The decision of the
arbitrator(s) will be final and binding on all parties and their successors and
permitted assignees. The judgment upon the award rendered by the arbitrator(s)
may be entered by any court having jurisdiction thereof. The arbitrator(s)
will be selected no later than 30 days after the date of the Arbitration
Notice. The arbitration hearing will commence no later than 60 days after the
arbitrator(s) is selected. The arbitrator(s) will render a decision no later
than 30 days after the close of the hearing, in accordance with AAA Rules. The
arbitrator's fees and costs will conform to the then current AAA fee schedule
and will be borne equally by the parties.
(k) If any provision of this Agreement is declared or found to
be illegal, unenforceable, or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent
9
10
or, if that is not possible, by substituting therefor another provision that is
legal and enforceable and achieves the same objectives.
(l) No supplement, modification or amendment of this agreement
or waiver of any provision of this Agreement shall be binding unless executed
in writing by all parties to this Agreement. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision of this Agreement (regardless of whether similar), nor
shall any such waiver constitute a continuing wavier unless otherwise expressly
provided.
(m) Employee acknowledges and agrees that the Company and the
Parent would be irreparably harmed by any violation of Employee's obligations
under Sections 9, 10 and 11 hereof and that, in addition to all other rights or
remedies available at law or in equity, the Company and the Parent will be
entitled to injunctive and other equitable relief to prevent or enjoin any such
violation. The provisions of Sections 9, 10 and 11 hereof will survive any
termination of this Agreement, in accordance with their terms.
(n) No party may assign this Agreement or any rights or
benefits thereunder without the written consent of the other parties to this
Agreement.
EXECUTED as of the date first above written.
ADVANCED TELEMARKETING
CORPORATION
By:
-------------------------------------
Xxxxxxx X. Xxxxxx,
Chairman of the Board
ATC COMMUNICATIONS GROUP, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxx,
Chairman of the Board
----------------------------------------
Xxxxxx Xxxxxxx
10
11
EXHIBIT A
The bonus program contains three broad segments: (i) net revenues; (ii)
EBIT; and (iii) intangibles. Two of the segments have subsections. Each
individual measurement set forth has a dollar value assigned which can be
earned independent of the results of any other individual measurement. The
measurements' period for the bonus is July 1, 1996 through June 30, 1997 and
applies to consolidated financial results for ATC Communications Group, Inc.
I. Net Revenues (total possible bonus of $70,000)
a. Increase of at least 30% over the fiscal year ended June
30, 1996...$40,000.
b. Increase of at least 50% over the 1996 fiscal year
...$15,000 additional to (a) above.
c. Increase of 60% or more over the 1996 fiscal
year...$15,000 additional to (a) and (b) above.
II. EBIT (total possible bonus of $40,000)
EBIT equals 11% or more of net revenues...$40,000.
III. Intangibles (total possible bonus of $90,000)
a. Resolution of the AT&T matter in a manner acceptable to
the Board of Directors...$25,000.
b. Signing of the American Airlines Cargo
contract....$25,000.
c. Legal protection established for ATC's intellectual
property...$10,000.
d. Development and implementation of a strategic marketing
plan to include a sales process and tactical execution
steps...$10,000.
e. System wide implementation of the "Timekeeper" system (or
a similar process)...$10,000.
f. Development of and at least partial implementation of a
financial control system to include budgeting, profit and
loss responsibility and capital expenditures...$10,000.
