EXHIBIT 10.1
ELCOTEL, INC.
Employment Agreement of C. Xxxxxxx Xxxxx
This Employment Agreement (this "Agreement") is effective as of the 10th
day of June, 1999 by and between Elcotel, Inc. (the "Company") and C. Xxxxxxx
Xxxxx ("Employee") upon the following terms and conditions:
1. Term:
(a) Commencement Date: This Agreement shall commence on June 10, 1999
and supersedes and replaces in its entirety the Amended and Restated
Employment Agreement dated October 20, 1998 between the Company and
Employee.
(b) Termination Date: Unless sooner terminated as provided in this
Agreement, this Agreement shall terminate on December 10, 1999 (the
"Initial Termination Date"). The Company shall have the option to extend
the termination date to a date that is not earlier than 30 days and not
later than 60 days after the Initial Termination Date (the "Extended
Termination Date"). The Company shall exercise such option by giving the
Employee at least 45 days written notice prior to the Initial Termination
Date specifying the number of days (between 30 days and 60 days) that the
termination date is extended.
2. Employment. Employee shall be employed by the Company as the acting
President, the acting Chief Executive Officer and Chairman of the Board of
Directors of the Company. Employee shall devote substantially all of his time
during normal business hours to the business of the Company; provided that the
Employee may continue to serve as a director of CSPI, DRS Technologies, SK
Technologies, Inc., Concurrent Computer Corporation, Cyberguard Corporation and
TechniSource Inc. and as the President and a Director of Fundamental Management
Corporation. Employee shall provide services pursuant to this Agreement
principally from the Company's executive offices in Sarasota, Florida, subject
to travel required in connection with his performance of such services. Employee
shall serve as the acting President and acting Chief Executive Officer of the
Company while the Company searches for an individual to serve in those positions
on a permanent (rather than interim) basis. If the Company appoints a permanent
President or Chief Executive Officer during the term of this Agreement, Employee
shall assist in the transition of management responsibilities to such permanent
President or Chief Executive Officer.
3. Salary: During the term of this Agreement, the salary paid to
Employee shall be Two Hundred Fifty Thousand Dollars ($250,000.00) on an annual
basis.
4. Benefits: Employee shall be entitled to the same benefits as are made
available to the Company's other senior executives and on the same terms and
conditions as such executives (the "Benefits"). Employee shall also be entitled
to a $2,000 per month non-accountable expense allowance ("Expense Allowance").
5. Bonuses: Employee shall be entitled to receive such bonus, if any, as
the board of directors of the Company or the Compensation Committee of the board
determines (the "Bonus").
6. Stock Options:
(a) Employee shall be granted additional stock options to purchase an
aggregate of 76,750 shares of the Company's common stock pursuant to the
Company's 1991 Stock Option Plan (the "Options"). The Options shall have
such exercise prices and such expiration dates as set forth on Exhibit A
attached hereto and made a part hereof. The Options shall become initially
exercisable as follows: 12,791 shares on each of July 10, 1999, August 10,
1999, September 10, 1999, October 10, 1999 and November 10, 1999 and 12,795
shares on December 10, 1999. The Options shall be incentive stock options
to the maximum extent permitted by law and otherwise nonqualified options.
Employee shall retain all options previously granted and unexercised.
(b) All of Employee's stock options shall immediately vest in their
entirety in the event of a Change of Control (as defined below). In
addition, in the event of a termination by the Company of Employee's
employment (including termination pursuant to Section 1(b)) other than for
Cause (in accordance with Section 9(a) of this Agreement) or upon the death
or disability of Employee (in accordance with Section 9(d) of this
Agreement), all of Employee's vested employee stock options shall continue
in effect for 30 days after the effective date of such termination at which
time they shall terminate, except that (i) for all options granted on or
after the date of this Agreement (including the Options) 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.
In the event of a termination by the Company of Employee's employment for
Cause (in accordance with Section 9(a) of this Agreement), all of
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Employee's outstanding employee stock options shall immediately lapse and
terminate.
(c) The occurrence of any one or more of the following events shall be
deemed to be a "Change of Control":
(i) If any transaction occurs whereby substantially all of the assets
of the Company are transferred, exchanged or sold to a non-affiliated third
party other than in the ordinary course of business;
(ii) If a merger or consolidation involving the Company occurs and the
stockholders of the Company immediately before such merger or consolidation
do not own immediately after such merger or consolidation at least fifty
percent (50%) of the outstanding common stock of the surviving entity or
the entity into which the common stock of the Company is converted; or
(iii) If any person (including, without limitation, any individual,
partnership or corporation), other than Fundamental Management Corporation
and its affiliates or other than Wexford Management LLC and its affiliates,
becomes the owner, directly or indirectly, of securities of the Company or
its successor (or a parent company thereof) representing thirty-five (35%)
or more of the combined voting power of the Company's or its successor's
(or a parent's, as the case may be) securities then outstanding.
7. Business Expenses: Employee shall be reimbursed (in accordance with
Company policy from time to time in effect) for all reasonable business expenses
incurred by him in the performance of his duties.
8. Indemnification: Employee shall be indemnified by the Company with
respect to claims made against him as 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: Employee's employment may be terminated by
the Company only as provided below:
(a) For Cause: For Cause (as defined below) by written notice to
Employee and payment to him of salary accrued, but not paid through the
date of termination; provided however -
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(i) If the nature of such Cause involves dishonesty, fraud,
serious moral turpitude or a material violation of any applicable
laws, such termination shall be effective upon the giving of such
notice.
(ii) If the nature of such Cause does not involve dishonesty,
fraud, serious moral turpitude or a material violation of any
applicable laws, such termination shall be effective upon the
expiration of fifteen (15) days after the giving of such notice,
unless within such fifteen-day period Employee has cured the basis of
such Cause.
(b) Without Cause: Without Cause by prior written notice of
termination given to Employee and by compliance with the following:
(i) The Company shall pay to Employee his salary and provide, at
the Company's expense, the Benefits (excluding participation in the
Company's 401(k) plan and any other benefits to which COBRA does not
apply) and the Expense Allowance through the end of the term of this
Agreement (i.e., the Initial Termination Date or Extended Termination
Date depending on when the notice of termination is given) and pay the
Employee Severance Pay (as defined below) beginning on the one month
anniversary of the last payment of salary to Employee pursuant to this
Agreement at the end of the term of this Agreement.
(ii) If without Employee's written consent, Employee is required
to perform his duties (other than for normal travel, consistent with
performance of his services hereunder) from a geographic location
other than the area consisting of Sarasota, Florida, and its
surrounding counties, such requirement may, at Employee's option by
notice given to the Company within ninety (90) days after the date of
such requirement, be treated by him as a notice of termination of his
employment by the Company without Cause. A reduction in Employee's
responsibilities or a change in title as a result of the Company
appointing another individual to serve as President or Chief Executive
Officer shall not be deemed a breach of this Agreement or a
termination of his employment by the Company without Cause.
(c) Non-renewal: If this Agreement terminates pursuant to Section 1(b)
because the Company does not extend the Initial Termination Date of this
Agreement or the parties do not agree to extend the Employee's employment
beyond the Extended Termination Date, then the Company shall pay the
Employee severance pay ("Severance Pay") equal to three months of salary,
payable in three equal monthly installments beginning on the one month
anniversary of the termination of employment.
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(d) Death or Permanent Disability: Upon the death or permanent disability
of Employee, but only after providing him with salary accrued through the
effective date of death or disability.
(e) Definition of "Cause": "Cause" for purposes of termination by the
Company shall be defined as (i) any act or acts by Employee of dishonesty or
fraud or that constitute serious moral turpitude or a material violation of any
applicable laws relating to xxxxxxx xxxxxxx or other securities law matters; or
(ii) misconduct of a material nature that Employee knew or should have known
would be materially detrimental to the Company or its business or a material
breach by Employee of this Agreement.
10. Termination By Employee:
(a) Employee may terminate his employment under this Agreement by reason of
a breach hereof by the Company on twenty (20) days prior written notice to the
Company, if such breach is not cured within such twenty day period.
(b) Employee may also terminate his employment under this Agreement by
giving the Company at least sixty (60) days prior written notice of termination.
11. Proprietary Information. Unless otherwise expressly agreed by Company
in writing, any inventions, ideas, reports, discoveries, developments, designs,
improvements, inventions, formulas, processes, techniques, "know-how," data, and
other creative ideas concerning the manufacture, design, marketing or sale of
pay phones (all of the foregoing to be hereafter referred to as "Proprietary
Information"), whether or not patentable or registrable under copyright or
similar statutes, hereinafter generated by Employee either alone or jointly with
others in the course of his employment hereunder with Company relating or useful
to the manufacture, design, marketing or sale of pay phones by the Company,
shall be the sole property of Company. Employee hereby assigns to Company any
rights which he may acquire or develop in such Proprietary Information. Employee
shall cooperate with Company in patenting or copyrighting any such Proprietary
Information, shall execute any documents tendered by Company to evidence its
ownership thereof, and shall cooperate with Company in defending and enforcing
its rights therein. Employee's obligations under this Section 11 to assist
Company in obtaining and enforcing patents, copyrights, and other rights and
protections relating to such Proprietary Information in any and all countries
shall continue beyond the termination of his employment. Company agrees to
compensate Employee at a reasonable rate for time actually spent by Employee at
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Company's request on such assistance after termination of Employee's employment
with Company. If Company is unable, after reasonable effort, to secure
Employee's signature on any document or documents needed to apply for or
prosecute any patent, copyright, or right or protection relating to such
Proprietary Information, whether because of the Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints Company and its duly authorized officers and agents as
Employee's agent and attorney-in-fact, to act for and on his behalf to execute
and file any such application or applications and to do all other lawfully
permitted acts to further the prosecution and issuance of patents, copyrights,
or similar protections thereon with the same legal force and effect as if
executed by Employee.
12. Covenants Not To Disclose Confidential Information.
(a) Employee agrees that he will not at any time or place during his
employment or for three years after termination of such employment directly or
indirectly disclose to any person or firm other than Company or make, use or
sell any records, ideas, files, drawings, documents, improvements, equipment,
customer lists, sales and marketing techniques and devices, formulas,
specifications, research, investigations, developments, inventions, processes
and data, and without limiting the generality of the foregoing, anything not
within the public domain (ideas in the process of being disclosed to customers
shall not be considered in the public domain), belonging to Company, whether or
not patentable or copyrightable, other than for the sole and exclusive benefit
of Company, without the prior written consent of Company. Employee agrees that
both during the course of his employment with Company and for three years
thereafter he will keep confidential from persons not associated with Company
any and all Proprietary Information, special techniques, and trade secrets of
Company. Upon termination of his employment for any reason whatsoever, Employee
agrees to return to Company any property belonging to it, including but not
limited to any and all records, notes, drawings, specifications, programs, data
and other materials, and copies thereof, pertaining to Company's business and
generated or received by Employee in the course of his employment duties with
Company.
(b) Employee agrees that during the course of his employment with the
Company and the Restricted Period (as defined in Section 13) he will not
directly or indirectly entice or hire away or in any other manner persuade an
employee, consultant, dealer or customer of Company to discontinue that person's
or firm's relationship with or to Company as an employee, consultant, dealer or
customer, as the case may be.
(c) Employee agrees that he will not, during the course of
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his employment with the Company and the Restricted Period (as defined in Section
13), engage in any employment or business activity in which it might reasonably
be expected that confidential Proprietary Information or trade secrets of
Company obtained by the Employee during the course of his employment with
Company would be utilized.
(d) The Employee recognizes and agrees that his violation of any terms
contained in paragraphs (a), (b), or (c) of this Section 12 will cause
irreparable damage to Company, the amount of which will be impossible to
estimate or determine. Therefore, Employee further agrees that Company shall be
entitled, as a matter of course, to an injunction restraining any violation or
further violation of any such covenant or covenants by Employee, his employees,
partners, agents or associates, such right to an injunction to be cumulative and
in addition to any other remedies, at law or otherwise, which Company might
have. Company hereby waives any right to require a bond in connection with
obtaining such an injunction. Employee further agrees that his violation of any
of the terms of paragraphs (a), (b), or (c) of this Section 12 during the course
of his employment with Company shall be a cause for his termination without
notice of any rights of the Employee under this Agreement. Such covenants shall
be severable, and if the same be held invalid by reason of length of time, area
covered, or activity covered, or any or all of them, shall be reduced to the
extent necessary to cure such invalidity.
13. Covenant Not To Compete Unreasonably With Company. Employee further
covenants and agrees that:
(a) During the course of his employment with Company and the Restricted
Period, Employee shall not undertake any employment or financial involvement
with, or assistance of, any person, firm, association, partnership, corporation
or enterprise which is engaged in the manufacture, design, marketing or sale of
pay phones or in any other business in which the Company is engaged or has
current plans to engage as of the date of termination of employment. "Restricted
Period" shall mean one year following the later of (i) termination of this
Agreement and (ii) the last date on which Employee is entitled to salary or
severance payments pursuant to this Agreement.
(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
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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
paragraph (a) of this Section 13 during the course of his employment with
Company shall be a cause for his termination without notice of any rights of
Employee under this Agreement. Such covenants shall be severable, and if the
same be held invalid by reason of length of time, area covered, or activity
covered, or any or all of them, shall be reduced to the extent necessary to cure
such invalidity.
14. Notices: Notices that are required or permitted hereunder shall be
given by hand delivery, by delivery to a courier service providing next day
delivery and proof of receipt, or by facsimile transmission (except to
Employee), as follows:
If to the Company at: Elcotel, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Chief Financial Officer
Facsimile: 000-000-0000
If to Employee, to his most recent residence address shown on
the books of the Company.
Either party may change the address as to which notices to that party shall be
given by giving notice in the manner provided herein.
15. Proration: To the extent that proration is not otherwise provided for
in this Agreement, all amounts payable to Employee under this Agreement shall be
deemed earned on a daily basis and shall be prorated based on a 365-day year.
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16. Entire Agreement, etc.:
(a) This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof; 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, heirs,
personal representatives and assigns; shall supersede and replace all prior
employment agreements between the parties, including the Amended and
Restated Employment Agreement dated October 20, 1998; and may be executed
in one or more counterparts each of which shall be deemed an original
hereof, but all of which shall constitute but one and the same agreement;
and shall not be assigned by a party without the written consent of the
other party and any attempted assignment without such consent shall be null
and void.
(b) No representation, affirmation of fact, course of prior dealings,
promise or condition in connection herewith not incorporated herein shall
be binding on the parties.
(c) The failure by either party to insist upon strict compliance with
any term, covenant or condition, or to exercise any right, contained herein
shall not be deemed a waiver of such term, covenant, condition or right;
and no waiver or relinquishment of any term, covenant, condition or right
at any one or more times shall be deemed a waiver or relinquishment thereof
at any other time or times. 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.
(d) The captions of the sections herein are for convenience only and
shall not be used to construe or interpret this Agreement.
(e) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida (without regard to the
principles of conflicts of law) applicable to a contract executed and to be
performed in such state.
(f) The parties agree to submit any controversy, claim or dispute of
whatever nature arising between them, including without limitation, those
arising out of or relating to this Agreement or the construction,
interpretation, performance, breach, termination, enforceability or
validity of this Agreement or the arbitration provisions contained in this
Agreement, for determination solely by binding arbitration, in Tampa,
Florida by one arbitrator in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitrator shall base
his or her award or decision on applicable law and judicial precedent,
shall include in such award or decision the findings of
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fact and conclusions of law upon which the award or decision is based and shall
not grant any relief or remedy that a court could not grant under applicable
law. The parties agree to be conclusively bound by the award or decision of such
arbitrator. Judgment on the award or decision rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
(g) The arbitrator's award or decision shall also include a determination
as to the allocation between the parties of the payment of the costs and
expenses of the arbitration (including, without limitation, fees and
disbursements of counsel) on the basis that the prevailing party's costs and
expenses shall be paid by the non-prevailing party.
(h) Employee and the Company each hereby waive any and all rights to
request or receive punitive damages in connection with any action or proceeding
related to the subject matter of this Agreement.
(i) Employee and the Company each hereby waive all right to trial by jury
in any action or proceeding to enforce or defend any rights under this
Agreement.
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 By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------- ---------------------------------
C. Xxxxxxx Xxxxx Xxxxxxx X. Xxxxxxxx
Senior Vice President
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Exhibit A
Options
Number of Shares
Purchasable Exercise Price Expiration Date
----------- -------------- ---------------
6,250 $6.1875 2/20/2001
20,500 6.0000 5/22/2002
50,000 4.5625 7/13/2003
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