EXHIBIT 10.1
EMPLOYMENT AGREEMENT
(XXXXXXX X. XXXXXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of April 15, 1999 (the
"Effective Date"), by and between APPLIED VOICE RECOGNITION, INC., a Delaware
corporation doing business as x-XXXX.xxx ("Employer"), and XXXXXXX X. XXXXXXX,
an individual residing in Knoxville, Tennessee ("Employee").
W I T N E S S E T H:
WHEREAS, Employer and Employee desire to enter into an agreement regarding
Employee's employment with Employer pursuant to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties covenant and agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby accepts
employment with Employer on the terms and conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT. The term of Employee's employment hereunder (the
"Term") shall commence as of April 15, 1999 (the "Commencement Date") and shall
continue (subject to termination by either Employer or Employee as hereinafter
provided) for an initial term (the "Initial Term") expiring on April 14, 2002
(the "Expiration Date"). The Expiration Date shall be automatically extended
unless terminated by Employer or Employee for successive one-year periods
following the expiration of the Initial Term. If Employer desires to terminate
Employee's employment under this Agreement at the end of the Initial Term or at
the end of any succeeding one year term, Employer shall give written notice of
such desire to Employee at least one month prior to the expiration of the
Initial Term or any succeeding one year term. If Employee desires to terminate
Employee's employment under this Agreement at the end of the Initial Term or at
the end of any succeeding one year term, Employee shall give written notice of
such desire to Employer at least one month prior to the expiration of the
Initial Term or any succeeding one year term. At the expiration of the then-
existing term, Employer shall have no further obligation to Employee other than
payment of any earned and unpaid Base Salary (as hereafter defined) under
Section 3(a) and any earned and unpaid Bonus (as hereafter defined) under
Section 3(b), and Employee shall have no further obligation to Employer except
as set forth in Sections 7, 8, 9 and 10.
3. COMPENSATION AND OTHER BENEFITS.
a. As compensation for all services rendered by Employee in performance of
Employee's duties or obligations under this Agreement, Employer shall pay
Employee the following base salary (the "Base Salary"):
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(1) for the period from April 15, 1999 until October 15, 1999, a monthly
base salary of ELEVEN THOUSAND SIX HUNDRED SIXTY-SEVEN AND NO/100
DOLLARS ($11,667.00); and
(1) for the period from October 16, 1999 until the Expiration Date, a
monthly base salary of TWELVE THOUSAND FIVE HUNDRED AND 00/100 DOLLARS
($12,500.00).
Employee's Base Salary shall be payable in equal semi-monthly installments or in
the manner and on the timetable which Employer's payroll is customarily handled
or at such intervals as Employer and Employee may hereafter agree to from time
to time.
b. In addition to receiving the Base Salary provided for in
Section 3(a), Employee shall be entitled to a quarterly bonus equal to twelve
and one-half percent (12-1/2%) of his annualized Base Salary as of the end of
the applicable quarter (the "Bonus"). References to quarters contained herein
shall mean the three months ending March 31, June 30, September 30 and December
31. The Bonus shall be earned if, and only if, Employee has met the criteria set
by Employer for the applicable quarter. In connection therewith, Employer agrees
that prior to the end of each quarter, it shall set criteria for Employee's
Bonus to be earned during the following quarter and shall communicate such
criteria to Employee in writing. If Employee successfully meets the criteria
established by Employer (in the discretion of Employer), Employer shall pay to
Employee the quarterly Bonus within thirty (30) days of the end of the
applicable quarter. In the event Employee is employed hereunder for less than a
full quarter, Employee shall be entitled to earn a pro rata portion of the Bonus
based upon the actual number of days employed hereunder during the quarter as
compared to the total number of days in the quarter; however, Employee shall not
be entitled to any adjustment in the criteria on account of working less than a
full quarter.
c. Employee shall be entitled to be reimbursed by Employer for
all reasonable and necessary expenses incurred by Employee in carrying out
Employee's duties under this Agreement in accordance with Employer's standard
policies regarding such reimbursements.
d. Beginning with the Commencement Date, Employee shall be
entitled during the Term, upon satisfaction of all eligibility requirements, if
any, to participate in all health, dental, disability, life insurance and other
benefit programs now or hereafter established by Employer which cover
substantially all other of Employer's employees and shall receive such other
benefits as may be approved from time to time by Employer.
e. Employee shall be entitled to receive one week of paid
vacation during the Term and following the six-month anniversary of the
Commencement Date. During the Term and following the first anniversary of the
Commencement Date, Employee shall be entitled to receive two weeks of paid
vacation. In addition, Employee shall be entitled to receive paid holidays as
enjoyed by all other employees of Employer.
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f. Employee shall be entitled to receive paid time off to
participate in the minimum annual required amount of continuing professional
education required by the American Institute of Certified Public Accountants and
the Texas State Board of Accountancy for Employee to maintain his Certified
Public Accountant license, which annual participation is estimated to be
approximately forty (40) hours.
g. Employee shall be entitled to reimbursement for (i) the
reasonable cost of relocating and moving his household from Knoxville, Tennessee
to Houston, Texas and (ii) realtor fees arising out of the sale of his house in
Knoxville, Tennessee. The aggregate reimbursement for the foregoing shall not
be in excess of $19,500. Employee shall also be entitled reimbursement for
temporary living and commuting expenses of up to $1,075.00 per month from the
Commencement Date, but in no event shall such payments be made for a period
longer than six (6) months after the Commencement Date.
4. DUTIES.
a. Employee that he will relocate to Houston, Texas on or
before April 15, 1999. Employee is employed to act as Chief Financial Officer
of the Employer or in such other office or position as shall be assigned to
Employee from time to time by Employer, and to perform such duties as are
commensurate with Employee's position with Employer.
b. Employee agrees that during the period of employment,
Employee shall devote full-time efforts to Employee's duties as an employee of
Employer and Employee shall use Employee's best efforts to perform the duties of
Employee's position in an efficient and competent manner and shall use
Employee's best efforts to promote the interests of Employer and any affiliated
companies.
c. During the period of employment, Employee agrees not to (i)
solely or jointly with others undertake or join any planning for or organization
of any business activity competitive with the business activities of Employer,
and (ii) directly or indirectly, engage or participate in any other activities
in conflict with the best interests of Employer.
d. Employee agrees that during the period of employment
Employee shall refer to Employer all opportunities to which Employee might
become exposed in carrying out Employee's duties and responsibilities hereunder
that relate to voice recognition or medical transcription.
5. STOCK OPTION PLAN. As a further inducement to Employee to accept
employment upon the terms set forth herein and in consideration of Employee's
execution of this Agreement, Employee shall be granted options entitling
Employee to purchase 210,000 shares of Employer's common stock, par value $0.001
(the "Options"), pursuant to, and Employee shall be entitled to otherwise
participate in, that certain Applied Voice Recognition, Inc. 1997 Incentive
Plan, as amended from time to time. The granting instrument for the Options
will provide, in addition to other terms set forth therein, that (i) the
purchase price for the Options shall be the average bid and ask price for
Employer's shares of common stock on the NASDAQ OTCBB (or any national
securities exchange hereafter listing Employer's common stock) on the
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day prior to the Commencement Date, (ii) one third of the Options (being options
to purchase 70,000 shares) will vest on the first anniversary date of the
Commencement Date, and (iii) approximately one twenty-fourth (1/24th) of the
remaining Options shall vest on the last day of each month following the first
anniversary date of the Commencement Date (specifically, options to purchase
5,833 shares on the last day of months one through twenty-three and 5,841 shares
on the last day of the twenty-fourth month).
6. TERMINATION OF EMPLOYMENT. Employee's employment and this
Agreement shall terminate upon the earliest to occur of any of the following
events (the actual date of such termination being referred to herein as the
"Termination Date"):
a. The termination of the Agreement pursuant to Section 2.
b. Employee's employment pursuant hereto shall terminate in the
event of the death of Employee.
c. Employer may terminate Employee's employment under this
Agreement for cause without any prior notice (except as set forth in
subparagraph (3) below), upon the occurrence of any of the following events:
(1) any embezzlement or wrongful diversion of funds of
Employer or any affiliate of Employer by Employee;
(2) gross malfeasance by Employee in the conduct of
Employee's duties;
(3) breach of this Agreement and the failure to cure such
breach following reasonable notice thereof;
(4) gross neglect by Employee in carrying out Employee's
duties; or
(5) the failure of Employee to be able to perform
Employee's duties hereunder for a period of not less than ninety (90)
days by reason of disability. For purposes of this Agreement,
Employee shall be deemed to have become disabled when the Board of
Directors of Employer, upon the advice of a qualified physician, shall
have determined that Employee has become physically or mentally
incapable (excluding infrequent and temporary absences due to ordinary
illness) of performing Employee's duties under this Agreement. Before
making any termination decision pursuant to this Section 6(c)(5), the
Board of Directors of Employer shall determine whether there is any
reasonable accommodation (within the meaning of the Americans with
Disabilities Act) which would enable Employee to perform the essential
functions of Employee's position under this Agreement despite the
existence of any such disability. If such a reasonable accommodation
is possible, Employer shall make that accommodation
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and shall not terminate Employee's employment hereunder based on such
disability.
d. If Employee's employment is terminated for any of the
reasons specified in Section 6(b), (c) or (e), Employer shall no longer be
obligated to make the payments specified under Section 3 or to pay to Employee
any other compensation or benefits whatsoever, except as may otherwise be
provided in Section 6(e). Notwithstanding the foregoing, if for any reason
Employee's employment is terminated hereunder, any compensation payable under
Sections 3(a) or 3(b) which shall have been earned but not yet paid shall be
paid by Employer to Employee or Employee's estate, as the case may be.
e. Employer shall have the right to terminate Employee's
employment hereunder without prior notice and without cause; provided, however,
in such event, Employee shall continue to receive his Base Salary for six (6)
months following the date of such termination. In such event, Employee shall
not be eligible to receive the Bonus for any quarter beyond the quarter in which
Employee's employment is terminated. If this Agreement is terminated by
Employer under this Section 6(e), any Options that would otherwise vest on or
before the next vesting period (be it annual or monthly) shall automatically
become fully vested immediately upon termination; however, any additional
unvested Options shall be cancelled upon termination. Notwithstanding the
foregoing, the prior provisions of this Section 6(e) shall be void and of no
force or effect in the event of (i) the sale of substantially all of the assets
of Employer, (ii) the merger of Employer into another entity, or (iii) the
merger of another entity into Employer if, as a result of any transaction
described in clause (i), (ii) or (iii), the shareholders of Employer do not
control a majority of the shares of the surviving entity. In the event of any
such sale or merger, any of the Options that have not yet vested shall
immediately vest.
7. INVENTIONS AND CREATIONS BELONG TO EMPLOYER.
a. Any and all inventions, discoveries, improvements or
creations (collectively, "Creations") which Employee has conceived or made or
may conceive or make during the period of employment in any way, directly or
indirectly, connected with Employer's business shall be the sole and exclusive
property of Employer. Employee agrees that all copyrightable works created by
Employee or under Employer's direction in connection with Employer's business
are "works made for hire" and shall be the sole and complete property of
Employer and that any and all copyrights to such works shall belong to Employer.
To the extent any of the works described in the preceding sentence are not
deemed to be "works made for hire," Employee hereby assigns all proprietary
rights, including copyright, in these works to Employer without further
compensation.
b. Employee further agrees to (i) disclose promptly to Employer
all such Creations which Employee has made or may make solely, jointly or
commonly with others during the period of employment to the extent connected
with Employer's business, (ii) assign all such Creations to Employer, and (iii)
execute and sign any and all applications, assignments or other instruments
which Employer may deem necessary in order to enable Employer, at Employer's
expense, to apply for, prosecute and obtain copyrights, patents or other
proprietary
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rights in the United States and foreign countries or in order to transfer to
Employer all right, title and interest in said Creations.
8. CONFIDENTIALITY; OWNERSHIP OF INFORMATION. Employer promises
that Employer will, during the Term, provide Employee with access to such
Confidential Information (as defined in Section 8(a)) owned by Employer and that
is used in the operation of Employer's business as reasonably necessary to allow
Employee to perform Employee's obligations hereunder. Employee acknowledges
that Employer has agreed to provide Employee with a definite term of employment
and with access to such Confidential Information of Employer during that term of
employment.
a. DEFINITION. For purposes of this Agreement, "Confidential
Information" means any and all information relating directly or indirectly to
Employer that is not generally ascertainable from public or published
information or trade sources and that represents proprietary information to
Employer, excluding, however, (i) Employees' business contacts, (ii) information
already known to Employee prior to Employee's employment with Employer, and
(iii) information required to be divulged in any legal or administrative
proceeding in which Employee is involved. Confidential Information shall
consist of, for example, and not intending to be inclusive, (A) software (source
and object codes), algorithms, computer processing systems, techniques,
methodologies, formulae, processes, compilations of information, drawings,
proposals, job notes, reports, records and specifications, and (B) information
concerning any matters relating to the business of Employer, any of its
customers, prospective customers, customer contacts, licenses, the prices it
obtains or has obtained for the licensing of its software products and services,
or any other information concerning the business of Employer and Employer's good
will.
b. NO DISCLOSURE. During the Term and at all times thereafter,
Employee shall not disclose or use in any manner, directly or indirectly, and
shall use Employee's best efforts and shall take all reasonable precautions to
prevent the disclosure of, any such trade secrets or other Confidential
Information, except to the extent required in the performance of Employee's
duties or obligations to Employer hereunder or by express prior written consent
of a duly authorized officer or director of Employer (other than Employee).
c. OWNERSHIP OF INFORMATION. Such Confidential Information is
and shall remain the sole and exclusive property and proprietary information of
Employer or Employer's customers, as the case may be, and is disclosed in
confidence by Employer or permitted to be acquired from such customers in
reliance on Employee's agreement to maintain such Confidential Information in
confidence and not to use or disclose such Confidential Information to any other
person except in furtherance of Employer's business.
d. RETURN OF MATERIAL. Upon the expiration or earlier
termination of this Agreement for any reason, Employee shall immediately turn
over to Employer all documents, disks or other magnetic media, or other material
in Employee's possession or under Employee's control that (i) may contain or be
derived from Creations or Confidential Information, or (ii) are connected with
or derived from Employee's services to Employer.
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Employee shall not retain any Confidential Information in any form (e.g.,
computer hard drive, microfilm, etc.) upon the expiration or earlier termination
of this Agreement.
9. NONCOMPETE; WORKING FOR COMPETITOR. In consideration of
Employee's employment by Employer, Employee will not, at any time during the
Term or at any time for twenty-four (24) months subsequent to any termination of
Employee's employment pursuant to the provisions of Section 6(c) or the
voluntary termination of employment by Employee pursuant to Section 2, directly
or indirectly, within the United States, for Employee's own account or on behalf
of any direct competitors of Employer, engage in any business or transaction
involving (i) the design, installation, integration, service or consulting with
respect to voice recognition software designs and applications, or (ii) the
transcription of medical records (whether as an employee, employer, independent
contractor, consultant, agent, principal, partner, stockholder, corporate
officer, director or in any other individual or representative capacity),
without the prior written consent of Employer, which consent may be withheld by
Employer in Employer's sole and absolute discretion.
10. NON-SOLICITATION OF EMPLOYEES. During the Term and for a period
of twenty-four (24) months after the date of termination of employment, Employee
will not in any way, directly or indirectly (i) induce or attempt to induce any
employee of Employer to quit employment with Employer; (ii) otherwise interfere
with or disrupt Employer's relationship with its employees; (iii) solicit,
entice or hire away any employee of Employer; or (iv) hire or engage any
employee of Employer or any former employee of Employer whose employment with
Employer ceased less than one year before the date of such hiring or engagement.
Employee acknowledges that any attempt on the part of Employee to induce others
to leave Employer's employ, or any effort by Employee to interfere with
Employer's relationship with its other employees would be harmful and damaging
to Employer.
11. EMPLOYEE'S ACKNOWLEDGEMENT. It is the express intention of
Employee and Employer to comply with sections 15.50 et seq. of the Texas
Business and Commerce Code in effect as of the date of execution hereof.
Employee stipulates that the provisions of this Agreement are not oppressive or
overly burdensome to Employee and will not prevent Employee from earning an
income following termination of this Agreement. Employee warrants and
represents that:
a. Employee is familiar with non-compete and non-solicitation
covenants;
b. Employee has discussed or acknowledges the opportunity to
discuss the provisions of the non-compete and non-solicitation covenants
contained herein with Employee's attorney and has concluded that such provisions
(including, without limitation, the right to equitable relief and the length of
time provided for herein) are fair, reasonable and just under the circumstances;
c. Employee is fully aware of the obligations, limitations and
liabilities included in the non-compete and non-solicitation covenants contained
in this Agreement;
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d. The scope of activities covered hereby are substantially
similar to those activities to be performed by Employee under this Agreement;
e. The twenty-four (24) month non-compete and non-solicitation
period is a reasonable restriction, giving consideration to the following
factors: (1) Employee and Employer reasonably anticipate that this Agreement,
although terminable under certain provisions, will continue in effect for
sufficient duration to allow Employee to attain superior bargaining strength and
an ability for unfair competition with respect to the customers covered hereby;
(2) the duration of the twenty-four (24) month non-compete and non-solicitation
period is a reasonably necessary period to allow Employer to restore its
position of equivalent bargaining strength and fair competition with respect to
those customers covered hereby; and (3) historically, employees of all types
have remained with Employer for a duration of longer than the duration of the
twenty-four (24) month non-compete and non-solicitation period; and
f. The limitations contained in this Agreement with respect to
geographic area, duration and scope of activity are reasonable; however, if any
court shall determine that the geographic area, duration or scope of activity of
any restriction contained in this Agreement is unenforceable, it is the
intention of the parties that such restrictive covenants set forth herein shall
not thereby be terminated, but shall be deemed amended to the extent required to
render such covenants valid and enforceable.
12. REMEDIES; INJUNCTION. In the event of a breach or threatened
breach by Employee of any of the provisions of this Agreement, Employee agrees
that Employer, in addition to and not in limitation of any other rights,
remedies or damages available to Employer at law or in equity, shall be entitled
to a permanent injunction without the necessity of proving actual monetary loss
in order to prevent or restrain any such breach by Employee or by Employee's
partners, agents, representatives, servants, employees and/or any and all
persons directly or indirectly acting for or with Employee. It is expressly
understood between the parties that this injunctive or other equitable relief
shall not be Employer's exclusive remedy for any breach of this Agreement, and
Employer shall be entitled to seek any other relief or remedy which it may have
by contract, statute, law or otherwise for any breach hereof.
13. ARBITRATION. The parties agree that all disputes or questions
arising in connection with this Agreement and/or the termination of Employee's
employment hereunder shall be settled by a single arbitrator pursuant to the
rules of the American Arbitration Association in the City of Houston, Texas, and
the award of the arbitrators shall be final, non-appealable, conclusive and
enforceable in a court of competent jurisdiction; provided, however,
notwithstanding the foregoing, in no event shall any dispute, claim or
disagreement arising under Sections 7, 8, 9 and 10 of this Agreement that
requires injunctive or other equitable relief be required to be submitted to
arbitration pursuant to this provision or otherwise.
14. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to Employer and Employee as follows:
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If to Employer, at: Applied Voice Recognition, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx, Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or, if to Employee, at: Xx. Xxxxxxx X. Xxxxxxx
00000 Xxxx Xxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Notices shall be deemed properly delivered and received when and if either: (i)
personally delivered; (ii) delivered by nationally-recognized overnight courier;
(iii) when deposited in the U.S. Mail, by registered or certified mail, return
receipt requested, postage prepaid; or (iv) sent via facsimile transmission with
confirmation mailed by regular U.S. mail. Any party may change its notice
address for purposes hereof to any address within the continental United States
by giving written notice of such change to the other parties hereto at least
fifteen days prior to the intended effective date of such change.
15. SEVERABILITY. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Employer and
Employee shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable, but all the remaining provisions
of this Agreement shall remain in full force and effect.
16. ASSIGNMENT. This Agreement may not be assigned by any party
without the prior written consent of the other parties.
17. BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective legal
representatives, heirs, successors and permitted assigns.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
19. ATTORNEYS FEES. In the event of any dispute between the parties
regarding this Agreement, the prevailing party shall be entitled to be
reimbursed for such prevailing party's attorneys fees and costs of court (or
cost of arbitration, as applicable) by the non-prevailing party.
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20. AGREEMENT READ, UNDERSTOOD AND FAIR. Employee has carefully read
and considered all provisions of this Agreement and agrees that all of the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the interests of Employer.
21. SUBJECT TO BOARD APPROVAL. This Agreement is subject to approval
of the Board of Directors of Employer. In connection therewith, Employer agrees
to submit this Agreement for approval to its Board of Directors on or before
April 30, 1999, and to advise Employee promptly following such meeting as to
whether this Agreement was approved. In the event this Agreement is not
approved on or before such date, this Agreement shall be void and of no further
force or effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
____ day of April, 1999, effective as of the Effective Date.
EMPLOYER:
APPLIED VOICE RECOGNITION, INC., a Delaware corporation
d/b/a x.XXXX.xxx
By:
----------------------------------------
Xxxxx X. Xxxxxxx, President
EMPLOYEE:
-------------------------------------------
XXXXXXX X. XXXXXXX
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