EXHIBIT (e)(12)
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of the 1st
day of January, 2002 (the "Effective Date"), by and between T-NETIX, Inc. a
Delaware Corporation ("T-NETIX"), and Xxxxxx X. Xxxxxx ("Employee").
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions contained herein, and in consideration of the employment of Employee,
and further, in consideration of the compensation contained herein, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. TERM. T-NETIX hereby agrees to employ Employee for a term commencing on the
Effective Date and ending December 31, 2002, unless earlier terminated as
provided in this Agreement. The term of this Agreement will automatically
continue on a calendar year-to-year basis unless and until T-NETIX or Employee
delivers written notice, on or before 90 days prior to the end of each calendar
year, of non-renewal. At such time as this Agreement becomes effective it shall
supercede in its entirety the current employment agreement between T-NETIX and
Employee dated as of the 3rd day of March, 2000.
2. DUTIES. Employee shall serve as the President and Chief Executive Officer of
T-NETIX. He shall assume such duties as the By Laws of T-NETIX (as in effect as
of the Effective Date) provide or as the Board of Directors of T-NETIX may from
time to time prescribe pursuant to such By Laws. The duties of Employee shall be
those as are generally consistent with the duties of a President and Chief
Executive Officer of a telecommunications company of such size as T-NETIX,
including such positions with and duties for T-NETIX subsidiaries as may be
assigned from time to time. Employee agrees to devote substantially all his
time, attention, and best efforts to the performance of his duties hereunder.
3. COMPENSATION. T-NETIX shall compensate Employee for the services rendered
under this Agreement as follows:
A. BASE SALARY. An annual base salary ("Base Salary") determined by the
Board of Directors or its compensation committee in its discretion and
consistent with its practices for executives of T-NETIX, but not less than
$200,000 per year (less applicable withholdings), payable in accordance with the
customary payroll practices of T-NETIX for compensation of its executives
(currently bi-weekly). If Employee's base salary is increased at any time, it
shall not thereafter be decreased during the term of this Agreement, unless such
decrease is the result of a general reduction affecting the base salaries of
substantially all other executives of T-NETIX.
B. BONUS. A bonus for the calendar year 2001 pursuant to that certain
"Executive Incentive Compensation Program" approved by the compensation
committee as of April 23, 2001. Thereafter, an annual bonus of 30% or more of
this annual salary based upon achieving performance objectives established by
the compensation committee of the Board of Directors of T-NETIX.
C. STOCK OPTIONS. Employee shall be awarded additional stock options as
may be granted from time to time by the Board of Directors or the compensation
committee consistent with terms of
the applicable option plans and the compensation policies of the Board of the
compensation committee.
4. EMPLOYEE BENEFITS.
A. BENEFIT PLANS. Employee shall be entitled to full participation on a
basis commensurate with his position with T-NETIX, in all plans of life,
accident, medical payment, health and disability insurance, retirement, pension,
perquisites and other employee benefit and pension plans which generally are
made available to executives of T-NETIX or its subsidiaries ("T-NETIX Benefit
Plans"), except for such plans which the Board, in its sole discretion, shall
adopt for select employees to compensate them for special or extenuating
circumstances.
B. VACATION. Employee shall be entitled to an annual vacation leave at
full pay as may be provided for by T-NETIX vacation policies applicable to
executives, but in any event such paid vacation shall not be less than three
weeks in the aggregate.
5. TERMINATION AND RIGHTS UPON TERMINATION.
A. DEATH, TOTAL DISABILITY OR RETIREMENT.
(i) This agreement shall automatically terminate upon the death,
total disability, or retirement of Employee.
(ii) Total disability shall be deemed to occur if, as a result of
his incapacity resulting from physical or mental illness or
disease (including alcohol or other substance addiction),
which is likely to be permanent, Employee shall have been
unable to perform his duties hereunder for a period of more
than 120 consecutive days during any twelve month period. The
Board of Directors will determine if Employee's termination is
due to total and permanent disability according to any
long-term disability plan then in effect for executives of
T-NETIX, and otherwise in good faith consistent with generally
prevailing practices of employers of like-size and industry
type in the general geographic location.
(iii) Upon termination for Employee's death, T-NETIX shall continue
to pay Employee's salary to a legal representative previously
designated in writing by Employee (the "Legal
Representative"), or if no such designation has been made, to
Employee's estate, for a period of the greater of twelve
months or the remaining term of this Agreement in monthly
increments.
(iv) Upon termination for Employee's total disability, T-NETIX
shall continue to pay Employee's salary to the Legal
Representative (or if no designation has been made, to
Employee or Employee's other legal representative) and shall
continue Employee's participation in all T-NETIX Benefit Plans
for a period of the greater of twelve months or the remaining
term of this Agreement in monthly increments.
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(v) Upon termination for Employee's retirement at any time after
Employee reaches the age of 65, Employee's rights to
compensation and participation in T-NETIX Benefit Plans shall
end and Employee shall not be entitled to a
severance/separation payment.
(vi) Following any termination pursuant to this Section 5(a),
Employee, Employee's heirs, administrators, executors or legal
representatives, as applicable, shall have a period of one
year from the date this Agreement is so terminated to exercise
any vested options previously granted to Employee. All
previously granted Options shall continue to vest during such
one-year period in accordance with the vesting schedule
included as part of the grant of the applicable Options.
B. TERMINATION FOR CAUSE.
(i) T-NETIX may terminate this Agreement at any time "For Cause"
(as defined in the following sentence). A Termination "For
Cause" means any of (A) the willful failure by Employee to
follow the reasonable instructions of the Board of Directors
after written notice to Employee of such failure, (B) the
willful commission by Employee of acts that are dishonest,
unethical, or inconsistent with the local normal business
standards, (C) the commission by Employee of a felonious act,
(D) intentional wrongful disclosure of confidential
information of T-NETIX, (E) Employee's engagement in any
competitive activity in violation of Section 9, or (F)
Employee's gross neglect of his duties.
(ii) Employee's right to compensation and participation in T-NETIX
Benefit Plans shall end and Employee shall not be entitled to
a severance/separation payment if T-NETIX terminates this
Agreement For Cause.
C. TERMINATION WITHOUT CAUSE.
(i) T-NETIX may terminate this Agreement at any time "Without
Cause," upon thirty days written notice to Employee. The
termination of Employee's employment by T-NETIX for any
reasons other than those specified in Section 5(b)(i) shall be
deemed a termination Without Cause.
(ii) Upon termination Without Cause other than following a Change
of Control, Employee shall be entitled to severance/separation
payments for a period of one year from (y) the effective date
of the termination, or (z) the expiration date of the term of
this Agreement as set forth in section 1, whichever period is
longer. Such payments shall be at his then effective salary
rate payable in accordance with the customary payroll
practices of T-NETIX for compensation of its executives.
During such period, T-NETIX shall also continue Employee's
participation in all T-NETIX Benefit Plans. Such payments and
benefits are to be in lieu of and not in addition to any
payments or benefits otherwise to be paid or disbursed over
the unexpired term of this Agreement.
D. RESIGNATION.
(i) Employee may terminate this Agreement at any time through his
resignation upon thirty days written notice to T-NETIX.
Employee's termination pursuant to this Section 5(d) shall be
deemed Resignation for Good Reason if such resignation meets
the criteria in part (ii) below, otherwise it shall be deemed
a Voluntary Resignation.
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(ii) Resignation for Good Reason is defined as Employee's
resignation that (x) is not in connection with T-NETIX's
Termination for Cause, (y) is prior to a Change of Control of
T-NETIX (as defined below), and (z) is the occurrence of any
of the following events without the Employee's written
consent:
A. Any material diminution of the Employee's position,
duties and responsibilities;
B. Any reduction in the Employee's base salary, except
as permitted in Section 3a;
C. Required relocation of the Employee's principal place
of employment more than 75 miles from his place of
employment as of the Effective Date for a period of
more than 120 days in any 365 day period, except for
strategic relocation of the personnel reporting to
Employee or relocation of T-NETIX's headquarters.
(iii) In the event of Employee's Voluntary Resignation, Employee's
right to compensation and participation in T-NETIX Benefit
Plans shall end, and Employee shall not be entitled to a
severance/separation payment.
(iv) Upon Employee's Resignation for Good Reason, Employee shall be
entitled to severance/separation payments for a period of one
year from (y) the effective date of the resignation, or (z)
the expiration date of the term of this Agreement as set forth
in section 1, whichever period is longer. Such payments shall
be at his then effective salary rate payable in accordance
with the customary payroll practices of T-NETIX for
compensation of its executives. During such period, T-NETIX
shall also continue Employee's participation in all T-NETIX
Benefit Plans. Such payments and benefits are to be in lieu of
and not in addition to any payments or benefits otherwise to
be paid or disbursed over the unexpired term of this
Agreement.
E. TERMINATION FOLLOWING A CHANGE OF CONTROL. The provisions of Section
6 govern employee's rights following a Change of Control of T-NETIX.
6. CHANGE OF CONTROL AND RIGHTS UPON CHANGE OF CONTROL.
A. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, a
Change of Control of T-NETIX shall be deemed to have taken place if one or more
of the following occurs:
(i) Any person or entity, as that term is used in Section 13 (d)
and 14 (d)(2) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"), other than (A) a qualified
benefit plan of T-NETIX or an affiliate of T-NETIX; (B) any
person who is a stockholder or beneficial owner of stock as of
the Effective Date (a "Current Stockholder"); (C) any
successor of a Current Stockholder who acquires his shares by
inheritance, devise, trust, or operation of law directly from
such Current Stockholder (a "Successor"); or (D) any person or
group of which Current Stockholders or Successors hold stock
representing an interest of one-third or more of the person's
or groups total stock, becomes a beneficial owner (as defined
in Rule 13d-3 under the Exchange Act as in effect on the date
hereof) directly or indirectly of securities of T-NETIX
representing fifty percent (50%) or more of the combined
voting power of T-NETIX's then outstanding securities.
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(ii) T-NETIX shall (in a single transaction or a series of related
transactions) issue shares, sell or purchase assets, engage in
a merger or engage in any other transaction immediately after
which securities of the merged company representing fifty
percent (50%) or more of the combined voting powers of the
then outstanding securities of the merged company shall be
ultimately owned by persons who shall not have owned voting
securities of T-NETIX prior to such transaction or who shall
be a party to such transaction.
(iii) T-NETIX and its affiliates shall sell or dispose of (in a
single transaction or series of related transactions) business
operations which generated a majority of the consolidated
revenues (determined on the basis of T-NETIX's four most
recently completed fiscal quarters) of T-NETIX and its
subsidiaries immediately prior thereto.
(iv) The Board of Directors of T-NETIX shall approve the
distribution to T-NETIX's shareholders of all or substantially
all of T-NETIX's net assets or shall approve the dissolution
of T-NETIX.
(v) Any other transaction or series of transactions occurring
which have substantially the effect of the transactions
specified in any of the preceding clauses in this Section 6.
B. RIGHTS UPON CHANGE OF CONTROL. Upon a Change of Control of T-NETIX,
and upon Employee's Voluntary Resignation during the term of this Agreement and
following the Change of Control, Employee shall be entitled to a Change of
Control payment equal to twenty-four months of salary at his then effective
salary rate payable in accordance with the customary payroll practices of
T-NETIX for compensation of its executives. During such time period T-NETIX
shall also continue Employee's participation in all T-NETIX Benefit Plans. Such
payments and benefits are to be in lieu of and not in addition to any payments
or benefits otherwise to be paid or disbursed over the unexpired term of this
Agreement. Further, upon a Change of Control and Employee's termination for any
reason other than For Cause, death, permanent disability or retirement, any
stock options previously granted to Employee which, by their terms, did not
fully vest upon such Change of Control, shall be fully vested.
7. OTHER BENEFITS. The provisions of Sections 5 and 6 shall not affect
Employee's participation in, or termination of distributions and vested rights
under, any T-NETIX Benefit Plans to which Employee is entitled pursuant to the
terms of such plan, except as otherwise expressly provided in Sections 5 and 6.
8. NON DISCLOSURE AGREEMENT.
a. In connection with his employment with T-NETIX, Employee will have
access to and become acquainted with various trade secrets and other proprietary
and confidential information of T-NETIX. "Trade secrets and other proprietary
and confidential information" include but are not limited to the following: (1)
business, pricing, marketing and cost data; (2) technical information; (3)
customer and supplier lists; (4) contents of contracts and agreements with
customers; and (5) customer requirements and specifications. Employee
acknowledges that the trade secrets and other proprietary and confidential
information have been developed and acquired by T-NETIX through expenditures of
substantial time, effort and money and provide value to T-NETIX with respect to
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competitors who do not know or use such trade secrets and other proprietary and
confidential information.
b. In consideration for access to trade secrets and other proprietary
and confidential information, Employee agrees that during the Non-competition
Period (as defined in Section 9) Employee will not directly or indirectly
disclose or use for any reason whatsoever any trade secrets and other
proprietary and confidential information obtained by Employee by reason of his
employment with T-NETIX, except as required to conduct the business of T-NETIX
or as authorized by express written permission of the Board of Directors or as
otherwise required by law.
c. Employee confirms that all trade secrets and other proprietary and
confidential information, and all documents reflecting such information, remain
the exclusive properties of T-NETIX. All business record, papers and documents
kept or made by Employee relating to the business of T-NETIX shall be and remain
the property of T-NETIX and shall remain in the possession of T-NETIX during the
term of Employee's employment and at all times thereafter. Upon termination of
employment with T-NETIX or upon the request of T-NETIX at any time, Employee
shall promptly deliver to T-NETIX, and shall retain no copies of any materials,
records and documents (in whatever form or medium) made by Employee or coming
into his possession concerning the business or affairs of T-NETIX.
9. NON-COMPETITION AGREEMENT. In consideration for access to trade secrets and
other proprietary information of T-NETIX, for so long as Employee is employed by
T-NETIX and for a period of two years thereafter (the "Non-competition Period"),
Employee will not:
a. Accept a position as an officer, director, employee, agent,
consultant, representative of (i) any other proprietary inmate call processing
systems company or (ii) any other entity that, as of the date of Employee's
termination, competes directly with T-NETIX or any of its subsidiaries (an
entity described in either part (i) or (ii) is referred to in this Agreement as
a "Competitor");
b. Acquire or fail to dispose of any stock or other ownership interest
in any Competitor, other than investments equal to less than one percent of the
outstanding stock of any class issued by any publicly traded company;
c. Solicit or seek business from any of T-NETIX customers, prospective
customers, suppliers, or prospective suppliers; or
d. Hire or engage any T-NETIX employee or induce any T-NETIX employee
to leave their employment with T-NETIX on behalf of any Competitor.
10. REMEDIES.
a. Without intending to limit the remedies available to T-NETIX,
Employee acknowledges that a breach or threatened breach of any of the covenants
contained in Sections 8 and 9 may result in material irreparable injury to
T-NETIX or its subsidiaries for which there is no adequate remedy at law, that
it may not be possible to measure damages for such injuries precisely, and that
in the event of such a breach or threat thereof, T-NETIX shall be entitled to
obtain a temporary restraining order, a preliminary or permanent injunction, or
other comparable provisional or equitable relief restraining Employee from
engaging in activities prohibited by Sections 8 or 9, and such other relief as
may be required to enforce specifically any of the covenants in such Sections.
Employee agrees
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to personal jurisdiction of any state or federal court in the State of Texas in
any proceeding brought by T-NETIX to enforce Employee's covenants under Sections
8 and 9
b. Without limiting the relief specified in Section 10a above, and in
addition to any other remedies available hereunder, at law, or in equity, upon
proof of Employee's deliberate violation of his obligations under Sections 8 or
9, T-NETIX shall be entitled to recover from Employee any severance paid
pursuant to Sections 5 or 6.
11. ARBITRATION.
a. Subject to the provisions of Section 11b below, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration before a single arbitrator in Dallas County, Texas,
in accordance with the rules of the American Arbitration Association then in
effect. The American Arbitration Association shall select the arbitrator. Each
party shall bear their own cost of arbitration, except that if Employee is the
prevailing party in such arbitration, the Employee shall be entitled to recover
from T-NETIX as part of any award entered reasonable expenses for attorneys and
expert's fees and disbursements. In any arbitration related to the calculation
of the amount of the severance pay due to Employee, each party shall submit a
figure and supporting documentation and the arbitrator shall select the figure
from those materials submitted, but no other figure. The arbitrator shall have
no power to award consequential or punitive damages, even if such damages are
permitted under applicable law.
b. Notwithstanding the foregoing, nothing in this Section 11 shall
prevent T-NETIX from seeking equitable relief pursuant to Section 10 in a court
of law.
12. NOTICES. All notices, request, demands and other communications called for
or contemplated hereunder shall be in writing and shall be deemed to have been
duly given on the date when delivered personally or when transmitted by
facsimile with receipt of delivery; on the next business day when sent by
overnight courier with receipt of delivery; or on the third business day
following mailing by United States certified mail, postage prepaid, addressed to
the parties, their successors in interest or assignees at the following
addresses or such other addresses as the parties may designate by notice in the
manner aforesaid:
If to T-NETIX: T-NETIX, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx XX, General Counsel
If to Employee: Mr. Xxx Xxxxxx
T-NETIX, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
13. GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to any
principle of conflict-of-laws that would require the application of the law of
any other jurisdiction.
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14. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which other provision or provisions shall remain in
full force and effect
15. ENTIRE AGREEMENT. This Agreement constitute the entire understanding between
the parties with respect to the subject matter hereof, superseding all
negotiations, prior discussions and preliminary agreements, and further
superseding any and all employment arrangements between Employee and T-NETIX or
any of T-NETIX's subsidiaries, affiliates or other related entities, including,
but not limited to, that certain Employment Agreement with an effective date of
March 3, 2000. This Agreement may not be amended except in a writing executed by
the parties hereto.
16. EFFECT ON SUCCESSORS IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the heirs, administrators, executors and successors of
each of the parties hereto.
17. ASSIGNMENT. This Agreement is personal to Employee and Employee may not
assign this Agreement to any other person.
18. EFFECTIVENESS. This Agreement shall be effective upon the Effective Date.
19. SURVIVAL OF SECTION. The provisions of Sections 8 and 9 of this Agreement
shall survive the termination of the Agreement for the period provided for
therein, and Sections 10 and 11 shall survive for resolution of any dispute
arising out of or relating to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
T-NETIX, Inc.
/s/ XXXXX X. XXXX /s/ XXXXXX X. XXXXXX
------------------------------------ ------------------------------------
Xxxxx X. Xxxx Xxxxxx X. Xxxxxx
Chairman, Compensation Committee "Employee"
/s/ XXXXXX X. XXXXXX
------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board
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