EXHIBIT 10.2
RETIREMENT AGREEMENT
THIS RETIREMENT AGREEMENT is effective as of June 11, 1999 between
ELCOTEL, INC., a Delaware corporation (the "Company"), and XXXXXX X. XXXX
("Xxxx").
Background. Xxxx is the President and Chief Executive Officer of the
Company. Xxxx and the Company are parties to an Amended and Restated Employment
Agreement dated as of October 20, 1998 (the "Employment Agreement"). Xxxx
desires to retire and the parties desire to set forth the terms and conditions
of Xxxx'x retirement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Retirement of Xxxx. Effective on Friday, June 11, 1999 (the "Retirement
Date"): (i) Xxxx shall retire as the President and Chief Executive Officer and
as an employee of the Company and shall retire as an officer and employee of all
subsidiaries of the Company, and (ii) the Employment Agreement shall terminate
and be of no further force or effect, other than the provisions of Sections 11,
12 and 13 of the Employment Agreement which shall continue in effect in
accordance with the terms of the Employment Agreement. Xxxx has elected to
retire and is doing so freely and voluntarily. Xxxx shall be reimbursed (in
accordance with Company policy) for all reasonable business expenses incurred by
him on behalf of the Company prior to the Retirement Date. The parties agree
that Xxxx'x termination of employment pursuant to this Agreement shall not be
deemed a termination by the Company or a termination by Xxxx under the
Employment Agreement.
2. Consulting Period. Commencing on June 14, 1999 and continuing until
July 14, 1999, unless extended to a date not later than August 13, 1999 pursuant
to notice from the Acting President and Chief Executive Officer of the Company
(the "Consulting Period"), Xxxx shall act as a consultant to the Company and its
subsidiaries to assist the Company in transferring management responsibilities
following Xxxx'x retirement, and to perform such other duties as the Acting
President and Chief Executive Officer of the Company may reasonably request.
During the Consulting Period, the Company shall pay Xxxx compensation of
$3,846.15 per week (pro rated for periods of less than one week) during the
Consulting Period. Xx. Xxxx shall also be entitled during the Consulting Period
to the same medical and dental insurance and other fringe benefits to which he
was entitled pursuant to the Employment Agreement immediately prior to the
Retirement Date, to the extent he qualifies for such benefits under the
applicable plan, including without limitation, an automobile allowance, and on
the same terms and conditions. Notwithstanding the foregoing, Xxxx shall not be
entitled during the Consulting Period to reimbursement for temporary living
expenses, any grant of employee stock options, or any bonuses. During the
Consulting Period, Xxxx 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.
3. Post Consulting Compensation. For a period of two years after the end
of the Consulting Period (the "Post Consulting Period"), the Company shall pay
Xxxx compensation at an annual rate of $75,000, payable in equal installments
(52 installments of $2,884.62 each) every two weeks. In addition, the Company
shall pay, during the Post Consulting Period, the cost of medical insurance
under COBRA covering Xxxx or, at Xxxx'x option or if such coverage is
unavailable beyond 18 months following termination of Xxxx'x employment because
the Company's insurance carrier refuses to provide such coverage, pay Xxxx the
amount which the Company would have paid to provide medical insurance under
COBRA covering Xxxx during such period.
4. Stock Options. Xxxx shall retain all stock options issued to him under
the Company's 1991 Stock Option Plan (the "Plan") that are vested as of the
Retirement Date (the "Options"). The Options shall remain exercisable until the
expiration date of the Option absent such termination of employment for the
total number of shares purchasable under the Option as of the Retirement Date in
accordance with Paragraph 10B of the Plan. Xxxx and the Company agree that
Paragraph 10A of the Plan does not apply to the Options.
5. Indemnification. Xxxx 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.
6. Covenants Not To Disclose Confidential Information.
(a) Xxxx agrees that he will not at any time or place during the
Consulting Period and for three years after the end of the Consulting Period
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. Xxxx agrees that
during the Consulting Period and for three years thereafter he will keep
confidential from persons not associated with the Company any and all
proprietary information, special techniques, and trade secrets of the Company.
Upon termination of the Consulting Period, Xxxx agrees to return to the 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 the Company's business and generated or received by Xxxx
in the course of his consulting duties with the Company.
(b) Xxxx agrees that, during the Consulting Period and for two years
thereafter, 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
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relationship with or to the Company as an employee, consultant, dealer or
customer, as the case may be.
(c) Xxxx agrees that he will not, during the Consulting Period and for two
years thereafter, engage in any employment or business activity in which it
might reasonably be expected that confidential proprietary information or trade
secrets of the Company obtained by Xxxx during the Consulting Period would be
utilized.
7. Covenant Not To Compete Unreasonably With Company. Xxxx further
covenants and agrees that:
(a) During the Consulting Period and for two years thereafter, Xxxx 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 Retirement Date; provided that, notwithstanding the foregoing, Xxxx shall
be permitted to engage in the business of owning and operating pay phone
terminals through NuTel Systems.
(b) Xxxx recognizes and agrees that his violation of the terms of any
provision contained in Section 6 or 7 will cause irreparable damage to the
Company the amount of which will be impossible to estimate or determine.
Therefore, Xxxx 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 Xxxx, 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. The Company
hereby waives any right to require a bond in connection with obtaining such an
injunction. Xxxx further agrees that his violation of the terms of any provision
contained in Section 6 or 7 shall permit the Company to cease making further
payments required under Section 2 or 3 of this Agreement. Such provisions 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.
8. Payments. All payments to Xxxx under this Agreement are in lieu of, and
replace in their entirety, any severance rights or payments to which Xx. Xxxx
would otherwise be entitled under any agreement (including the Employment
Agreement) or Company policy or under any state or federal law, rule or
regulation in effect at the date hereof.
9. Director. Xxxx and the Company agree that Xxxx will continue to serve
on the Board of Directors of the Company until the next annual meeting of
stockholders. During the Consulting Period, Xxxx shall not be entitled to any
fees as a director that the Company pays to its non-employee directors. After
the Consulting Period and while Xxxx remains a director, Xxxx shall be entitled
to any fees that a non-employee director receives as a member of the Board of
Directors (any annual retainer fees shall be prorated for such period). While a
member of the Board of Directors, Xxxx shall be reimbursed for reasonable
expenses in attending Board and Board Committee meetings. In connection with the
next annual meeting of stockholders, Xxxx
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agrees not to seek nomination as a director and, if nominated and elected,agrees
not to serve as a director.
10. Mutual Releases.
(a) In consideration for the payments promised in Sections 2 and 3 of this
Agreement and the other agreements of the Company contained herein, Xxxx hereby
releases and forever discharges the Company and each and all of its past and
present subsidiaries, parent and related corporations, companies and divisions,
and their past and present directors, trustees, officers, managers, supervisors,
employees, attorneys, and agents, and their predecessors, successors and assigns
(all such entities and persons hereafter being referred to collectively in this
Agreement as "Releasees"), from any and all claims, debts, agreements,
complaints or causes of action (hereinafter, collectively, "Claims"), whether
known or unknown that he ever had, now has, or may have against any or all of
the Releasees, for, upon, or by reason of any cause, matter, thing or event
whatsoever occurring at any time up to and including the date of this Agreement.
This means that Xxxx is waiving and giving up any right he may have to xxx the
Company or any other Releasee on or for any Claims within the scope of this
Section 10(a). The Claims within the scope of this section and covered by this
release and waiver include, but are not limited to, (i) any Claim based on
contract or in tort or common law; (ii) any Claim based on or arising under any
employment laws, such as the federal Age Discrimination in Employment Act, Title
VII of the Civil Rights Act of 1964 or the Americans with Disabilities Act;
(iii) any Claim based on or arising out of Xxxx'x employment by the Company
and/or his retirement therefrom; and (iv) any Claims for compensatory,
liquidated or punitive damages, damages for emotional distress, back pay, front
pay, attorneys' fees, expenses, and unpaid benefits. Xxxx understands that, by
signing this Agreement, he waives all Claims he ever had or now has against the
Company and against all other Releasees that arose or may have arisen before the
date of this Agreement (including any right to a remedy or recovery in an action
that may be brought on his behalf by any government agency or other person based
on any Claims released herein), but does not release or waive any claims that
may arise after the date of this Agreement, including any claim for breach of
this Agreement. Xxxx further promises not to commence a lawsuit against the
Company or against any other Releasee based on or asserting any Claims described
in this Section.
(b) The Company hereby releases and forever discharges Xxxx, his heirs and
legal representatives from any and all Claims, whether known or unknown, that it
ever had, now has, or may have against Xxxx, his heirs or legal representatives,
for, upon or by reason of any cause, matter, thing or event whatsoever occurring
at any time up to and including the date of this Agreement, but the Company does
not release or waive any claims that may arise after the date of this Agreement,
including any claim for breach of this Agreement.
11. Severability. All provisions of this Agreement are severable, and if
any of them is determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force to the fullest extent permitted by law.
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12. Miscellaneous.
(a) This Agreement contains the entire understanding of the parties on 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
permitted assigns; 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.
(b) 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.
(c) The captions of the sections herein are for convenience only and shall
not be used to construe or interpret this Agreement.
(d) 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 Xxxx), as follows:
If to the Company at:
Elcotel, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Chairman of the Board
Facsimile: 000-000-0000
If to Xxxx, to his most recent residence
address 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 in this section.
(e) This Agreement shall terminate upon the death of Xxxx.
(f) 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.
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(g) 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 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.
(h) 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.
(i) Xxxx 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.
(j) Xxxx 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.
13. Voluntary Nature. Xxxx acknowledges that he has been advised of his
right to consult with an attorney before signing this Agreement and he has been
given a period of at least twenty-one (21) days to consider this Agreement
before signing it. Xxxx also represents that he has read this Agreement and
understands it, that he is signing this Agreement voluntarily and of his own
free will, without any duress or coercion, and that he has had a reasonable time
to consider this Agreement before signing it. In deciding whether to enter into
this Agreement, Xxxx is not relying on any promises, statements or
representations other than those that are expressly set forth herein.
14. Effectiveness. This Agreement will not become effective or enforceable
until seven (7) days after Xxxx executes it. Xxxx may revoke this Agreement at
any time within that seven (7) day period, by sending a written notice to C.
Xxxxxxx Xxxxx at Elcotel, Inc., 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000
[Fax: (000) 000-0000.] Such written notice may be sent by mail, fax or hand
delivery. If a written revocation is received within that seven (7) day period,
this Agreement shall be null and void for all purposes. If a written revocation
is not received within that seven (7) day period, this Agreement will go into
effect on the first day immediately following the expiration of said seven (7)
day period ("Effective Date").
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.
THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS.
READ CAREFULLY BEFORE SIGNING.
ELCOTEL, INC.
By: /s/ C. Xxxxxxx Xxxxx 7/22/99
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C. Xxxxxxx Xxxxx Date
Chairman of the Board
/s/ Xxxxxx X. Xxxx 7/22/99
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Xxxxxx X. Xxxx Date
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