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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
(Xxxxx X. Xxxxxx)
THIS AGREEMENT is entered into on June 12, 1996, between VOICE
POWERED TECHNOLOGY INTERNATIONAL, INC., a California corporation (the
"Company"), and XXXXX X. XXXXXX ("Employee").
Employee and Company, in consideration of the covenants and
agreements hereinafter contained, agree as follows with respect to the
employment by the Company of Employee and Employee's future business
activities:
1. Employment; Term of Employment. The Company hereby
employs Employee and Employee hereby accepts such employment upon the terms and
conditions hereinafter set forth, effective as of the "Commencement Date" (as
defined hereafter). Subject to the provisions for earlier termination as
hereinafter provided, Employee's term of employment by the Company shall
commence as soon as reasonably possible following the execution and delivery
hereof, but in any event not later than July 1, 1996 (the date of actual
commencement of employment is referred to herein as the "Commencement Date"),
and shall continue thereafter until June 30, 1997.
2. Services to be Rendered by Employee.
(a) On and subject to the terms and provisions
hereof, Employee shall be employed initially as the Company's Vice President of
Sales and Marketing, subject to the direction of the Board of Directors or a
duly authorized committee thereof from time to time, and subject to the
authority and direction of the President and Chief Executive Officer of the
Company from time to time. Subject to the foregoing, Employee's
responsibilities shall include management of the Company's domestic sales and
marketing activities, including management of all sales representative
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organizations, direct contact with buyers of major customers, development of
new customers, development of pricing recommendations, sales and market
programs, advertising, public relations materials, and participation in
defining the Company's product developments; and, Employee shall have such
other powers and duties as may be prescribed by the By-laws, the Board of
Directors, or a duly authorized committee thereof, and shall perform such
executive duties as from time to time may be decided upon by the Board of
Directors, or a duly authorized committee thereof, of the Company. During the
term of employment hereunder, Employee's primary employment location shall be
the greater Los Angeles, Orange, and Ventura County areas.
(b) Employee shall devote substantially all his
productive time, energy and ability to the proper and efficient conduct of the
Company's business during the term of this Agreement. Employee shall not
directly or indirectly render any substantial services of a business,
commercial, or professional nature to any person or organization, other than
the Company, whether for compensation or otherwise, without the prior written
consent of the Board of Directors, or a duly authorized committee thereof, of
the Company.
3. Compensation.
(a) For the services to be rendered by Employee
during his employment by the Company, the Company shall pay Employee,
commencing as of the Commencement Date, a yearly Base Salary of Ninety Thousand
Dollars ($90,000). The Base Salary may be adjusted upward by and at the
discretion of the Board of Directors in its sole discretion. The yearly Base
Salary shall be payable in equal installments at such times as other employees
are paid but in any case at least monthly. In addition, as further
compensation to Employee hereunder, Employee shall also be entitled to receive
an amount equal to one percent (1%) of the net selling price collected by the
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Company on all shipments of the Company's IQ*VOICE Organizers that are made
during the period between the Commencement Date and December 31, 1996 to U.S.
retail customers with whom the Company has not done business prior to the
Commencement Date, except that Employee shall not be entitled to any of such
further compensation with regard to products so sold during such period at
"close out" prices; and, Employee shall not be entitled to any such further
compensation with respect to any shipment of such products subsequent to
December 31, 1996.
(b) (1) Employee shall be eligible to participate in
a Bonus Pool during each "Employee Year" (which for purposes of this Agreement
means each fiscal year of the Company during which Employee is employed
hereunder, commencing with the 1996 calendar year) or partial Employee Year of
this Agreement, except as otherwise provided hereinafter. The Bonus Pool shall
equal for each Employee Year 10% of the Net Pre-Tax Income of the Company for
such Employee Year or a pro rata portion thereof based on actual employment
time in any partial Employee Year. Employee's participation with regard to the
current Employee Year (i.e., the 1996 calendar year) shall be based on one-half
year of employment for the 1996 calendar year (i.e., July 1, 1996 through
December 31, 1996), and Employee's participation thereafter shall continue
through to the date of his termination of employment hereunder, as hereinafter
described.
Except as otherwise provided hereinafter, Employee's share of
the Bonus Pool for an Employee Year or partial Employee Year shall be
determined by the vote or written consent of a majority of the Board of
Directors, provided in no case shall Employee receive less than ten percent
(10%) of the Bonus Pool or a pro rata portion thereof where Employee
participates in the Bonus Pool for less than a full Employee Year. Other
participants in the Bonus Pool will be decided by a vote of Board of Directors
of the Company. Notwithstanding anything hereinabove set forth,
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Employee shall participate in the Bonus Pool for an Employee Year only if he
was employed by the Company during such entire Employee Year, unless
termination of employment during such Employee Year (or during the 1996
calendar year, should termination then occur) was pursuant to Paragraph 5(a)(2)
hereof, in which case Employee's share of the Bonus Pool shall be what he would
have received if he had been employed hereunder until the date of his
termination of employment and participated in ten percent (10%) of the Bonus
Pool through such time, and except that:
(A) for the 1996 Employee Year (i.e., the 1996 calendar
year), Employee shall participate on a pro-rata one-half year basis if he
remains in the Company's employ through at least December 31, 1996; and
(B) for the 1997 Employee Year (i.e., the 1997 calendar
year), assuming Employee remains in the employ of the Company under the terms
hereof through at least December 31, 1997, and for each full Employee Year
(i.e., calendar year) thereafter, Employee shall participate in the Bonus Pool
for such Employee Year only if he was employed by the Company during such
entire Employee Year.
The amounts payable to Employee as a result of the
participation in the Bonus Pool shall be paid to Employee in cash within 90
days of the earlier of either (1) the close of each Employee Year or (2)
Employee's termination of employment hereunder.
(2) "Net Pre-Tax Income" of the Company
shall be the consolidated pre-tax income (loss) of the Company for each
Employee Year of the Company, or partial Employee Year, if applicable, during
the term of this Agreement. (For portions of an Employee Year any time after
June 30, 1997, Employee shall be deemed to be employed to the end of the fiscal
quarter of the Company ending on or immediately after the date of termination
of
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employment with the Company; in case of termination prior to June 30, 1997,
Employee shall be deemed to be employed to the end of the calendar month in
which termination occurred if termination occurred later than the 15th day of
the calendar month, or to the end of the calendar month immediately preceding
the month in which termination occurred if termination occurred on or before
the 15th day of the calendar month.) Net Pre-Tax Income shall reflect all
revenues less all deductions, including the Base Salary and bonuses but
excluding the Bonus Pool, and without deduction for income taxes. Net Pre-tax
Income shall be determined under generally accepted accounting principles
consistently applied during such Employee Year or partial Employee Year, if
applicable, unless required to be changed by generally accepted accounting
principles, and such determination shall be made based upon the audited
financial statements of the Company for each Employee Year, or, in the case of
Net Pre-tax Income for a partial Employee Year, such determination shall be
made by the Board of Directors.
(c) The Company shall pay or reimburse Employee
for all expenses normally reimbursed by the Company and reasonably incurred by
him in furtherance of his duties hereunder and authorized by the Company,
including, without limitation, expenses for entertainment, traveling, meals,
hotel accommodations, cellular phone usage, and the like upon submission by him
of vouchers or an itemized list thereof as the Board of Directors may from time
to time adopt and authorize, and as may be required in order to permit such
payments as proper deductions to the Company under the Internal Revenue Code of
1986 and the rules and regulations adopted pursuant thereto now or hereafter in
effect.
(d) The Company shall pay to Employee an
automobile allowance of $700 per month for all automobile expenses incurred by
Employee, including fuel, repairs, maintenance,
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insurance, and any other expenses. Employee shall pay all such expenses
directly, and shall not be accountable to the Company therefor.
(e) Employee and his immediate family (i.e.,
spouse and children under 21 years of age) shall be entitled to participate, at
the Company's expense, in the health insurance plan and other benefit plans and
arrangements the Company may have in effect from time to time for its employees
and executives with salaries and responsibilities comparable to Employee, in
accordance with any policies adopted by the Board of Directors of the Company
with regard thereto from time to time.
(f) During the term of his employment hereunder,
Employee shall be entitled to two weeks paid vacation per annum. Use thereof
shall be in accordance with the Company's policies in effect from time to time.
(g) Simultaneously herewith, the Company and
Employee are entering into a certain stock option agreement in connection with
the transactions contemplated hereunder.
4. Direct Competition. While employed by the Company
and thereafter (subject to the term described below in this paragraph regarding
applicability of the prohibition in this paragraph to periods after termination
of employment), Employee will neither permit his name to be used by, nor engage
in or carry on, directly or indirectly, either for himself or as a member of a
partnership, or as a stockholder (except as a stockholder of less than one
percent (1%) of the issued and outstanding stock of a publicly held
corporation), investor, officer or director of a corporation or as an employee,
agent, associate or consultant of any person, partnership or corporation, any
business in competition with any business carried on by the Company or a
parent, subsidiary, affiliate or successor of the Company, provided that for
the period after termination of employment, the
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provision of this Paragraph 4 shall only apply to the Company's voice
recognition technology, shall continue for a period of one (1) year after
termination of employee's employment hereunder, and shall be limited
geographically to those cities and counties in the United States and outside of
the United States where the Company's voice recognition technology was being
marketed and sold immediately prior to termination of Employee's employment
hereunder.
5. Termination of Employment.
(a) On and subject to the terms and provisions
hereof, the Company shall have the right at its option to terminate the
employment of Employee hereunder by giving written notice thereof to Employee
in the event of any of the following:
(1) Employee has materially breached any
material provision of this Agreement and does not cure such breach within 20
days after the Company has given notice of such breach (specifying with
particularity the basis for such breach) to Employee, or Employee is convicted
of fraud or embezzlement, or has engaged in material misconduct in connection
with his material duties under this Agreement.
(2) If the Company gives Employee ninety
(90) days advance written notice of termination of employment.
(3) If Employee dies (in which case
except as otherwise provided herein employment under this Agreement shall
automatically terminate upon such death).
(4) If Employee shall fail to carry out
or to perform the duties required of him because of mental or physical
disability for thirty (30) consecutive days or any thirty (30) days within a
sixty (60) day period during the term hereof, and does not resume his duties
prior to the termination date specified in the Company's written notice of
termination by reason of such;
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provided, however, that in no event may any such notice provide a termination
date shorter than thirty (30) days from the date the notice is delivered to
Employee.
Following termination by reason of either death or disability,
Employee shall not be entitled to receive any further Base Salary, bonus, or
other compensation hereunder for any period thereafter.
If Employee's employment is terminated by the Company pursuant
to Paragraph 5(a)(2) hereof, then Employee shall receive severance payments
equal to the Base Salary (and the further compensation described elsewhere
herein relating to certain product shipments through December 31, 1996) which
employee would have been entitled to receive through expiration of the initial
term of this Agreement (i.e., through June 30, 1997) had he remained in the
regular employ of the Company through such time; such payments will be made to
Employee in equal monthly installments at the same time his Base Salary
payments would have been made had Employee remained in the employ of the
Company (and in the case of the further compensation relating to shipments
through December 31, 1996, payments shall be made at the time they would have
otherwise been made had Employee been employed through the date of termination
of employment), and he shall be entitled to continue participating in the Bonus
Pool through the date of such termination and such payment from the Bonus Pool
shall be paid (i) as provided for in Paragraph 3(b)(1) hereof after the end of
an Employee Year or (ii) if earlier, within ninety (90) days after such
termination of employment.
(b) Except as specifically provided for in this
Paragraph 5 or by applicable law, Employee shall not be entitled to any
severance compensation upon termination of employment
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with the Company, whether at the Company's or Employee's option. Except as
specifically provided in this Paragraph 5, the Company may not terminate
Employee's employment for any reason.
(c) Employee shall have the right at his option
to terminate his employment hereunder by giving the Company three (3) months
advance written notice of such termination.
6. Soliciting Customers; Employees. Employee agrees
that he will not for a period of one (1) year immediately following the
termination of his employment with the Company, either directly or indirectly,
make known to any competing person, firm, or corporation the names or addresses
of any of the customers of the Company, including any prospective customers
with whom the Company or its agents or its representatives have had discussions
or other communications concerning such persons or entities becoming customers
of the Company, or any other information pertaining to them. Employee also
agrees that following termination of employment hereunder, Employee shall not,
directly or indirectly, solicit any employees of the Company to leave the
employ of the Company for any reason, nor shall Employee assist or participate
with, directly or indirectly, any other person, organization or entity in so
doing.
7. Trade Secrets of the Company. During the term of
employment under this Agreement, Employee will have access to and become
acquainted with various trade secrets, consisting of devices, secret
inventions, processes, and compilations of information, records, and
specifications, and licensing arrangements and potential uses and/or
applications of the Company's technology, which are owned by the Company and
which are regularly used or to be used in the operation of the business of the
Company. Employee shall not disclose any of the aforesaid trade secrets,
directly or indirectly, or use them in any way, either during the term of this
Agreement or at
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any time thereafter, except as required in the course of his employment. All
files, records, documents, drawings, specifications, equipment, and similar
items relating to the business of the Company prepared by Employee or otherwise
coming into his possession during the term of his employment, shall remain the
exclusive property of the Company and shall not be removed under any
circumstances from the premises where the work of the Company is being carried
on without the prior written consent of the Company, or consistent with the
Company's normal business practices.
8. Inventions and Patents. Employee agrees that any
inventions made by him during the term of his employment, solely or jointly
with others, which are made with the equipment, supplies, facilities or trade
secrets information of the Company, or which relate at the time of conception
or reduction to practice of the invention to the business of the Company or the
Company's actual or demonstrably anticipated research or development, or which
result from any work performed by Employee for the Company, shall belong solely
and exclusively to the Company, and Employee promises to assign such inventions
to the Company without additional payment or consideration. Employee also
agrees that the Company shall have the right to keep such inventions as trade
secrets, if the Company chooses. Employee agrees to assign to the Company
Employee's rights in any such inventions where the Company is required to grant
those rights to the United States government or any agency thereof.
This Agreement does not apply to any inventions which are the
subject of Section 2870 of the California Labor Code.
In order to permit the Company to claim rights to which it may
be entitled, Employee agrees to disclose to the Company in confidence all
inventions which Employee makes arising out of Employee's employment, and all
patent applications filed by Employee within one (1) year after
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termination of his employment. The Company agrees to maintain all information
and documents provided by Employee in strict confidence and to return any such
information and documents (including all copies thereof) to Employee within
sixty (60) days of Employee's request therefor which the Company does not
obtain ownership of.
Employee shall, at the Company's expense, assist the Company
in obtaining patents on all inventions, designs, improvements, and discoveries
deemed patentable by the Company in the United States and in all foreign
countries, and shall execute all documents and do all things necessary to
obtain letters patent, to vest the company with full and exclusive title
thereto, and to protect the same against infringement by others, all at the
Company's expense.
9. Confidential Data of Customers of the Company.
Employee in the course of his employment may be handling financial, accounting,
statistical, and personnel data of customers of the Company. All such data is
confidential and shall not be disclosed, directly or indirectly, or used by
Employee in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment.
10. Severability. Each paragraph and subparagraph of
this Agreement shall be construed and considered separate and severable from
the validity and enforceability of any other provision contained in this
Agreement.
11. Assignment. The rights of the Company (but not its
obligations) under this Agreement may, with the reasonable consent of Employee
(which may be withheld if, among other things, Employee's title or the scope or
stature of Employee's responsibilities within the Company would be
substantially diminished), be assigned by the Company to any parent,
subsidiary, or successor of the Company; provided that such parent, subsidiary
or successor acknowledges in
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writing that it is also bound by the terms and obligations of this Agreement.
Except as provided in the preceding sentence, the Company may not assign all or
any of its rights, duties or obligations hereunder without prior written
consent of Employee. Employee may not assign all or any of his rights, duties
or obligations hereunder without the prior written consent of the Company.
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12. Notices. All notices, requests, demands and other
communications shall be in writing and shall be deemed to have been duly given
if delivered or if mailed by registered mail, postage prepaid:
(a) If to Employee, addressed to him at the
address set forth below his name:
Xxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(b) If to the Company, addressed to:
Voice Powered Technology International, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx, President
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Xxx, Castle & Xxxxxxxxx, LLP
28th Floor
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as any party hereto may request by notice given as
aforesaid to the other parties hereto.
13. Titles and Headings. Titles and headings to
paragraphs hereof are for purposes of reference only and shall in no way limit,
define or otherwise affect the provisions hereof.
14. Governing Law. This Agreement is being executed and
delivered and is intended to be performed in the State of California, and shall
be governed by and construed in accordance with the laws of the State of
California.
15. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall
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constitute one and the same instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than one counterpart.
Facsimile signatures shall be accepted by the parties as valid and binding in
lieu of original signatures; however, if facsimile signatures are presented by
any party in lieu of original signatures, within two (2) business days after
execution of the Agreement such party shall also deliver to counsel for the
other party(ies) an original signature page signed by that party (but failure
to do so shall not affect the validity of this Agreement).
16. Cumulative Rights. Each and all of the various
rights, powers and remedies of the Company in this Agreement shall be
considered as cumulative, with and in addition to any rights, powers or
remedies of the Company and no one of them as exclusive of the others or as
exclusive of any other rights, powers and remedies allowed by law. The
exercise or partial exercise of any right, power or remedy shall neither
constitute the election thereof nor the waiver of any other right, power or
remedy.
17. Entire Agreement. This Agreement is being entered
into concurrently with the Stock Option Agreement pursuant to which the Company
has granted to Employee options to purchase up to 50,000 shares of the
Company's common stock on the terms and conditions therein set forth, and all
of such documents contain the entire agreements of the parties hereto with
respect to the subject matter hereof and thereof, and each such agreement may
be modified or amended only by a written instrument executed by both parties to
such agreement.
18. Good Faith. Each of the parties hereto agrees that
he or it shall act in good faith in all actions taken under this Agreement.
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19. Expenses of Proceedings. In the event that any party
hereto brings any type of proceeding to enforce the terms and conditions of
this Agreement, the prevailing party in such proceeding shall be entitled to
recover from the unsuccessful party all incidental costs and reasonable
attorneys' and paralegals' fees incurred by said prevailing party.
20. Dispute Resolution. Any dispute or disagreement
concerning this Agreement or any term or provision hereof shall be heard and
determined by a reference under and in accordance with the provision of
sections 638 to 645.1 or the California Code of Civil Procedure, and the
prevailing party therein shall be entitled to recover its reasonable attorneys'
fees and litigation and court costs and expenses (including the fees of the
referee or temporary judge).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Its: President
/s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
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