EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into as of January
1, 1995 by and between Kenneth D. Tuchman ("EXECUTIVE") and TeleTech Holdings,
Inc., a Delaware corporation (the "COMPANY").
WHEREAS, the Company currently has two wholly owned subsidiaries,
TeleTech Telecommunications, Inc., a California corporation, and TeleTech
Teleservices, Inc., a Colorado corporation (collectively, "SUBSIDIARIES");
WHEREAS, Executive currently serves as the Chairman of the Board and
President of each Subsidiary;
WHEREAS, the Company desires the benefit of Executive's services as its
Chairman of the Board and President; and
WHEREAS, Executive desires to be employed on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual agreement set
forth herein, the parties hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ Executive on a full-time basis
as Chairman of the Board and President, and Executive hereby accepts such
employment on the terms and subject to the conditions set forth herein. The
term of employment shall be from the date hereof until and including December
31, 1997 ("TERM"), subject to earlier termination as provided in Section 4.
2. DUTIES.
2.1 GENERAL DUTIES. Executive shall serve as the Chairman of the Board
and President of the Company. Subject to the authority of the Company's Board
of Directors, Executive shall have supervision and control over, and
responsibility for, the general management and operation of the Company
consistent with Executive's duties prior to the date hereof with the
Subsidiaries. Executive shall also have such other powers and duties as the
Board of Directors may prescribe, provided that such duties are reasonable and
customary for a Chairman of the Board and President. No executive or other
employee of the Company, the Subsidiaries, or any Affiliates, as defined
herein, of the Company, shall hold a position, stature, title or powers higher
or greater than or equal to those of Executive, without Executive's prior
written consent. "AFFILIATE" shall be defined as any person or entity that the
Company controls directly or indirectly, through one or more intermediaries,
or that is under common control with the Company. Executive shall devote his
entire working time, attention and energies to the business of the Company.
Notwithstanding anything to the contrary in this Agreement, the Board of
Directors of the Company may in their sole discretion authorize Executive to
accept employment with other companies in addition to or in substitution of
the employment set forth in this Agreement, provided that such authorization
shall be approved in writing by a majority of the directors of the Company
selected by TeleTech Investors General Partnership, an Illinois limited
partnership ("TIGP"), so long as TIGP is entitled to nominate individuals to
serve as directors of the Company.
2.2 OTHER ACTIVITIES. Provided that such activities shall not
materially interfere with the proper performance of his duties and
responsibilities as the Chairman of the Board and President of the Company
nothing in this Agreement shall preclude Executive from:
2.2.1 serving on the boards of directors of a reasonable number of
other corporations with the consent of the Company's Board of Directors, which
consent will not be unreasonably withheld, or the boards or committees of a
reasonable number of trade associations and/or charitable organizations;
2.2.2 delivering lectures, fulfilling speaking engagements or
teaching at education institutions;
2.2.3 engaging in charitable activities and community affairs; or
2.2.4 managing his personal investments and affairs.
3. COMPENSATION.
3.1 BASE SALARY. During each year of the Term, the Company shall pay to
Executive $750,000 ("BASE SALARY AMOUNT"), payable in equal semi-monthly
installments on the fifteenth and final days of each month during the period
of employment. The Base Salary Amount shall be increased on each anniversary
of the date hereof ("ADJUSTMENT DATES") by the amount resulting from the
following computation: the Consumer Price Index (all items) for Urban Wage
Earners and Clerical Workers for the Denver metropolitan area (1982-1984=100),
published by the United States Department of Labor, Bureau of Labor Statistics
(the "INDEX") which is published for the date immediately preceding an
Adjustment Date (the "ADJUSTMENT INDEX") shall be compared with the Index
immediately preceding the previous Adjustment Date (the "BEGINNING INDEX"), or
for the first Adjustment Date shall be the Index published immediately
preceding the date of this Agreement. If the Adjustment Index has increased
over the Beginning Index, the Base Salary Amount payable after the Adjustment
Date shall be determined by multiplying the Base Salary Amount previously in
effect, by a fraction, the numerator of which is the Adjustment Index and the
denominator of which is the Beginning Index. If the Index does not exist at
any Adjustment Date, the parties shall substitute an official index published
by the Bureau of Labor Statistics or successor or similar governmental agency,
as may then be most nearly equivalent thereto. The adjustment described in
this paragraph shall be referred to in this Agreement as the "CPI ADJUSTMENT."
3.2 ANNUAL PERFORMANCE BONUSES.
3.2.1 At the end of every fiscal year of the Company during the
Term, the Company shall pay Executive, in addition to his Base Salary Amount,
an annual performance bonus ("PERFORMANCE BONUS") not to exceed $250,000, as
adjusted by the CPI Adjustment for each year. Such Performance Bonus shall be
based on achieving certain
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corporate performance objectives as presented in the Business Plan
("PERFORMANCE OBJECTIVES"), which Performance Objectives shall be set by the
Compensation Committee of the Board of Directors or, in the absence thereof,
the Board of Directors, and shall be reasonable and fair. Said Compensation
Committee or the Board of Directors, as applicable, shall comply with the
following procedure in determining said objectives for each fiscal year of the
Term:
(a) to determine the Performance Objectives for fiscal year
1995, said Compensation Committee shall meet at the Company's Denver facility
no later than January 31, 1995: to analyze the Company's performance for
fiscal year 1994; and to discuss Executive's intentions, goals and objectives
in 1995 and any Performance Objectives proposed by Executive for 1995. Within
7 days after said meeting, the Compensation Committee shall deliver in writing
to Executive its proposed Performance Objectives for fiscal year 1995 along
with its reasons for modifying any of Executive's proposed Performance
Objectives. Unless Executive accepts said Performance Objectives in writing
within 7 days after his receipt thereof, Executive and the Compensation
Committee shall meet as soon as reasonably possible at the Company's Denver
facility to discuss said proposed Performance Objectives. Within 7 days after
said meeting, the Compensation Committee shall deliver in writing to Executive
the final Performance Objectives for that fiscal year.
(b) for each fiscal year after 1995, said Compensation
Committee shall meet no later than 90 days prior to the end of that fiscal
year to review the Company's performance for the first three fiscal quarters
and to meet with Executive to analyze the Company's performance over the first
three fiscal quarters and its projected performance in the fourth fiscal
quarter, to examine Executive's progress in achieving the prior year's
Performance Objectives, and to discuss Executive's intentions, goals and
objectives for the next fiscal year and any Performance Objectives proposed by
Executive for that year. Within 7 days after said meeting, the Compensation
Committee shall deliver in writing to Executive its proposed Performance
Objectives for that fiscal year along with its reasons for modifying any of
Executive's proposed Performance Objectives. Unless Executive accepts said
Performance Objectives in writing within 7 days after his receipt thereof,
Executive and the Compensation Committee shall meet as soon as reasonably
possible at the Company's Denver facility to discuss said proposed Performance
Objectives. Within 7 days after said meeting, the Compensation Committee
shall deliver in writing to Executive the final Performance Objectives for
that fiscal year.
3.2.2 In the event that the Company changes its fiscal year, the
computation and payment of the Performance Bonus shall be prorated and
adjusted on an allocable and equitable basis to reflect such change including
payment of a Performance Bonus for any shortened fiscal year. The Performance
Bonus for such year shall be paid no later than ten (10) days after the
Company shall have completed consolidating and consolidated statements of
income and cash flows of Company and Subsidiaries for such year, and
consolidating and consolidated balance sheets of Company and Subsidiaries for
such year, and the Company's Board of Directors shall have approved the
opinion of the Company's independent certified public accounting firm with
respect to the consolidated
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portions of such statements. The Company shall also pay to Executive, such
discretionary bonuses as may be granted by the Compensation Committee of the
Board of Directors, or, in the event that the Compensation Committee does not
exist, the Board of Directors.
3.3 EXPENSES. Executive shall be entitled to receive prompt
reimbursement for all documented business expenses incurred by him in the
performance of his duties hereunder, provided that Executive properly accounts
therefor in accordance with the Company's reimbursement policy, which policy
shall be comparable to the Subsidiaries' reimbursement policy and practices as
of the date hereof.
3.4 OTHER BENEFITS. In addition to the Base Salary Amount, the
Performance Bonus and the discretionary bonuses granted to Executive, if any,
Executive shall be entitled to participate in and receive benefits under all
of the sick pay, retirement, welfare, medical, dental, disability, life
insurance, incentive compensation, or other benefit programs or arrangements
generally available to senior management of the Company ("BENEFIT PLANS").
Notwithstanding the foregoing, the Company shall at a minimum provide
Executive with the following:
3.4.1 MEDICAL BENEFITS. The Company will provide Executive and his
wife and children with the same insurance for medical, dental,
hospitalization, convalescent, nursing and similar health expenses provided to
Executive by the Subsidiaries immediately prior to the execution of this
Agreement, subject to applicable law.
3.4.2 LIFE INSURANCE. During the Term the Company agrees to
maintain term or whole life insurance in the amount of $24,000,000 on
Executive's life (i) payable to his estate or his named beneficiary or
beneficiaries and (ii) payable to the Company to the extent necessary to repay
the Company's payment of the premiums for said insurance. The ownership of
such insurance policies may, at the sole discretion of the Executive, be
transferred to a trust for the benefit of his spouse or family.
3.4.3 DISABILITY AND AD&D INSURANCE. The Company agrees to
maintain in effect during the Term disability insurance on Executive's behalf
in an amount equal to the lesser of: (a) an amount sufficient to pay
Executive an amount for each year of disability prior to age 65 equal to the
Base Salary Amount and the prior year's Performance Bonus; or (b) the maximum
amount payable to an insured generally available to insure an individual
against disability with insurance companies qualifying for an "A" rating or
higher by the Best's Rating Service. During the Term, the Company also agrees
to maintain for Executive accident, death and dismemberment insurance on the
same terms and conditions as Executive presently enjoys. The parties
acknowledge that during the Term the Company will maintain key man life
insurance, disability, and accident, death and dismemberment insurance for the
Company's benefit, separate from the insurance described in this Section 3.4.3
or Section 3.4.2. The disability insurance, and accident, death and
dismemberment insurance provided in this Section 3.4.3; and the life insurance
provided in Section 3.4.2; including the proceeds therefrom, shall be separate
and distinct from other insurance on Executive for the benefit of persons
other than Executive, his estate, or his named beneficiary or beneficiaries
(including without limitation the Disability Insurance Proceeds and the Life
Insurance Proceeds as
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defined in the Investment Agreement, dated as of December 22 , 1994, by and
among Executive, Company, TIGP and Essaness Theatres Corporation, a Delaware
corporation) and shall be reserved for payment to Executive or his designated
beneficiaries under said insurance policy.
3.4.4 VACATIONS. During the Term, Executive shall be entitled to
sick leave, paid holidays and paid vacation consistent with the Subsidiaries'
sick leave, holiday and vacation policy for senior management on the date
hereof, or as modified hereafter to the extent that such modification is not
to Executive's detriment. Any vacation time that is not taken in a given year
shall be carried forward to the following year or years; provided, that
Executive shall not take more than six weeks of vacation in any fiscal year;
provided, further, that Executive may elect in his sole discretion, to cancel
any vacation time that is not taken in a given year in return for the Company
paying Executive an amount equal to Executive's Base Salary Amount for said
unused vacation time, which amount shall be in addition to Executive's
standard salary for paid vacation.
3.4.5 ERRORS & OMISSIONS INSURANCE. During the Term, the Company
shall maintain errors and omissions insurance with a reputable insurance
company with a policy limit of no less than $1,000,000 protecting Executive
from any and all claims, actions, causes of action, arbitrations, proceedings,
losses, damages, liabilities and expenses ("CLAIMS") that arise directly or
indirectly from his duties with the Company, the Subsidiaries, or Affiliate of
the Company and that are customarily covered by errors and omissions insurance
issued by insurance companies of good reputation.
3.4.6 PERQUISITES. Executive shall be entitled to receive the
following perquisites:
(a) consistent with past practice, the Company shall furnish
Executive with the use of a recent model automobile comparable to the current
automobile that TeleTech Teleservices, Inc. furnishes to Executive, and shall
pay or reimburse Executive for all expenses pertaining to the ownership and
operation of such automobile, including gas and maintenance; and
(b) the Company shall pay or reimburse Executive for all
membership fees, dues and other expenses in connection with the membership
currently enjoyed by Executive and his spouse with Executive's existing
country club, or an equivalent membership at a comparable country club.
4. EARLY TERMINATION.
4.1 TERMINATION FOR DEATH OR DISABILITY. In the event that Executive is
unable or fails to perform any of his duties hereunder as a result of his
death or as a result of illness or mental or physical disability for six
consecutive months, the Company will be entitled to terminate this Agreement
upon 30 days written notice to Executive that it intends to replace him if
Executive does not resume his duties within said 30 day notice period.
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4.2 TERMINATION FOR CAUSE. Except as permitted under Section 4.1,
Executive's employment under this Agreement may be terminated by the Company
only for the following occurrences ("GOOD CAUSE"):
4.2.1 Executive's breach of any of the covenants contained in
Section 5 of this Agreement;
4.2.2 Executive's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or any felony punishable by imprisonment in the
jurisdiction involved; or
4.2.3 Executive's commission of an act of fraud or dishonesty upon
the Company;
4.2.4 provided, however, that termination for any other reason or
in any other manner shall be deemed to be without Good Cause.
4.3 SEVERANCE PAYMENTS. If, before the end of the Term, the Company
terminates Executive's employment:
4.3.1 for Good Cause, the Company shall pay to Executive an amount
equal to the sum of the Base Salary Amount accrued as of the date of
termination.
4.3.2 without Good Cause, the Company shall pay to Executive the
lesser of
(a) a lump sum amount equal to the sum of the Base Salary
Amount accrued as of the date of termination, the Performance Bonus prorated
for any portion of the year remaining and calculated as if the Company had
achieved its target goals, and the present value of all payments (whether
constituting Base Salary Amount or Performance Bonus) to be made to Executive
for the remainder of the Term using a per annum discount factor equal to the
prime rate as announced by Bank of America NT & SA at its San Francisco
executive office on the date of such termination and calculated as if the
Company had achieved its target goals; or
(b) three times the Base Salary Amount and Performance Bonus
for the year immediately preceding the year of termination.
5. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Executive recognizes that he
will occupy a position of trust with respect to business and technical
information of a secret or confidential nature which is the property of the
Company and which will be imparted to him from time to time in the course of
the performance of his duties hereunder. Executive agrees that for the Term
and for three years thereafter:
5.1 Executive shall not use or disclose directly or indirectly any
Confidential Information or Trade Secrets (defined herein) of the Company to
any person, except that
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Executive may use and disclose to authorized personnel of the Company or
Subsidiaries such Confidential Information and Trade Secrets in the course of
the performance of his duties hereunder; and
5.2 Executive shall return promptly upon termination of this Agreement
or otherwise upon the request of the Company any and all copies of any
documentation or materials containing any Confidential Information or Trade
Secrets of the Company.
5.3 "CONFIDENTIAL INFORMATION OR TRADE SECRETS" of the Company shall
include all information of any nature and in any form which was owned by the
Company prior to the Term or which is owned by the Company during the Term,
including, but not limited to, patents and patent applications; inventions and
improvements, whether patentable or not; development projects; computer
software and related documentation and materials; designs, practices, recipes,
processes, methods, know-how and other facts relating to the business of the
Company; practices, processes, methods, know-how and other facts related to
sales, advertising, promotions, financial matters, customers, customer lists,
supplier lists, vendor lists, or customers' purchases of goods or services
from the Company; and all other trade secrets and information of a
confidential and proprietary nature. Confidential Information or Trade
Secrets shall not include, however: (i) any information that is or shall
become generally known in the trade through no fault of Executive, and (ii)
any information received in good faith from a third party who has the right to
disclose such information and who has not received such information, either
directly or indirectly, from the Company.
6. INDEMNIFICATION. The Company shall indemnify, defend and hold harmless
Executive if he is made, or threatened to be made, a party to an action or
proceeding (including without limitation any and all suits, claims, actions,
investigations or proceedings whether civil, criminal or administrative), to
the full extent permitted by applicable law, including an action by or in the
right of the Company to procure a judgment in its favor, by reason of the fact
that Executive is or was an officer, director or employee of the Company,
against all costs and expenses (including but not limited to attorney fees,
amounts paid in settlement or satisfaction of any order or judgment in, any
action or proceeding, and fines, penalties and assessments asserted or
adjudged in any action or proceeding) resulting from or related to such action
or proceeding, or an appeal thereof, if Executive acted in good faith for a
purpose which he reasonably believed to be in the best interests of the
Company. The termination of any such action or proceeding by judgment,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not create the presumption that Executive did not act in good faith for
purposes which he reasonably believed to be in the best interests of the
Company.
7. NON-COMPETITION. Executive's non-competition covenants in this Section 7
shall apply only: for a three year period after the Company terminates
Executive's employment for Good Cause, for a three year period after Executive
voluntarily terminates his employment with the Company, or during the
Executive's employment with the Company (collectively "NON-COMPETE TERM").
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7.1 Executive agrees that Executive shall not during any Non-Compete
Term, directly or indirectly, in any capacity, engage or participate in, or
become employed by or render advisory or consulting or other services in
connection with any Prohibited Business as defined herein.
7.2 The Executive agrees that the Executive shall not during any
Non-Compete Term, make any financial investment, whether in the form of equity
or debt, or own any interest, directly or indirectly, in any Prohibited
Business. Executive, however, shall be entitled to make any investment in any
company whose stock is listed on a national securities exchange or actively
traded in the over-the-counter market; provided that (i) such investment does
not give the Executive 15% or more of the equity ownership or voting power
with respect to such company, and (ii) such investment does not create a
conflict of interest between the Executive's duties hereunder and the
Executive's interest in such investment.
7.3 For the purpose of this Section 7, "PROHIBITED BUSINESS" shall be
defined as any business that has as its primary business inbound or outbound
teleservices.
8. INJUNCTIVE RELIEF. Executive acknowledges that damages would be an
inadequate remedy for Executive's breach of any of the provisions of Sections
5 or 7 of this Agreement, and that breach of any of such provisions will
result in immeasurable and irreparable harm to the Company. Therefore, in
addition to any other remedy to which the Company may be entitled by reason of
Executive's breach of any such provision, the Company shall be entitled to
seek and obtain temporary, preliminary and permanent injunctive relief from
any court of competent jurisdiction restraining Executive from committing or
continuing any breach of the Sections listed herein.
9. MISCELLANEOUS.
9.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or three (3) days
after being mailed by certified or registered mail, postage prepaid, return
receipt requested, to the parties, their successors in interest or their
assignees at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:
To the Company:
TeleTech Holdings, Inc.
1700 Lincoln Street, 14th Floor
Denver, Colorado 80203
Attention: Kenneth Tuchman
PERSONAL AND CONFIDENTIAL
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With a copy to:
Equity Group Investments, Inc.
Two North Riverside Plaza
Chicago, IL 60606
Attn: Richard Weingarten
To Executive:
Kenneth D. Tuchman
4375 S. Lafayette Street
Englewood, Colorado 80110
With a copy to:
AHN & LEE
3435 Wilshire Boulevard, Ste. 2000
Los Angeles, CA 90010-2006
9.2 GOVERNING LAW. This Agreement shall be governed as to its validity
and effect by the laws of the State of Colorado.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of (i) the heirs, executors and legal
representatives of Executive upon Executive's death and (ii) any successor of
the Company and any such successor or permitted assign shall be deemed
substituted for the Company, as the case may be, under the terms hereof for
all purposes. As used in this Agreement, "SUCCESSOR" shall include any
person, firm, corporation or other business entity which at any time, whether
by purchase, merger, consolidation or otherwise, directly or indirectly
acquires a majority of the assets, business or stock of the Company.
9.4 ASSIGNMENT. This Agreement is personal to the Company and Executive
and may not be assigned by either party without the written consent of the
other, except as permitted by Section 9.3 (ii).
9.5 ENTIRE AGREEMENT/MODIFICATION. This Agreement supersedes any and
all other agreements, either oral or written, between the parties hereto with
respect to the subject matter hereof. Executive and the Company agree that no
other agreement, statement or promise with respect to the subject matter
hereof not contained in this Agreement and the agreements and instruments
contemplated hereby shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing, signed by the party to
be charged.
9.6 COUNTERPARTS. This Agreement is being executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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9.7 SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions thereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall
be modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
9.8 AGREEMENT FEES AND EXPENSES. The Company shall reimburse Executive
for all legal fees and expenses in negotiating this Agreement, advising
Executive with respect to this Agreement before the execution hereof, and
drafting this Agreement.
9.9 ATTORNEY FEES. In the event that any action or proceeding is
commenced by any party hereto for the purpose of enforcing any provision of
this Agreement, the parties to such action, proceeding or arbitration may
receive as part of any award, settlement, judgment, decision or other
resolution of such action or proceeding, whether or not reduced to a court
judgement, their costs and reasonable attorneys fees as determined by the
person or body making such award, settlement, judgment, decision or resolution.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TELETECH HOLDINGS, INC.
By: /s/ Kenneth D. Tuchman
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Its: __________________________
/s/ Kenneth D. Tuchman
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Kenneth D. Tuchman
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