EXHIBIT 10.1
AMERICAN TELECONFERENCING SERVICES, LTD.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into by and between AMERICAN
TELECONFERENCING SERVICES, LTD. a Missouri corporation (the "Company"), and
THEODORE P. SCHRAFFT (the "Employee"), as of January 1, 2000 (the "Effective
Date").
BACKGROUND STATEMENT
The Company is engaged in the business of designing, developing, marketing,
selling and provisioning audio, video and data conferencing services (the
"Conferencing Business") within the United States and various countries around
the world. The Employee is currently an employee of the Company and has
substantial knowledge of the Company's business; the Company considers it to be
in its best interest to enter into this Agreement with the Employee; and the
Employee is willing to render such services to the Company in accordance with
the provisions of this Agreement.
THEREFORE, in consideration of and reliance upon the foregoing Background
Statement and the representations, warranties and covenants contained in this
Agreement, the Company and the Employee agree to the following:
TERMS
Section 1. Duties. The Company hereby employs the Employee as President
of the Company. The Employee will have the powers, duties and responsibilities
from time to time assigned to him by the President of Premiere Technologies,
Inc. ("Premiere"). The Employee will be the Chief Operating Officer of the
Company and his duties will include those normally associated with the Chief
Operating Officer of a corporation, including day-to-day management
responsibility for the operations of the Company, subject to the direction and
control of the President of Premiere. In the event of a Sale of the Company (as
defined below), the term "President of Premiere" will be replaced with "the
Company's Board of Directors." The Employee will devote substantially all of his
business time to faithfully and industriously perform his duties and promote the
business and best interests of the Company. The Employee's duties hereunder are
to be performed at Premiere's corporate offices located in Atlanta, Georgia;
provided, however, the Employee will be required to spend as much time as
necessary at the Company's corporate offices in Colorado Springs, Colorado and
its operations center in Lenexa, Kansas in order to carry out his duties
hereunder.
Section 2. Compensation.
Section 2.1. Base Salary. During the term of the Employee's employment
under this Agreement, the Company will pay the Employee an annual base salary of
$225,000.00, payable in accordance with the Company's payroll practices.
Effective as of
the first pay period in April of each year during the term of this Agreement,
starting in April 2000, the Employee shall receive an increase in his base
salary equal to five percent (5%) of the previous year's base salary.
Section 2.2. Bonus Compensation. In addition to his base salary, the
Employee will be entitled to such annual bonus compensation as mutually agreed
upon in writing by the Company and the Employee. The Employee has been paid a
bonus of $67,000.00 for 1999.
Section 2.3. Special Bonus. In the event that all or substantially all
of the stock or assets of the Company are disposed of, through a sale, merger or
otherwise, on or before September 30, 2000 (a "Sale of the Company"), the
Employee will be entitled to a special bonus in the amount of $112,500.00, one-
half (1/2) of which will be payable by the Company within thirty (30) days after
the closing of such sale and one-half (1/2) of which will be payable within one
hundred eighty (180) days after the closing of such sale, or such shorter period
of time as agreed to by the Company and the Employee, provided that the second
one-half (1/2) of such special bonus shall not be paid to the Employee unless he
is an employee of the Company or one of its affiliates on the payment date,
unless he has been terminated by the Company without Cause (as defined below) or
the Employee has terminated his employment with Adequate Justification (as
defined below), in which case the special bonus shall be paid to the Employee
within thirty (30) days following the date of his termination.
Section 2.4. Employee Benefits. During the term of his employment under
this Agreement, the Employee will be entitled to participate in all employee
benefit programs, including pension and profit-sharing plans, and any medical,
health, dental, disability and other insurance programs generally available to
employees of the Company.
Section 2.5. Reimbursement of Expenses. The Company will reimburse the
Employee, in accordance with the Company's policies, for all reasonable expenses
incurred by the Employee in performing his duties hereunder.
Section 2.6. Vacation. The Employee will be entitled to three (3) weeks
paid vacation annually in accordance with the Company's policies.
Section 2.7. Automobile Allowance. During the term of his employment
under this Agreement, the Company will pay the Employee a monthly automobile
allowance of $1,000.00, payable in accordance with the Company's standard
payroll practices.
Section 3. Term of Employment. Subject to Section 4 hereof, the
Employee's initial term of employment under this Agreement will begin on the
Effective Date and will expire on December 31, 2003. The initial term of
employment will automatically renew for an additional one-year period upon the
foregoing expiration, and thereafter upon the expiration of any renewal term
provided by this Section 3, unless the Company or the
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Employee provides written notice to the other party at least ninety (90) days
prior to the expiration date that such party does not want this Agreement to
renew.
Section 4. Termination of Employment.
Section 4.1. Automatic Termination. The Employee's employment hereunder
will terminate automatically upon the death of the Employee.
Section 4.2. Termination by the Company.
(a) The Company may terminate the Employee's employment under this
Agreement for "Cause," which shall consist of any of the following: (i) the
commission by the Employee of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Employee, which is intended to cause,
causes or is reasonably likely to cause material harm to the Company or any of
its subsidiaries (including harm to the business reputation of the Company or
any of its subsidiaries); (ii) the indictment of the Employee for the commission
or perpetration of any felony or any crime involving dishonesty, moral turpitude
or fraud; (iii) the breach by the Employee of any material term or covenant of
this Agreement and such breach is not cured, if it is susceptible to cure,
within thirty (30) days following receipt of notice from the Company setting
forth the allegations of Cause; or (iv) the failure of the Employee to devote
substantially all of his business time to the Company's business and affairs as
provided in Section 1 hereof.
(b) If the Company terminates the Employee's employment under this
Agreement without Cause either before a Sale of the Company, or more than
twenty-four (24) months after the Sale of the Company, the Employee will be
entitled to receive (i) severance pay equal to one hundred percent (100%) of the
Employee's annual base salary in effect on the date of termination (the
"Termination Date"), plus (ii) the cost of the Employee's COBRA coverage over
the twelve (12) month period following the Termination Date, both payable in
accordance with the Company's payroll practices over such 12-month period;
provided, that if the expiration date of this Agreement as provided in Section 3
hereof (the "Expiration Date") is less than twelve (12) months after the
Termination Date, then the Employee will be entitled to receive (A) severance
pay equal to a pro rata portion of the Employee's annual base salary in effect
on the Termination Date determined by multiplying such base salary by a fraction
equal to (y) the number of days between the Termination Date and the Expiration
Date divided by (z) 365, plus (B) the cost of the Employee's COBRA coverage over
the period starting on the Termination Date and ending on the Expiration Date,
both payable in accordance with the Company's payroll practices over the period
starting on the Termination Date and ending on the Expiration Date. Such COBRA
coverage shall be the same as was in effect on the Termination Date.
(c) If, during the twenty-four (24) month period following a Sale of
the Company, the Employee's employment with the Company is terminated (i) by the
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Employee with "Adequate Justification" or (ii) by the Company for any reason
other than Cause, the Employee will be entitled to receive (A) severance pay
equal to two hundred percent (200%) of the Employee's annual base salary in
effect on the Termination Date, plus (B) the cost of the Employee's COBRA
coverage over the twelve (12) month period following the Termination Date, both
payable in accordance with the Company's payroll practices over such 12-month
period. Such COBRA coverage shall be the same as was in effect on the
Termination Date. For purposes of this Agreement, "Adequate Justification" means
a material breach by the Company of this Agreement, including, without
limitation, a reduction in the Employee's base salary or bonus compensation, a
significant change to the Employee's title, powers, duties or responsibilities
(including, without limitation, his reporting relationships), or a significant
change in his working conditions (including, without limitation, the requirement
that he perform his duties at a corporate headquarters outside of the Atlanta,
Georgia area), or the failure by the Company to make any payments due to the
Employee hereunder, and such breach is not cured by the Company within thirty
(30) days following receipt of written notice from the Employee, which notice
specifies in reasonable detail the events which the Employee believes constitute
Adequate Justification.
Section 4.3. Termination by the Employee. The Employee may terminate
his employment under this Agreement by giving the Company at least thirty (30)
days prior written notice.
Section 4.4. Compensation Upon Termination. In the event the Company
terminates the Employee's employment hereunder for any reason other than Cause,
or if the Employee terminates his employment pursuant to Section 4.2(c) or 4.3,
the Company will pay to the Employee, in addition to any amounts payable
pursuant to Section 4.2, his accrued base salary through the termination date
and a pro rata portion of any bonus earned by the employee with respect to the
calendar year in which the termination occurs, which will be paid within a
reasonable period of time after the amount of his bonus is determined. In the
event the Company terminates the Employee's employment hereunder for Cause, the
Company will pay to the Employee his accrued base salary through the termination
date, but the Employee will not be entitled any bonus compensation with respect
to the calendar year in which termination occurs, including any bonus
compensation that has been earned but not paid as of the termination date.
Section 5. Restrictive Covenants.
Section 5.1. Prohibited Activities. During the Restricted Period (as
defined below), the Employee will not, directly or indirectly, for the
Employee's own account or for or on behalf of any other person or entity,
whether as an officer, director, employee, partner, principal, joint venturer,
consultant, investor, shareholder, independent contractor or otherwise:
(a) Noncompetition. Perform, within the United States, executive
management, sales or administrative services for or on behalf of any business or
other
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entity in competition with the Conferencing Business, it being expressly
acknowledged that the Employee has performed and will continue to perform
services on behalf of the Company throughout the United States.
(b) Nonsolicitation. Solicit business in competition with the
Conferencing Business, from any (i) customers of the Company who were customers
of the Company at the time of the termination of the Employee's employment, or
(ii) entities or individuals who were customers of the Company during the one
(1) year period preceding such termination with whom the Employee had any
contact (defined as direct or indirect influence over any goodwill generated
with such customer either through the Employee's communications with such
customer or by virtue of the Employee's status as a key employee of the
Company), or (iii) prospective customers of the Company who, within two (2)
years prior to such termination, had been solicited by the Company and where the
Employee supervised or participated in any way in such solicitation activities.
(c) Nonrecruitment. Solicit or induce, or attempt to solicit or
induce, any of the Company's employees, consultants, clients, customers,
vendors, suppliers or independent contractors to terminate their relationship
with the Company or to establish a relationship with a competitor of the
Company.
(d) Nondisparagement. Speak or act in any manner that is intended to,
or does in fact, damage the goodwill or the business or reputation of the
Company.
For purposes of this Agreement, the Restricted Period will be a period beginning
on the Effective Date and continuing for a period of one (1) year after the
termination or expiration of the Employee's employment hereunder, regardless of
the reason for such termination or expiration. The foregoing notwithstanding,
the Employee may own up to five percent (5%) of any class of securities
registered pursuant to the Securities Exchange Act of 1934, as amended, of any
corporation engaged in competition with the Company so long as the Employee does
not otherwise (i) participate in the management or operation of any such
business in such a manner as to be engaged in competition with the Company, or
(ii) violate any other provision of this Agreement. The Employee understands and
agrees that, by virtue of the Employee's position with the Company, the Employee
will have substantial access to and impact on the goodwill, confidential
information and other legitimate business interests of the Company, and
therefore will be in a position to have a substantial adverse impact on the
Company's business interests should the Employee engage in activities in
violation of the restrictive covenants of this Section 5.1. The Employee
acknowledges that the Company is materially relying upon the Employee's
compliance with the terms of this Section 5.1 and that the Employee's covenants
herein are material to the Company's ongoing operations. The Employee further
acknowledges that the Employee's adherence to the restrictive covenants set
forth in this Section 5.1 is also an important and substantial part of the
consideration that the Company is receiving under this Agreement, and agrees
that the restrictive covenants in this Section 5.1 are enforceable in all
respects. The Employee consents to the entry of injunctive relief to
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enforce such covenants, in addition to such other relief to which the Company
may be entitled by law.
Section 5.2. Trade Secrets.
(a) The Employee agrees to maintain in strict confidence, and not use
or disclose except pursuant to written instructions from the Company, any Trade
Secret (as defined below) of the Company, for so long as the pertinent data or
information remains a Trade Secret, provided that the obligation to protect the
confidentiality of any such information or data shall not be excused if such
information or data ceases to qualify as a Trade Secret as a result of the acts
or omissions of the Employee.
(b) The Employee agrees to maintain in strict confidence and, except
as necessary to perform his duties hereunder, not to use or disclose any
Confidential Business Information (as hereinafter defined) during his employment
hereunder and for a period of one (1) year thereafter.
(c) Upon termination of his employment, the Employee shall leave with
the Company all business records, contracts, calendars, telephone lists,
rolodexes, and other materials or business records relating to the Company, its
business or customers, including all physical and electronic copies thereof,
whether or not the Employee prepared such materials or records himself; provided
that the Employee shall have the right to retain any personal property
(including personal records) maintained at the Company's offices or otherwise.
(d) The Employee may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so, provided that the Employee shall first
have notified the Company in writing of the request or order to so disclose the
Trade Secrets or Confidential Business Information in sufficient time to allow
the Company to seek an appropriate protective order.
(e) "Trade Secret" shall mean any information, including, but not
limited to, technical or nontechnical data, a formula, a pattern, a compilation,
a program, a plan, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its disclosure or
use, and (ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. "Confidential Business Information"
shall mean any nonpublic information of a competitively sensitive nature, other
than Trade Secrets, acquired by the Employee, directly or indirectly, in
connection with the Employee's employment, including (without limitation) oral
and written information concerning the Company's financial positions and results
of operations (revenues, margins, assets, net
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income, etc.)), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information.
Section 5.3. Remedies. In the event the Employee violates or threatens
to violate the provisions of this Section 5, the parties acknowledge and agree
that damages at law will be an insufficient remedy and that the Company will be
entitled to equitable relief in addition to any other remedies or rights
available to the Company, and no bond or security will be required in connection
with such equitable relief.
Section 5.4. Counterclaims. The existence of any claim or cause of
action the Employee may have against the Company will not at any time constitute
a defense to the enforcement by the Company of the restrictions or rights
provided by this Section 5, but the failure to assert such claim or cause of
action shall not be deemed to be a waiver of such claim or cause of action.
Section 5.5. Company. For purposes of this Section 5, "Company" shall
include the Company and all of its direct and indirect subsidiaries, parents and
affiliates and any predecessors and successors of the Company.
Section 5.6. Modification. The Employee and the Company agree that they
will negotiate in good faith to amend this Agreement from time to time to modify
the terms of this Section 5, including the definition of the terms "Conferencing
Business," "Trade Secrets" and "Confidential Business Information," to reflect
changes in the Company's business and affairs so that the scope of the
limitations placed on the Employee's activities by this Section 5 accomplish the
parties' intent in relation to the then current facts and circumstances. Any
such amendment shall be effective only when embodied in a written document
signed by the Employee and the Company. This Section 5 shall survive any
termination of this Agreement.
Section 6. Ownership of Employee's Work
Section 6.1. Company Developments. The Employee hereby assigns to the
Company all of the Employee's right, title and interest (including, without
limitation, the right to file and prosecute applications for domestic and
foreign letters patent and to have issued such letters patent) in any and all
Company Developments. "Company Developments" means any Development that (a) is
conceived, completed or reduced to practice during the Employee's employment
with the Company solely or jointly by the Employee, or created wholly or in part
by the Employee, whether or not such Development is patentable, copyrightable or
susceptible to other forms of protection, and (b)(i) relates to the actual or
anticipated business, research or development of the Company, (ii) results from
any work the Employee does using any equipment, facilities, materials, trade
secrets or personnel of the Company, or (iii) is suggested by or results from
any task assigned to the Employee or work performed by the Employee for or on
behalf of the Company. "Development" means any idea, invention, discovery,
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improvement, innovation, design of a useful article (whether the design is
ornamental or otherwise), computer program and related documentation, and other
work of authorship.
Section 6.2. Works Made for Hire. The Employee acknowledges that all
writings and works of authorship, including, without limitation, works that
contain software program codes, that the Employee makes or conceives, alone or
with others, during the period of time the Employee is employed by the Company
and that relate in any way to the actual or then-prospective business of the
Company or its subsidiaries or affiliates are works made for hire and the
property of the Company, including, without limitation, copyrights on those
writings and works of authorship and the right to file and prosecute
applications for domestic and foreign letters patent and to have issued such
letters patent with respect to such writings and works of authorship.
Section 6.3. Copyrights. The Employee hereby assigns to the Company all
the Employee's right, title, and interest of any kind, and nature in and to all
copyrights, copyright licenses, and copyright interests of every kind and
nature, and any and all renewals and extensions thereof that may be secured
under all laws now or hereafter in force and any and all causes of action
heretofore accrued or which may hereafter accrue in the Employee's favor for
infringement of such copyrights, copyright licenses, and copyright interests
that the Employee makes or conceives, alone or with others, during the period of
time in which the Employee is employed by the Company, and that relate in any
way to the actual or then-prospective business of the Company or its
subsidiaries or affiliates, whether or not published, to the full extent of such
rights.
Section 7. Compliance With Other Agreements. The Employee represents and
warrants to the Company that he is free to enter this Agreement and that the
execution of this Agreement and the performance of his obligations under this
Agreement will not, as of the date of this Agreement or with the passage of
time, conflict with, cause a breach of or constitute a default under any
agreement to which the Employee is a party or may be bound.
Section 8. Severability. Every provision of this Agreement is intended
to be severable. If any provision or portion of a provision is illegal or
invalid, then the remainder of this Agreement will not be affected. Moreover,
any provision of this Agreement which is determined to be unreasonable,
arbitrary or against public policy will be modified as necessary so that it is
not unreasonable, arbitrary or against public policy.
Section 9. Waiver. A waiver by a party to this Agreement of any breach
of this Agreement by the other party will not operate or be construed as a
waiver of any other breach or a waiver of the same breach on a future occasion.
No delay or omission by either party to enforce any rights it may have under
this Agreement will operate or be construed as a waiver.
Section 10. Amendment. This Agreement may not be amended or modified
except by a writing signed by both parties.
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Section 11. Headings. The various headings contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of any of the provisions of this Agreement.
Section 12. Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which taken
together will constitute one and the same instrument.
Section 13. Number and Pronouns. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural will include
the singular and the plural and pronouns stated in the masculine, feminine or
neuter gender will include the masculine, feminine and neuter genders.
Section 14. Assignment; Binding Effect. Neither this Agreement nor any
right or interest hereunder shall be assignable by either the Employee or the
Company without the other party's prior written consent; provided, however, that
nothing in this Section 14 shall preclude (i) the Employee from designating a
beneficiary to receive any benefits payable hereunder upon his death, or (ii)
the executors, administrators or other legal representatives of the Employee or
his estate from assigning any rights hereunder to the person or persons entitled
thereto. Except as otherwise provided herein, this Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, administrators, executors, successors and assigns.
Section 15. Arbitration. Any dispute between the parties shall be
resolved through binding arbitration conducted by the American Arbitration
Association under the rules then in effect. The parties agree that any
arbitration proceeding shall be conducted in Atlanta, Georgia and hereby consent
to jurisdiction and venue there. The predominately nonprevailing party, as
determined by the arbitrator(s), shall pay the reasonable attorneys' fees and
other expenses of the predominately prevailing party in any such arbitration or
resulting litigation.
Section 16. Entire Agreement. With respect to its subject matter, this
Agreement constitutes the entire understanding of the parties superseding all
prior agreements, understandings, negotiations and discussions between them,
whether written or oral, and there are no other understandings, representations,
warranties or commitments with respect thereto except as embodied herein.
Section 17. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of Georgia
without reference to conflicts of law.
Section 18. Notices. Any notices or other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given and delivered when delivered in person, three (3) days after
being mailed postage prepaid by certified or registered mail with return receipt
requested, or when delivered by
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overnight delivery service to the recipient at the following address, or to such
other address as to which the other party subsequently shall have been notified
in writing by such recipient:
If to the Company:
American Teleconferencing Services, Ltd.
3399 Peachtree Road
The Lenox Building
Suite 600
Atlanta, GA 30326
Attention: Jeffrey A. Allred
With a copy to (which shall not constitute notice):
Premiere Technologies, Inc.
3399 Peachtree Road
The Lenox Building
Suite 600
Atlanta, GA 30326
Attn: Chief Legal Officer
If to the Employee:
Theodore P. Schrafft
570 Kearny Street
Alpharetta, GA 30022
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
AMERICAN TELECONFERENCING SERVICES, LTD
By: /s/ Patrick G. Jones
---------------------------------
Its: Executive Vice President
---------------------------------
EMPLOYEE
/s/ Theodore P. Schrafft
-------------------------------------
Theodore P. Schrafft
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