EXHIBIT 10.7
VOICE-TEL ENTERPRISES, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into by and between VOICE-TEL
ENTERPRISES, INC., a Delaware corporation (the "Company"), and WILLIAM E. WELSH
(the "Employee").
BACKGROUND STATEMENT
The Company provides interactive voice messaging services throughout the
United States and several foreign countries. The Employee has substantial
knowledge of the Company's business; the Company considers it to be in its best
interest to have the benefit of the Employee's services as provided in this
Agreement; 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 and warranties contained in this Agreement,
the Company and the Employee agree to the following provisions:
TERMS
SECTION 1. DUTIES. The Company hereby employs the Employee as President.
The Employee will have the powers, duties and responsibilities from time to time
assigned to him by the Company's Board of Directors or its Chief Executive
Officer, including rendering services on behalf of Premiere Technologies, Inc.
("Premiere") or any of Premiere's other subsidiaries. During the term of his
employment under this Agreement, the Employee will perform such duties and
exercise such authority as are customarily performed and exercised by the
president of a corporation, subject to the ultimate direction and control of the
Board of Directors and Chief Executive Officer of the Company. 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 (subject to
such travel as may be required in the conduct of his duties hereunder) at the
Company's corporate offices, which are currently located in the Cleveland, Ohio
metropolitan area; provided, however, in the event that the Company's Board of
Directors determines that it is in the best interest of the Company that the
Employee's duties hereunder be performed (subject to such travel as may be
required in the conduct of his duties hereunder) at Premiere's corporate
offices, which are currently located in the Atlanta, Georgia metropolitan area,
then the Employee shall perform his duties hereunder (subject to such travel as
may be required in the conduct of his duties hereunder) at Premiere's corporate
offices; provided, that the employee shall not be required to relocate his
personal residence to the Atlanta, Georgia metropolitan area. Except as
provided in the preceding sentence, the Employee's place of employment hereunder
shall not be moved to a location outside of the Cleveland, Ohio metropolitan
area or the Atlanta, Georgia metropolitan area without the Employee's consent.
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
$200,000.00, payable in accordance with the Company's standard payroll
practices. At the beginning of each calendar year after 1997 during the term of
this Agreement, the Employee shall receive an increase in his base salary equal
to 5% of the previous year's base salary.
SECTION 2.2. BONUS COMPENSATION. In addition to his base salary and
subject to the limitations and exceptions set forth below, the Employee shall be
entitled to earn an annual bonus based on the Company's "Adjusted Net Income
Before Interest and Taxes." For the purposes of this Agreement, Adjusted Net
Income Before Interest and Taxes means the net income of the Company, before
interest expense and income taxes, determined in accordance with generally
accepted accounting principles ("GAAP"), consistently applied, and adjusted to
exclude the following items: (i) gains or losses arising from any material
extraordinary, non-recurring transactions; (ii) gains or losses arising from
sales or dispositions of capital assets; and (iii) any expense resulting from
the issuance or exercise of stock options or warrants; provided, however, in
determining Adjusted Net Income Before Interest and Taxes, the amount of the
Employee's bonus under this Section 2.2, plus any other bonuses payable to
other employees of the Company that are based primarily upon the Company's
revenues or net income (or any substantially similar measurement base), shall be
deducted. In the event that the business and operations of Voice-Tel Network
Limited Partnership ("VTE") are not acquired by the Company on the date hereof,
then until such time as the Company acquires the business and operations of VTE,
the Company's Adjusted Net Income Before Interest and Taxes shall be calculated
as if the Company had acquired the business and operations of VTE as of the date
hereof. For calendar year 1997, the bonus shall be earned if the cumulative
Adjusted Net Income Before Interest and Taxes for the third and fourth quarters
is equal to at least twenty-eight percent (28%) of the Company's total revenues
for the third and fourth quarters of 1997, in which event the Employee shall
earn a bonus equal to $50,000.00. For each calendar year thereafter during the
term of this Agreement, the bonus shall be earned if (i) the Adjusted Net Income
Before Interest and Taxes for such calendar year is equal to at least thirty
percent (30%) of the Company's total revenues for such calendar year, and (ii)
the total revenues for such calendar year are at least twenty-five percent (25%)
greater than the Company's total revenues for the preceding calendar year, in
which event the Employee shall earn a bonus equal to $50,000.00. In addition,
if the Adjusted Net Income Before Interest and Taxes is equal to at least
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thirty-one percent (31%) of the Company's total revenues for a calendar year,
the Employee shall earn a bonus equal to $10,000.00 for each full percentage
point above thirty percent (30%), up to a total of $50,000.00 per calendar year.
For purposes of this Section 2.2, revenues shall be determined under GAAP. The
Employee's bonus for a calendar year described in this Section 2.2 will be due
ninety (90) days after the end of such calendar year; provided, however, the
Company may make advance payments of bonus compensation to the Employee based on
the Company's good faith estimate of his bonus compensation for such calendar
year. Each such payment shall constitute a non-interest bearing advance from
the Company to the Employee until his bonus compensation for such calendar year
is finally determined. In the event that the advance payments to the Employee
during a calendar year exceed his bonus compensation for such calendar year, as
finally determined, the Employee shall repay to the Company the amount of such
excess, promptly upon receipt of written notice thereof from the Company. If
the Employee's employment under this Agreement is terminated pursuant to Section
3 or 4.1 hereof, is terminated by the Company without "Cause" (as defined in
Section 4.2 hereof), or if the Employee terminates his employment under this
Agreement with "Adequate Justification" (as defined in Section 4.3 hereof), then
the Employee will be entitled to a pro rata portion of the bonus compensation
described in this Section 2.2 for the calendar year in which his employment is
terminated (based on the number of days the Employee is employed by the Company
during such calendar year). If the Employee's employment under this Agreement
is terminated for any other reason, he shall not be entitled to any bonus
compensation for the year of termination. Notwithstanding anything else
contained in this Agreement, the Employee will be entitled to any other bonus
compensation provided for by resolution of the Board of Directors of the
Company.
SECTION 2.3. 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
other officers of the Company.
SECTION 2.4. SEVERANCE PAY. If the Company terminates the Employee's
employment under this Agreement without Cause, then in addition to any other
rights or remedies the Employee may have, the Employee will be entitled to
receive severance pay equal to the Employee's base salary in effect at the date
of termination, payable in accordance with the Company's standard payroll
practices over the twelve (12) month period following the date of termination.
SECTION 2.5. DISABILITY OF EMPLOYEE. If during the term of the Employee's
employment under this Agreement, the Employee, in the opinion of a majority of
the Board of Directors of the Company (excluding the Employee if he is a
director), as confirmed by competent medical evidence, becomes physically or
mentally unable to perform his duties hereunder ("Disabled"), then for the first
six (6) months of his Disability the Employee will receive his full base salary
and for the next six (6) months of his Disability he will receive one-half (1/2)
of his base salary. (The Company may satisfy this obligation in whole or in
part by payments to the Employee provided through disability insurance.) The
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Company will not, however, be obligated to pay any salary to the Employee under
this Section beyond expiration of his term of employment hereunder. Nor will
the Company be obligated to pay bonus compensation with respect to the period of
Disability. Bonus compensation in this circumstance will be a pro rata portion
of the bonus the Employee would have earned absent the period of Disability
based upon the number of days during the fiscal year the Employee was not
Disabled. When the Employee is again able to perform his duties he will be
entitled to resume his full position and salary; provided, if the Employee's
Disability endures for a continuous period of at least twelve (12) months, then
the Company may terminate the Employee's employment under this Agreement after
delivery of ten (10) days written notice. The Employee hereby agrees to submit
himself for appropriate medical examination by a physician selected by the
Company for the purposes of this Section 2.5.
SECTION 2.6. DEATH OF EMPLOYEE. Within forty-five (45) days after the
Employee's death during the term of this Agreement, the Company will pay to the
Employee's estate, or his heirs, the amount of any accrued and unpaid base
salary (determined as of the date of death). In addition, the Company will pay
to the Employee's spouse (or if she is not alive, to his estate or heirs) a
death benefit of $5,000.
SECTION 2.7. REIMBURSEMENT OF EXPENDITURES. The Company will reimburse
the Employee for all reasonable expenditures incurred by the Employee in the
course of his employment in promoting the interests of the Company, including
expenditures for (i) transportation, lodging and meals during overnight business
trips, (ii) business meals and entertainment, (iii) supplies and business
equipment, and (iv) long-distance telephone calls. Notwithstanding the
foregoing, the Company will have no obligation to pay reimbursements under this
Section 2.8 unless the Employee submits timely reports of his expenditures to
the Company in the manner prescribed by the Company.
SECTION 2.8. VACATION. The Employee will be entitled to three (3) weeks
paid vacation annually. Unused vacation time will accumulate and carryover to
subsequent years. Any unused vacation time at the date of termination of the
Employee's employment under this Agreement will be paid to the Employee, unless
such employment is terminated by the Company with Cause or by the Employee
without Adequate Justification, in which case no unused vacation time will be
paid to the Employee.
SECTION 3. TERM OF EMPLOYMENT. Subject to Section 4 hereof, the Employee's
initial term of employment under this Agreement will begin on April 30, 1997 and
will expire on April 30, 2000. 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 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.
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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. The Company may terminate the
Employee's employment under this Agreement for Cause or for Disability as
provided in Section 2.5 hereof. "Cause" 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,
Premiere or any of Premiere's subsidiaries (including harm to the business
reputation of the Company, Premiere or any of Premiere's 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 that remains
uncured ten (10) days following the expiration of the thirty (30) day period
described in the next sentence; 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. Termination for Cause will not be effective
unless the Company delivers to the Employee thirty (30) days advance written
notice setting forth in reasonable detail the allegations of Cause, and the
Employee does not convince the Board of Directors of Premiere within such 30-day
period that Cause does not exist. The final determination for the Company of
whether a termination of the Employee was with or without Cause shall rest with
the Board of Directors of Premiere, which shall act by a majority of the
directors, with the Employee abstaining from the consideration of and vote on
the matter if he is a director. From the date of notice through the date of
decision, the Company may place the Employee on administrative leave with pay,
and in such event restrict the authority and activities of the Employee in any
manner the Company deems appropriate.
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. If the Employee terminates his employment under this
Agreement, then he will be entitled to pro rata portions of his base salary and
bonus compensation with respect to the fiscal year in which the termination
occurs (based on the number of days the Employee is employed by the Company
during such fiscal year); provided, however, that the Employee will not be
entitled to any bonus compensation if he terminates his employment without
"Adequate Justification," which shall consist of a material breach by the
Company of this Agreement, including 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. The final determination
for the Company of whether the Employee terminated his employment with or
without Adequate Justification shall rest with the Board of Directors of
Premiere, which shall act by a majority of the directors, with the Employee
abstaining from the consideration of and vote on the matter if he is a director.
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SECTION 5. RESTRICTIVE COVENANTS.
SECTION 5.1. PROHIBITED ACTIVITIES. The Company and Premiere currently
engage in the interactive voice messaging business, telecommunications business,
and the computer telephony business, including Internet related services,
throughout the world (collectively the "Premiere Business"). Except as
necessary to perform his duties hereunder, during the term of his employment
under this Agreement and for a period of one (1) year thereafter, the Employee
will not, as a shareholder, owner, operator, employee, partner, independent
contractor, consultant, lender, financier, officer, director or by any other
means whatsoever participate in any of the following activities:
(i) engage in or be associated with any business that competes
directly or indirectly with the Premiere Business or any part thereof;
(ii) induce any person who is an employee, officer, agent, affiliate,
supplier, client or customer of the Company to terminate such relationship
or refuse to do business with the Company; or
(iii) solicit, direct, take away, interfere with, or endeavor to
entice away from the Company any person, company, firm, institution, or
other entity that has purchased products or services from the Company.
The foregoing notwithstanding, nothing herein shall prohibit the Employee from
owning a passive investment of not more than one percent (1%) of the outstanding
capital stock of any publicly traded company engaged in the Premiere Business or
any part thereof.
SECTION 5.2. TRADE SECRETS.
(i) 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 hereinafter defined) 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.
(ii) 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.
(iii) 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
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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.
(iv) 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.
(v) "Trade Secret" shall mean any information, including, but not
limited to, technical or non-technical 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 (A) 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 (B) is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than
Trade Secrets, acquired by the Employee, directly or indirectly, in
connection with the Employee's employment (including his employment with
the Company and Voice-Tel Network Limited Partnership prior to the date of
this Agreement, including (without limitation) oral and written information
concerning the Company's financial positions and results of operations
(revenues, margins, assets, net 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, damages at law will be an insufficient
remedy and 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.
SECTION 5.5. COMPANY. For purposes of this Section 5, "Company" shall
include Premiere and all of its subsidiaries.
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 "Premiere
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
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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.
SECTION 6. 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 7. 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 8. 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 9. MODIFICATION. This Agreement may not be modified or amended except
by a writing signed by both parties.
SECTION 10. 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 11. 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 12. 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 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the parties to this Agreement will survive the
execution of this Agreement and continue without limitation.
SECTION 14. ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right
or interest hereunder shall be assignable by either the Employee or the Company
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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. WAIVER OF JURY. With respect to any dispute which may arise in
connection with this Agreement each party to this Agreement hereby irrevocably
waives all rights to demand a jury trial.
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.
SECTION 17. GOVERNING LAW; VENUE. This Agreement will be governed by and
interpreted in accordance with the substantive laws of the State of Georgia
without reference to conflicts of law. Venue for the purposes of any litigation
in connection with this Agreement will lie solely in the state court in and for
Fulton County, Georgia or the United States District Court in and for the
Northern District of Georgia.
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, two (2) days after being mailed
postage prepaid by certified or registered mail with return receipt requested,
or when delivered by overnight delivery service or by facsimile to the recipient
at the following address or facsimile number, or to such other address or
facsimile number as to which the other party subsequently shall have been
notified in writing by such recipient:
If to the Company:
Voice-Tel Enterprises, Inc.
Four Commerce Park Square, No. 800
23200 Chagrin Boulevard
Cleveland, Ohio 44122
Attn: President
Facsimile: (216) 360-4410
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With a copy to:
Premiere Technologies, Inc.
3399 Peachtree Road
The Lenox Building
Suite 400
Atlanta, GA 30326
Attn: Patrick G. Jones
Senior Vice President
Facsimile: (404) 262-8540
If to the Employee:
William E. Welsh
922 Mayfair Road
Akron, Ohio 44303
Facsimile: (330) 864-9177
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 30th
day of April, 1997.
VOICE-TEL ENTERPRISES, INC.
By: /s/ Boland T. Jones
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Boland T. Jones
Chief Executive Officer
EMPLOYEE
/s/ William E. Welsh
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William E. Welsh
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