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EXHIBIT 10.40
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated effective as of October 20, 1998, by and
between PRECISION RESPONSE CORPORATION, a corporation organized and existing
under the laws of the State of Florida (hereinafter referred to as "Employer"),
and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employer is a Florida corporation engaged in the
teleservicing, database management and marketing and fulfillment business;
WHEREAS, Employer desires to employ Employee upon the terms and
conditions set forth below and Employee desires to accept such employment upon
such terms and conditions; and
WHEREAS, Employer and Employee desire to set forth in writing the terms
and conditions of their agreements and understandings with respect to Employee's
employment by Employer.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT
Employer hereby employs Employee, and Employee hereby accepts
employment by Employer, upon the terms and conditions set forth in this
Employment Agreement.
2. TERM
Subject to the provisions for earlier termination set forth in
Section 9 hereof, this Employment Agreement shall commence as of the date hereof
and shall continue until 5:00, p.m., December 31, 2001 (the "Initial Employment
Term"), with the Initial Employment Term to be automatically renewed and
extended for consecutive additional one year periods unless, at least sixty (60)
days prior to the expiration of the Initial Employment Term or any one year
renewal period thereof, either party hereto delivers to the other party hereto
written notice of such party's termination of this Employment Agreement at the
expiration of the Initial Employment Term or any one year renewal period thereof
(as the case may be). The Initial Employment Term together with any or all one
year renewal periods thereof are hereinafter collectively referred to as the
"Employment Term".
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3. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES
Employee represents and warrants to Employer that Employee is
free to accept employment with Employer as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would in
any way interfere with Employee's acceptance of employment pursuant to the terms
hereof or the full performance of Employee's obligations hereunder or the
exercise of Employee's best efforts in Employee's employment hereunder or which
would otherwise pose any conflict of interest.
4. DUTIES AND EXTENT OF SERVICES
A. DUTIES. Employee's duties and responsibilities hereunder
shall be those reasonably assigned to Employee from time to time by Employer,
consistent with the following: Employee shall, subject to his initial election
by the Employer's Board of Directors, serve as Employer's President and Chief
Operating Officer, and shall, subject to the direction from time to time of
Employer's Chairman of the Board or Chief Executive Officer, have responsibility
to oversee and supervise all activities relating to Employer's day-to-day
operations including those related to teleservices, database management services
and marketing and fulfillment services. Employee shall report directly to
Employer's Chief Executive Officer. Employee agrees to devote Employee's full
and exclusive business time, skill, attention and energy to perform the duties
and responsibilities properly assigned to Employee hereunder or pursuant hereto
to the best of his abilities. However, Employee may devote a reasonable amount
of his time to civic, community or charitable activities and, with the prior
written approval of the Chairman of the Board or Chief Executive Officer of
Employer, to serve as a director of other corporations and undertake other
activities not expressly mentioned in this paragraph. Employee may invest his
personal assets as he deems appropriate so long as such investments (i) are
passive investments, (ii) are not invested in any business which is a direct or
indirect competitor of Employer (subject to the proviso in clause (ii)(B) of
Section 11 hereof) and (iii) do not interfere with Employee's performance of the
duties and responsibilities assigned to him pursuant to this Employment
Agreement.
B. RULES AND REGULATIONS. Employee agrees to abide by the
rules and regulations of Employer promulgated by Employer from time to time with
respect and applicable to Employer's senior executives generally, provided that
copies of such rules and regulations are provided to Employee. Such rules and
regulations are all hereby incorporated by reference and made a part of this
Employment Agreement.
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C. PLACE OF SERVICE. Employee shall render his services
initially in northern Miami-Dade County, Florida, and shall not be obligated to
maintain his office in any place other than northern Miami-Dade County (i.e.,
not any further south in Miami-Dade County than the location of Employer's
executive offices as of the date of this Employment Agreement), Broward County
or Palm Beach County, Florida; provided, however, that Employee shall be
obligated to travel as necessary to fulfill his duties and responsibilities, and
Employee understands that such travel may, during certain periods, be extensive.
5. COMPENSATION
A. BASE COMPENSATION. Subject to the provisions of Section 9
of this Employment Agreement, Employer shall pay salary to Employee ("Salary")
at a rate of $350,000 per annum through the expiration of the Employment Term
unless otherwise mutually agreed in writing by the parties hereto. Employer may
decide, in its sole discretion, to increase (but not to decrease) the Salary at
any time during the Employment Term. Salary shall be payable in accordance with
Employer's normal payroll practices for its employees and shall be subject to
payroll deductions and tax withholdings in accordance with Employer's usual
practices and as required by law.
B. BONUS COMPENSATION. Employee shall receive an annual bonus
in an amount not to exceed seventy-five percent (75%) of the Salary paid to
Employee with respect to the year to which the bonus relates, the actual amount
of which shall be determined by the Compensation Committee of the Board of
Directors of Employer in its sole and absolute discretion (the "Bonus Amount").
Subject to the provisions regarding payment upon termination or expiration of
employment set forth in Section 9 hereof, each annual Bonus Amount shall be paid
on or before March 31 of each year of the Employment Term. The Bonus Amount
payable on or before each March 31 shall be based upon the operating results of
Employer and Employee's performance during the calendar year (or the portion
thereof in which Employee was employed hereunder) immediately preceding such
March 31. Each Bonus Amount shall be subject to payroll deductions and tax
withholdings in accordance with Employer's usual payroll practices and as
required by law.
C. FAIR MARKET VALUE STOCK OPTIONS. Employer acknowledges that
as of the date of this Employment Agreement Employer has granted to Employee
stock options (the "FMV Stock Options") to acquire 350,000 shares of Employer's
common stock, par value $.01 per share, pursuant to the Precision Response
Corporation Amended and Restated 1996 Incentive Stock Plan (the "Plan") and a
Stock Option Agreement in the form attached as
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Exhibit "A" to this Employment Agreement. Employer represents that there are
sufficient shares of Employer's common stock, par value $.01 per share, reserved
by Employer for issuance under the Plan to fulfill Employer's obligation to
issue such shares upon exercise of all of the FMV Stock Options, and that
Employer will use its best efforts to register and thereafter have such shares
continue to be registered with the Securities and Exchange Commission on Form
S-8 (or such other applicable registration form).
6. FRINGE BENEFITS AND EXPENSES
A. EMPLOYEE BENEFITS. Employee shall be entitled to such
benefits and fringe benefits (such as health, dental, life and disability
insurance) as are made available by Employer from time to time, in Employer's
sole discretion, to Employer's senior executives generally.
B. EXPENSES. Employer shall reimburse Employee for Employee's
reasonable out-of-pocket costs and expenses incurred in connection with the
performance of Employee's duties and responsibilities hereunder, subject to
Employee's presentation of appropriate documentation and, if requested,
justification therefor.
C. AUTOMOBILE. Employer shall provide to Employee an
automobile allowance of $850.00 per month during the Employment Term in order to
defray Employee's automobile expenses incurred in the performance of his duties,
but shall not be obligated to provide Employee with an automobile.
D. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. Employer will
endeavor to maintain Employer's directors' and officers' liability insurance at
least at the same level of coverage as in effect as of the date hereof.
7. VACATIONS
Employee shall be entitled to four (4) weeks vacation each
full year of the Employment Term (prorated for any partial year), with full
compensation, which, to the extent unused, may be carried over from year to year
up to an aggregate of eight (8) weeks vacation in any full year of the
Employment Term, provided that the use of any such carried over vacation in any
year does not substantially interfere with Employee's performance of his duties
and responsibilities assigned to him pursuant to this Employment Agreement.
Employee shall not be entitled to be compensated for any unused vacation days
upon termination of employment. The periods during which Employee will be absent
from
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work for vacation shall be at the reasonable discretion of Employer.
8. FACILITIES
Employer shall provide and maintain (or cause to be provided
and maintained) such facilities, equipment, supplies and personnel as are
reasonably necessary for Employee's performance of Employee's duties and
responsibilities under this Employment Agreement.
9. TERMINATION OF EMPLOYMENT
A. TERMINATION EVENTS. Employee's employment under this
Employment Agreement may be terminated by Employer only as follows: with or
without Cause (as hereinafter defined), effective upon the delivery of written
notice to Employee; upon Employee's death; or upon Employee becoming Disabled
(as hereinafter defined) and receiving written notice of termination from
Employer to that effect within ninety (90) days after being deemed Disabled.
Employee may terminate Employee's employment under this Employment Agreement
without being in breach hereunder by giving written notification of (i)
Employee's resignation to Employer which shall specify a resignation date no
earlier than ninety (90) days following the date of delivery of such notice of
resignation or (ii) Constructive Termination (as hereinafter defined) of
Employee's employment under this Employment Agreement (subject to the provisions
of Section 9.B. hereof relating to Constructive Termination). Employee's
employment under this Employment Agreement shall be terminated upon expiration
of the Employment Term pursuant to Section 2 hereof.
B. DEFINITIONS OF CAUSE, DISABLED AND CONSTRUCTIVE
TERMINATION. For purposes of this Employment Agreement, "Cause" shall mean: (i)
commission of a felony, or commission of acts of fraud, embezzlement, or the
like; (ii) habitual drunkenness during business hours or at Employer's premises;
(iii) use of illicit drugs during business hours or at Employer's premises; (iv)
abandonment of employment duties (other than by reason of death or becoming
Disabled); (v) gross negligence in the performance of employment duties; or (vi)
material breach by Employee of this Employment Agreement which, if curable, is
not cured by Employee within thirty (30) days following Employee's receipt of
written notice thereof (such notice shall specify in reasonable detail the
nature of the material breach and the curative steps, if curable, required to be
taken). Employee shall be deemed "Disabled" for purposes of this Employment
Agreement (a) if Employee is unable, due to physical, mental or emotional
illness or injury, to perform substantially all of Employee's duties and
responsibilities for
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Employer for a continuous period of one hundred and twenty (120) days, or (b) if
Employee is adjudicated as an incompetent or has a guardian appointed to handle
Employee's affairs. If clause (a) above applies, Employee shall be deemed
Disabled on the last day of the 120 day period. If clause (b) above applies,
Employee shall be deemed Disabled on the date of adjudication as an incompetent
or the appointment of the guardian, whichever occurs first. For purposes of this
Employment Agreement, "Constructive Termination" shall mean: (x) Employer has
delegated to another or others a material portion of Employee's duties or
responsibilities provided for in Section 4.A. hereof (and shall include, without
limitation, removal of Employee from the office of President or Chief Operating
Officer, even if Employee's day-to-day duties are to remain substantially the
same), other than for Cause, and Employer fails to confirm in writing, and
implement, the reinstatement of such material portion of Employee's duties and
responsibilities and/or offices to Employee within thirty (30) days after
receipt by each of the Chairman of the Board and Chief Executive Officer of
Employer of Employee's written notice of protest (as provided in the next
sentence), (y) Employer attempts, without Employee's prior written consent, to
relocate Employee's office outside the location specified in Section 4.C.
hereof, or (z) the position of Chairman of the Board or Chief Executive Officer
of Employer becomes vacant for any reason and the vacancy is filled by a person
other than ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Employee or another person not an
employee of Employer immediately prior to becoming the Chairman of the Board or
Chief Executive Officer of Employer. In the event of Constructive Termination of
Employee's employment under this Employment Agreement, Employee may terminate
Employee's employment, provided that he has given written notice of protest to
each of the Chairman of the Board and Chief Executive Officer of Employer within
thirty (30) days of the occurrence of the event causing the Constructive
Termination setting forth the manner in which the Constructive Termination has
occurred (and such Constructive Termination is not timely corrected, as provided
in the case of a Constructive Termination under clause (x) of the preceding
sentence).
C. EFFECT OF TERMINATION FOR CAUSE OR EMPLOYEE'S RESIGNATION.
In the event that Employee's employment under this Employment Agreement is
terminated by Employer with Cause, or because Employee resigns from Employee's
employment, Employer shall pay to Employee, within thirty (30) days following
the date of such termination or resignation, (i) the Salary, if any, accrued and
unpaid through the date of such termination or resignation, and (ii) if the
Bonus Amount of Employee for the prior year has been declared by Employer, but
not yet paid to Employee, the Bonus Amount for such prior year, and shall pay
and provide to Employee the amounts and items payable and to be provided under
Section 6
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through the date of such termination or resignation; and Employee shall not be
entitled to any other compensation, remuneration or other sums provided for in
this Employment Agreement or to which Employee might otherwise be entitled
hereunder or at law or in equity.
D. COMPENSATION UPON DEATH OR DISABILITY. Upon the death of
Employee, or termination of employment because Employee is Disabled, Employer
shall pay to Employee, Employee's legal guardian or the legal representative of
Employee's estate (or heir as designated by the legal representative of
Employee's estate at such time), within thirty (30) days following the date of
Employee's death or termination, the Salary and Bonus Amount, if any, accrued
and unpaid through the date of termination and shall pay and provide to
Employee, Employee's legal guardian or the legal representative of Employee's
estate the amounts and items payable and to be provided under Section 6 through
the date of such termination; and Employee (or such legal guardian, legal
representative or any heirs) shall not be entitled to any other compensation,
remuneration or other sums provided for in this Employment Agreement or to which
Employee might otherwise be entitled hereunder or at law or in equity (except
with respect to benefits which become payable under any employee benefit plans
of Employer as a result of Employee's death or disability). In the event that
death or termination of employment as a result of Employee becoming Disabled
occurs during a year and prior to any Bonus Amount of Employee being declared by
Employer for such year, the Bonus Amount under this Subsection D. for such
partial year of employment shall be prorated through the date of such death or
termination based upon the prior year's Bonus Amount.
E. COMPENSATION UPON TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE
TERMINATION OR EXPIRATION. In the event that Employer (or its successor)
terminates Employee's employment under this Employment Agreement without Cause
(other than in connection with a Change in Control (as hereinafter defined) as
provided in Subsection F. below), Employee terminates his employment as a result
of the occurrence of a Constructive Termination to the extent and in the manner
permitted hereunder or upon expiration of the Employment Term pursuant to the
terms of Section 2, Employee's sole and exclusive compensation and remedy
hereunder shall be to receive from Employer, and Employer shall pay to Employee,
(i) the amount of Salary and Bonus Amount, if any, accrued and unpaid through
the date of termination or expiration, and the amounts and items payable or to
be provided under Section 6 through the date of termination or expiration,
payable within thirty (30) days following the date of termination or expiration
of employment, and (ii) (A) in the case of termination without Cause or
Constructive Termination, an amount in cash equal to the sum of (1) the Salary
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that Employee would have received during the greater of (x) the one year period
following the date of such termination of Employee's employment and (y) the
remainder of the Initial Term (if such termination occurs during the Initial
Term) and (2) $175,000 or (B) in the case of expiration of the Employment Term
pursuant to Section 2 hereof as a result of Employer delivering to Employee a
written notice of termination of this Employment Agreement and provided that
Employer has not elected, as provided under Section 11, to waive Employee's
obligation to comply with his covenants under Subsection (ii) of Section 11, an
amount in cash equal to the Salary for one (1) full year. Such cash amount
payable under clauses (A) or (B) above shall be payable one-half (1/2) within
thirty (30) days following the date of termination of employment or expiration
and the balance (the other one-half (1/2)) payable in equal consecutive monthly
installments over the period that Employee was entitled to be paid the Salary
under clauses (A) or (B) above (as the case may be), with the first such
installment payable sixty (60) days following the date of termination of
employment or expiration and each subsequent installment payable on the same day
of each successive month until payment is made in full. In the event that
termination of employment without Cause, as a result of Constructive Termination
or upon expiration of this Employment Agreement occurs during a year and prior
to any Bonus Amount of Employee being declared by Employer for such year, the
Bonus Amount under this Subsection E. for such partial year of employment shall
be prorated through the date of such termination based upon the prior year's
Bonus Amount.
F. COMPENSATION UPON A CHANGE IN CONTROL. Notwithstanding the
provisions of Subsection E. above, in the event that (i) Employer (or its
successor) terminates Employee's employment under this Employment Agreement
without Cause within one hundred eighty (180) days after a Change in Control (as
hereinafter defined), (ii) Employee terminates his employment to the extent and
in the manner permitted under this Employment Agreement as a result of the
occurrence of a Constructive Termination within one hundred eighty (180) days
after a Change in Control or (iii) Employer (or its successor)(but not Employee)
delivers to Employee a written notice of termination pursuant to Section 2
terminating this Employment Agreement at the expiration of the Employment Term
and such expiration occurs within one hundred eighty (180) days after a Change
in Control, and subject to and limited by the provisions of Subsection G. below,
Employee's sole and exclusive compensation and remedy hereunder shall be to
receive from Employer (or its successor), and Employer (or its successor) shall
pay to Employee within thirty (30) days following the date of termination of
employment or expiration, (a) the amount of Salary and Bonus Amount, if any,
accrued and unpaid through the date of termination of employment or expiration,
and the amounts and items payable or
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to be provided under Section 6 through the date of termination of employment or
expiration, and (b) a lump sum severance payment in cash equal to 2.99 times an
amount equal to the average of the sum of the annual Salary and Bonus Amount
paid to Employee each year during the Employment Term. For purposes of this
Subsection F., (1) a "Change in Control" means that (x) neither ▇▇▇▇ ▇▇▇▇▇▇ (for
these purposes, counting all common stock directly or indirectly beneficially
owned by ▇▇▇▇ ▇▇▇▇▇▇'▇ Affiliates) nor ▇▇▇▇▇ ▇▇▇▇▇▇▇ (for these purposes,
counting all common stock directly or indirectly beneficially owned by ▇▇▇▇▇
▇▇▇▇▇▇▇'▇ Affiliates) beneficially owns at least 10% of the issued and
outstanding common stock of Employer (or its successor); (y) neither ▇▇▇▇ ▇▇▇▇▇▇
(for these purposes, counting all common stock directly or indirectly
beneficially owned by ▇▇▇▇ ▇▇▇▇▇▇'▇ Affiliates) nor ▇▇▇▇▇ ▇▇▇▇▇▇▇ (for these
purposes, counting all common stock directly or indirectly beneficially owned by
▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ Affiliates) is the stockholder of Employer (or its successor)
beneficially owning the highest number of issued and outstanding shares of
common stock of Employer (or its successor); provided, however, that no Change
in Control shall be deemed to have occurred under this clause (y) if, but only
for so long as, the person(s) owning the highest number of issued and
outstanding shares of common stock of Employer (or its successor) have otherwise
agreed not to exercise the material rights and powers concomitant with such
ownership or (z) neither ▇▇▇▇ ▇▇▇▇▇▇ nor ▇▇▇▇▇ ▇▇▇▇▇▇▇ occupies the position of
Chairman of the Board, Chief Executive Officer or President of Employer (or its
successor); (2) "Affiliate" means, with respect to ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇,
an immediate family member of his, a trust principally for his benefit and/or
the benefit of his family members and/or lineal descendants, or a family limited
partnership or any other entity the direct or indirect beneficial or pecuniary
owners of which are principally him, his immediate family members and/or trusts
or other entities principally for the benefit of him, his family members and/or
lineal descendants; and (3) "Immediate family members" mean, with respect to
▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇, his spouse, children, parents, siblings or other
lineal descendants. For purposes of clause (a) of this Subsection F., but
subject to and limited by the provisions of Subsection G. below, any Bonus
Amount for a partial year of employment shall be prorated through the date of
such termination or expiration(based upon the prior year's Bonus Amount, if any)
and for purposes of clause (a) or clause (b) of this Subsection F., if Employee
has not previously earned a Bonus Amount under this Employment Agreement, the
Bonus Amount shall be deemed to be $262,500. Nothing in this Subsection F. shall
be deemed to limit Employee's rights as provided under Subsection E. with
respect to a termination without Cause or Constructive Termination or expiration
of this Employment Agreement occurring after the 180-day period referred to
above in this Subsection F.
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G. LIMITATIONS ON SEVERANCE PAYMENTS. Notwithstanding anything
to the contrary contained in this Employment Agreement, if any payments under
Subsection F. above are to be made as a result of a Change in Control, and such
Change in Control constitutes a change in the ownership or effective control of
Employer (within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations issued thereunder), the
amount so payable shall be reduced to the extent necessary so that in all events
the aggregate amount of the present value of all such payments under Subsection
F. above and the value of any other compensation, consideration or benefit
received by Employee that would be deemed to be a "parachute payment" as defined
under Section 280G(b)(2)(A)(i) (without regard to Section 280G(b)(2)(A)(ii))
including, without limitation, the acceleration of the exercise of any stock
options in respect of such Change in Control (determined in accordance with Code
Section 280G(d)(4)), computed on the date of such Change in Control, (a) shall
not exceed 2.99 times Employee's average annual compensation which is includible
in Employee's gross income (for federal income tax purposes) during the most
recent five taxable years (or such shorter period in which Employee has been
employed by Employer (or its successor)) ending before that date on which such
Change in Control occurs, and (b) shall in no event result in an "excess
parachute payment" as defined under Section 280G.
H. KEY-MAN INSURANCE. In the event that Employer has obtained
or obtains a key-man insurance policy (the "Policy") on the life of Employee,
Employer shall be the sole owner thereof and all proceeds payable in respect
thereof shall be the property solely of Employer. In the event that Employee's
employment terminates for any reason other than Employee's death, Employee may
request that the Policy be assigned to Employee by giving written notice to
Employer to that effect. Subject to obtaining any requisite consent from the
insurer, Employer shall, if Employee has so requested, assign the Policy to
Employee subject to Employee's reimbursement to Employer of any premiums paid by
Employer which relate to any period following the date of termination of
Employee's employment, and the cash value, if any, of the Policy. In the event
that Employer desires to obtain any such Policy, Employee shall fully cooperate
in Employer's efforts, including submitting to medical exams and tests and
executing and delivering applications and information statements.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. CONFIDENTIAL INFORMATION. Employee acknowledges that
Employee has been informed by Employer of Employer's policy to maintain as
secret and confidential all information and materials relating to (i) the
financial condition, operations, business and
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interests of Employer, (ii) the systems, know-how, records, products, services,
cost information, inventions, computer software programs, marketing and sales
techniques and/or programs, methods, methodologies, manuals, lists and other
trade secrets from time to time acquired, sold, developed, maintained and/or
used by Employer, and (iii) the nature and terms of Employer's relationships
with its clients, suppliers, lenders, underwriters, vendors, consultants,
independent contractors, attorneys, accountants and employees (all such
information and materials being hereinafter collectively referred to as
"Confidential Information"). Employee further acknowledges that such
Confidential Information is of great value to Employer and has been developed by
Employer as a result of substantial effort and expense. Therefore, Employee
understands that it is reasonably necessary to protect Employer's good will,
trade secrets and business interests that Employee agree and, accordingly,
Employee does hereby agree, that Employee will not directly or indirectly
(except where authorized by the Board of Directors, Chairman of the Board or
Chief Executive Officer of Employer for the benefit of Employer and/or as
required in the course of employment) at any time hereafter divulge or disclose
for any purpose to any persons, firms, corporations or other entities
(hereinafter referred to collectively as "Third Parties"), or use or cause or
authorize any Third Parties to use, any such Confidential Information, except as
otherwise required by law.
B. EMPLOYER'S MATERIALS. In accordance with the foregoing,
Employee furthermore agrees that (i) Employee will at no time retain or remove
from the premises of Employer any products, prototypes, drawings, notebooks,
software programs or discs, tapes or similar containers of software, manuals,
data, books, records, materials or documents of any kind or description of
Employer or related to its business for any purpose unconnected with the
performance of Employee's duties with Employer and (ii) upon the cessation or
termination of Employee's employment with Employer for any reason, Employee
shall forthwith deliver or cause to be delivered up to Employer any and all
drawings, notebooks, software programs or discs, tapes or similar containers of
software, manuals, data, books, records, materials and other documents and
materials in Employee's possession or under Employee's control relating to any
Confidential Information or any other material or thing which is the property of
Employer.
11. COVENANT-NOT-TO-COMPETE
In view of (a) the Confidential Information to be obtained by
or disclosed to Employee, and (b) the consideration payable to Employee under
this Employment Agreement, and as a material inducement to Employer to enter
into this Employment Agreement, Employee covenants and agrees that, (i) for as
long as
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Employee is employed by Employer and for a period of 24 months after the date
Employee ceases for any reason to be employed by Employer, Employee shall not,
directly or indirectly, (A) sell any products or services sold or offered by
Employer to any person or entity who is or was a client of Employer at any time
prior to the date hereof and for or to whom Employer is performing services or
selling products or for or to whom Employer has performed services or sold
products at any time during the one-year period ending on Employee's termination
of employment or (B) solicit the services of, or hire, directly or indirectly,
whether on Employee's own behalf or on behalf of others, any managerial or
executive employee, account manager, programmer, information services employee
(including, without limitation, network or other information services operation
employee) or database management or marketing employee of Employer who was or is
employed by Employer at any time during the two-year period ending on the date
of termination of Employee's employment, and (ii) for as long as Employee is
employed by Employer and thereafter for the Severance Period (as hereinafter
defined), Employee shall not, directly or indirectly, (A) sell any products or
services sold or offered by Employer to any person or entity who becomes a
client of Employer at any time on or after the date hereof and for or to whom
Employer is performing services or selling products or for or to whom Employer
has performed services or sold products at any time during the one-year period
ending on Employee's termination of employment or (B) engage in any venture,
enterprise, activity or business, passively or actively, as an owner,
consultant, adviser, participant, employee, agent or in any other capacity,
competitive with the business of Employer anywhere within the continental United
States; provided, however, that nothing in this Section 11 shall prohibit
Employee from owning as a passive investor beneficially and/or of record less
than 5% of the outstanding equity securities of any entity whose equity
securities are registered under the Securities Exchange Act of 1934, as amended,
or are listed for trading on any United States or foreign stock exchange.
Employee acknowledges that the business of Employer is national in scope, that
one can effectively compete with such business from anywhere in the continental
United States, and that, therefore, such geographical area of restriction is
reasonable in the circumstances to protect Employer's trade secrets and other
legitimate business interests. For purposes of this Section 11, the "Severance
Period" shall mean: (x) in the case of either termination of Employee's
employment as a result of Employee becoming Disabled or a termination of
Employee's employment with Cause or as a result of the resignation of employment
by Employee, a period of 12 months after the termination date of Employee's
employment with Employer; (y) in the case of termination of Employee's
employment without Cause or as a result of the occurrence of a Constructive
Termination, the greater of (1) a
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period of 12 months after the termination date of Employee's employment with
Employer or (2) the remainder of the Initial Term (if such termination occurs
during the Initial Term); and (z) in the case of the expiration of the
Employment Term and in the event that either (1) Employer has not advised
Employee in writing at least 60 days prior to the expiration of the Employment
Term of the election of Employer, in its sole discretion, to waive Employee's
obligation to comply with his covenants under clause (ii) above upon the
expiration of the Employment Term or (2) the expiration of the Employment Term
is the result of Employee delivering to Employer pursuant to Section 2 the
written notice of Employee's termination of this Employment Agreement, a period
of 12 months after the expiration of the Employment Term.
12. EMPLOYER'S REMEDIES FOR BREACH OF SECTIONS 10 AND 11
Employee covenants and agrees that if Employee shall violate
or breach any of Employee's covenants or agreements provided for in Section 10
or 11 hereof, Employer shall be entitled to an accounting and repayment of all
profits, compensation, commissions, remunerations and benefits which Employee
directly or indirectly has realized and realizes as a result of, growing out of
or in connection with any such violation or breach. In addition, in the event of
a breach or violation or threatened or imminent breach or violation of any
provisions of Section 10 or 11 hereof, Employer shall be entitled to a temporary
and permanent injunction or any other appropriate decree of specific performance
or equitable relief from a court of competent jurisdiction in order to prevent,
prohibit or restrain any such breach or violation or threatened or imminent
breach or violation by Employee. Employer shall be entitled to such injunctive
or other equitable relief in addition to any ascertainable damages which are
suffered, together with reasonable attorneys' and paralegals' fees and costs and
other costs incurred in connection with any such litigation, both before and at
trial and at all tribunal levels. It is understood that resort by Employer to
such injunctive or other equitable relief shall not be deemed to waive or to
limit in any respect any other rights or remedies which Employer may have with
respect to such breach or violation.
13. REASONABLENESS OF RESTRICTIONS
A. REASONABLENESS. Employee acknowledges that any breach or
violation of Section 10 or 11 hereof will cause irreparable injury and damage
and incalculable harm to Employer and that it would be very difficult or
impossible to measure all of the damages resulting from any such breach or
violation. Employee further acknowledges that Employee has carefully read and
considered the provisions of Sections 10, 11 and 12 hereof and,
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having done so, agrees that the restrictions and remedies set forth in such
Sections (including, but not limited to, the time period, geographical and types
of restrictions imposed) are fair and reasonable and are reasonably required for
the protection of the business, trade secrets, interests and good will of
Employer.
B. SEVERABILITY. Employee understands and intends that each
provision and restriction agreed to by Employee in Sections 10, 11 and 12 hereof
shall be construed as separate and divisible from every other provision and
restriction. In the event that any one of the provisions of, or restrictions in,
Sections 10, 11 and/or 12 hereof shall be held to be invalid or unenforceable,
and is not reformed by a court of competent jurisdiction (which a court, in lieu
of striking a provision entirely, is urged by the parties to do), the remaining
provisions thereof and restrictions therein shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable provisions or
restrictions had not been included. In the event that any such provision
relating to time period, geographical and/or type of restriction shall be
declared by a court of competent jurisdiction to exceed the maximum or
permissible time period, geographical or type of restriction such court deems
reasonable and enforceable, said time period, geographical and/or type of
restriction shall be deemed to become and shall thereafter be the maximum time
period or geographical area and/or type of restriction which such court deems
reasonable and enforceable.
C. SURVIVABILITY. The restrictions, acknowledgments, covenants
and agreements of Employee set forth in Sections 10, 11, 12 and 13 of this
Employment Agreement shall survive any termination of this Employment Agreement
or of Employee's employment (for any reason, including expiration of the
Employment Term).
D. DEFINITION OF EMPLOYER. For purposes of Sections 10, 11, 12
and 13 of this Employment Agreement, the term "Employer" includes the Employer
and any parent corporation of Employer and all subsidiaries of Employer and its
parent corporation (if any).
14. LAW APPLICABLE
This Employment Agreement shall be governed by and construed
pursuant to the laws of the State of Florida.
15. NOTICES
Any notices required or permitted to be given pursuant to this
Employment Agreement shall be sufficient if in writing, and
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delivered personally, by commercial courier service or sent by certified mail,
return receipt requested, and sent to Employer's executive offices, to the
attention of the Chief Executive Officer, if mailed to Employer, and to
Employee's then current residence, if mailed to Employee, and shall be effective
only upon actual receipt by the party to whom it is given.
16. SUCCESSION
This Employment Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives,
heirs, assignees and/or successors in interest of any kind whatever; PROVIDED,
HOWEVER, that Employee acknowledges and agrees that Employee cannot assign or
delegate any of Employee's rights, duties, responsibilities or obligations
hereunder to any other person or entity. Employer shall have the right to assign
its rights and delegate its duties under this Employment Agreement, provided
that, in the event of any such assignment other than in connection with a
merger, consolidation or similar reorganization or the sale of all or
substantially all of the assets of Employer (or its successor), Employer shall
remain liable for all of its obligations hereunder.
17. ENTIRE AGREEMENT
This Employment Agreement, together with the Stock Option
Agreement and Indemnification Agreement, both of even date herewith between
Employer and Employee, constitute the entire final agreement between the parties
with respect to, and supersedes any and all prior and contemporaneous agreements
between the parties hereto both oral and written concerning, the subject matter
hereof and may not be amended, modified or terminated except by a writing signed
by the parties hereto.
18. SEVERABILITY
If any provision of this Employment Agreement shall be held to
be invalid or unenforceable, and is not reformed by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision and shall not in any way affect or render invalid or unenforceable any
other provision of this Employment Agreement, and this Employment Agreement
shall be carried out as if such invalid or unenforceable provision were not
herein contained.
19. NO WAIVER
A waiver of any breach or violation of any term, provision or
covenant herein contained shall not be deemed a continuing waiver or a waiver of
any future or past breach or violation. No oral waiver shall be binding.
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20. ATTORNEYS' FEES
In the event that either of the parties to this Employment
Agreement institutes suit against the other party to this Employment Agreement
to enforce or declare any of their respective rights hereunder, the prevailing
party in such action shall be entitled to recover from the other party all
reasonable costs thereof, including reasonable attorneys' and paralegals' fees
and costs incurred before and at trial and at all tribunal levels, and whether
or not suit or any other proceeding is instituted.
21. COUNTERPARTS
This Employment Agreement may be executed in counterparts,
each of which shall be an original, but both of which together shall constitute
one and the same instrument.
22. INDEPENDENT COUNSEL
THE PARTIES HEREBY ACKNOWLEDGE THAT EACH OF THEM HAS RETAINED
AND WAS REPRESENTED VIGOROUSLY BY INDEPENDENT LEGAL COUNSEL WITH RESPECT TO, AND
IN CONNECTION WITH ALL STAGES OF THE NEGOTIATION, PREPARATION AND EXECUTION OF,
THIS EMPLOYMENT AGREEMENT. EMPLOYER WAS REPRESENTED BY BILZIN ▇▇▇▇▇▇▇ ▇▇▇▇ PRICE
& ▇▇▇▇▇▇▇ LLP AND EMPLOYEE BY ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the day and year first above written.
EMPLOYER:
PRECISION RESPONSE CORPORATION, a
Florida corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
EMPLOYEE:
/s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
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EXHIBIT A
PRECISION RESPONSE CORPORATION
STOCK OPTION AGREEMENT
Agreement dated as of the 20th day of October, 1998 (the "Date of
Grant") between Precision Response Corporation, a Florida corporation (and,
collectively with its subsidiaries, if any, the "Company") with its principal
office at ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇,
at the address set forth beneath such person's signature on the signature page
of this Agreement ("Optionee").
1. GRANT OF OPTIONS
The Company grants to Optionee, on the terms and conditions
set forth below, options (the "Options") to purchase up to 350,000 shares
(individually a "Share" and collectively the "Shares") of Precision Response
Corporation common stock (the "Common Stock"), par value $.01 per share, for a
price of $5.50 per Share (the "Option Price"), subject to adjustment as provided
in Paragraph 3 below. Subject to the limitation set forth in the Precision
Response Corporation Amended and Restated 1996 Incentive Stock Plan (the
"Plan"), a copy of which is attached hereto and incorporated herein by
reference, that the aggregate Fair Market Value (as defined in the Plan and as
determined as of the time the option is granted) of the shares of Common Stock
with respect to which Incentive Stock Options (as defined in and pursuant to the
Plan) are exercisable for the first time by a participant during any calendar
year (under all option plans of the Company) shall not exceed $100,000, the
Options shall be designated as Incentive Stock Options to the maximum extent
permitted by law and under the Plan. To the extent that the number of Options
which vest in any calendar year pursuant to the vesting schedule set forth below
exceeds the number which may properly be designated as Incentive Stock Options
pursuant to applicable law or under the Plan, such excess number of Options
shall, pursuant to the provisions of Section 6(e) of the Plan, be designated as
Nonqualified Stock Options (as defined in and pursuant to the Plan).
2. TERMS AND CONDITIONS OF OPTIONS
(a) OPTION PRICE
Subject to paragraph 3 hereof, the Option Price shall
be as set forth in Section 1 above.
(b) VESTING OF OPTIONS
Subject to such further limitations as are provided
for herein, the Options shall vest, if at all (and be exercisable once vested)
in the following amounts:
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PERIOD FROM PERCENTAGE OF
DATE OF GRANT OPTIONS VESTED (%)
------------- ------------------
Six (6) months from Date of Grant 50%
One (1) year from Date of Grant 67%
Two (2) years from Date of Grant 84%
Three (3) years from Date of Grant 100%
Notwithstanding the vesting schedule set forth above, Optionee shall
become immediately 100% vested in all outstanding Options upon, and may exercise
such Options subject to the time frames set forth in subparagraph (e) below
after, (i) a Change in Control (as defined in that certain Employment Agreement
dated effective as of October 20, 1998, by and between Optionee and the Company
(the "Employment Agreement")) or (ii) Optionee's termination of employment (A)
by the Company without Cause (as defined in the Employment Agreement) or (B) by
Optionee to the extent and in the manner permitted under the Employment
Agreement as a result of the occurrence of a Constructive Termination (as
defined in the Employment Agreement). Subject to the accelerated vesting
provided in the previous sentence, Optionee shall not become vested in any
Options subsequent to the termination of his employment regardless of any
exercise period provided in subparagraph (e) below.
(c) TERM OF OPTIONS
The Options may be exercised by Optionee in whole or
in part from time to time, but only during the period beginning on the date of
this Agreement and ending on October 19, 2005, subject in all cases, however, to
subparagraphs (b) and (e) of this paragraph 2, paragraph 3 and the other
provisions of this Agreement and the Plan.
(d) NON-TRANSFERABILITY OF OPTIONS
Options shall not be transferable by Optionee other
than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended (the "Code"), or Title I of the Employment Retirement Income
Security Act, or the rules thereunder, and, except with respect to a qualified
domestic relations order as aforesaid, may be exercised during Optionee's
lifetime only by Optionee. If any Options are exercised after Optionee's death,
the Company may require evidence reasonably satisfactory to it of the
appointment and qualification of Optionee's personal representatives and their
authority and of the right of any heir or distributee to exercise such Options.
(e) TERMINATION OF EMPLOYMENT
Subject to the vesting requirements set forth in
Section 2(b) above, if Optionee's employment with the Company terminates, the
unexercised portion of any of the Options granted under this Agreement shall
automatically and without notice terminate and become null and void at the time
of the earliest to occur of the following:
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(1) The expiration of seven (7) years from the Date
of Grant;
(2) The expiration of three months from the date of
termination of Optionee's employment (other than a termination described in
subparagraph (3), (4) or (5) below); PROVIDED, that, if Optionee shall die
during such three-month period, the time of termination of the unexpired portion
of any such Option shall be determined under the provision of subparagraph (4)
below;
(3) The expiration of one year from the date of
termination of the employment of an Optionee due to his becoming Disabled (as
defined in the Employment Agreement);
(4) The expiration of eighteen (18) months following
the issuance of letters testamentary or letters of administration to the
personal representative, executor or administrator of a deceased Optionee, if
Optionee's death occurs either during his employment by the Company or during
the three-month period following the date of termination of such employment
(other than a termination described in subparagraph (5) below), but in no event
later than two years after Optionee's death;
(5) The date of termination of Optionee's employment
by the Company if Optionee has been discharged for Cause.
Neither this Agreement nor any Option granted hereunder shall confer on
Optionee any right to continue in the Company's employ, or limit in any respect
the Company's right (in the absence of a specific written agreement to the
contrary) to terminate Optionee's employment at any time with or without Cause.
(f) EXERCISE OF OPTIONS
Subject to the limitations set forth herein and the
provisions hereof, the Options may be exercised only by written notice to the
Company, at its principal business office or such other office as the Committee
may from time to time direct, which shall contain provisions consistent with the
provisions of the Plan as the Committee may from time to time prescribe and
shall specify the number of optioned Shares being purchased. Not less than one
hundred (100) shares may be purchased at any one time upon exercise of the
Options unless the number purchased is the total number then purchasable under
this Agreement. Subsequent to the grant of any Options which are not immediately
exercisable in full, the Committee, at any time before complete termination of
such Options, may accelerate the time or times at which such Options may be
exercised in whole or in part. Any notice of exercise of Options shall be
accompanied by payment of the full purchase price for the Shares being
purchased: (i) by check payable to the Company; or (ii) with the prior consent
of the Committee, by tendering previously acquired shares of Common Stock having
a fair market value (determined as of the date such Options are exercised and in
the same manner as the Fair Market Value of the Option Price is determined under
the Plan) equal to all of the purchase price; or (iii) by any combination of (i)
and (ii). The Company shall have no obligation to deliver the Shares being
purchased pursuant to the exercise of any Options, in whole
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or in part, until the aforesaid payment in full of the purchase price therefor
is received by the Company.
(g) ISSUANCE OF SHARES
The exercise of Options granted hereunder is subject
to the condition that if at any time the listing, registration or qualification
of the Shares covered by the Options upon any securities exchange or under any
state or federal law is necessary as a condition of or in connection with the
purchase or delivery of Shares, the delivery of any or all Shares pursuant to
exercise of the Options may be withheld unless and until such listing,
registration or qualification shall have been effected. Optionee agrees to
comply with any and all legal requirements relating to Optionee's resale or
other disposition of any Shares acquired under this Agreement. Unless the Shares
are registered for sale under an effective registration statement under the
Securities Act of 1933, as amended, and applicable state securities laws, the
Committee may require, as a condition of exercise of any Options, that Optionee
represent, in writing, that the Shares received upon exercise of the Options are
being acquired for investment and not with a view to distribution and agree that
the Shares will not be disposed of except pursuant to an effective registration
statement under the Securities Act of 1933, as amended, and only after any
required qualifications under applicable state securities laws, unless the
Company shall have received an opinion of counsel satisfactory to the Company
that such disposition is exempt from such registration and qualification. In
such case, there may be endorsed on certificates representing Shares issued upon
the exercise of Options such legends referring to the foregoing representations
or any applicable restrictions on resale as the Committee, in its discretion,
shall deem reasonably appropriate, as well as place such stop transfer orders
with its registrar and transfer agent as it deems reasonably appropriate.
(h) RIGHTS AS A SHAREHOLDER
Optionee shall acquire none of the rights of a
shareholder of the Company under this Agreement unless and until certificates
for such Shares are issued to Optionee upon the exercise of Options.
(i) SIX-MONTH HOLDING PERIOD
Optionee acknowledges that in no event may any Shares
acquired upon exercise of any Options be sold or otherwise disposed of until
after six (6) months have elapsed from the Date of Grant except, in the event of
Optionee's death during such period, for a sale by the executors or
administrators of Optionee's estate relying on Rule 16a-2(d)(1)(i) of the
Securities Exchange Act of 1934, as amended.
3. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
In the event of any stock split, stock dividend,
reclassification or recapitalization which changes the character or amount of
the Company's outstanding Common Stock while any portion of any Options
theretofore granted pursuant to this Agreement are outstanding but unexercised,
the Committee shall make such adjustments in the character and number of Shares
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subject to such Options and in the Option Price as shall be equitable and
appropriate in order to make such Options, as nearly as may be practicable,
equivalent to such Options immediately prior to such change; PROVIDED, however,
that no such adjustment shall give any Optionee any additional benefits under
this Agreement; and PROVIDED FURTHER, that, if any such adjustment is made by
reason of a transaction described in section 424(a) of the Code, it shall be
made so as to conform to the requirements of that section and the regulations
thereunder.
If any transaction (other than a change specified in the
preceding paragraph) described in section 424(a) of the Code affects the
Company's Common Stock subject to any unexercised Option theretofore granted
hereunder (hereinafter for purposes of this paragraph 3 referred to as the "old
option"), the Committee or any surviving or acquiring corporation may take such
action as it deems appropriate, and in conformity with the requirements of that
section and the regulations thereunder, to substitute a new option for the old
option, in order to make the new option, as nearly as may be practicable,
equivalent to the old option, or to assume the old option.
If any such change or transaction shall occur, the number and
kind of Shares to be issued upon the exercise of any Options shall be adjusted
to give effect thereto.
4. OPTIONEE BOUND BY PLAN
Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by the terms and provisions thereof, regardless of whether
such provisions have been set forth in this Agreement. In the event of any
conflict between this Agreement and the Plan, the Plan shall govern.
5. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Shares
subject to Options may be commingled with any other corporate funds and used for
any corporate purpose.
6. GENERAL
(a) Any communication in connection with this Agreement shall
be deemed duly given when delivered in person or mailed by certified or
registered mail, return receipt requested, to Optionee at his or her address
listed on the signature page hereof or such other address of which Optionee
shall have advised by similar notice, or to the Company or Committee at the
Company's then executive offices.
(b) This Agreement sets forth the parties' final and entire
agreement with respect to its subject matter, may not be changed or terminated
orally and shall be governed by and construed in accordance with the internal
law of the State of Florida. This Agreement shall bind and inure to the benefit
of Optionee, and his heirs, distributees and personal and legal representatives,
and the Company and its successors and assigns.
(c) As a condition of the granting of the Options hereunder,
Optionee agrees for Optionee and Optionee's heirs, distributees and personal and
legal representatives, that any dispute
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or disagreement which may arise under or as a result of or pursuant to this
Agreement shall be determined and resolved by the Committee in its reasonable
discretion, and any interpretation by the Committee of the terms of this
Agreement or the Plan shall be final, binding and conclusive.
(d) Wherever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in the masculine, the feminine or the neuter
gender shall include the masculine, feminine and neuter.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
OPTIONEE: PRECISION RESPONSE CORPORATION,
a Florida corporation
By:
------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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PRECISION RESPONSE CORPORATION
AMENDED AND RESTATED 1996 INCENTIVE STOCK PLAN1
1. PURPOSE. The PRECISION RESPONSE CORPORATION Amended and Restated
1996 Incentive Stock Plan (the "Plan") is intended to provide incentives which
will attract and retain highly competent persons as officers and key employees
of PRECISION RESPONSE CORPORATION and its subsidiaries (the "Company"), as well
as independent contractors providing consulting or advisory services to the
Company, by providing them opportunities to acquire the Company's common stock,
$.01 value per share ("Common Shares") or to receive monetary payments based on
the value of such shares pursuant to the Awards described in Paragraph 4 below.
2. ADMINISTRATION. Prior to the date, if any, upon which the Company
becomes subject to the Securities Exchange Act of 1934 (the "Act"), the Plan
shall be administered by the Board of Directors of the Company (the "Board") or
a committee appointed by the Board. After the date, if any, upon which the
Company becomes subject to the Act, the Plan will be administered by the
Compensation Committee (the administrator of the Plan, initially the Board and
thereafter the Compensation Committee, if and when the Company becomes subject
to the Act, shall be referred to hereinafter as the "Committee") appointed by
the Board from among its members PROVIDED, HOWEVER, that, on and after November
1, 1996 (the "Effective Date") as long as Common Shares are registered under the
Act, members of the Committee must each qualify as a "non-employee director"
within the meaning of Securities and Exchange Commission Regulation ss.
240.16b-3. Once appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, and fill
vacancies however caused; provided, however, that at no time shall a Committee
of less than two members of the Board administer the Plan, and provided further,
that all members of the Committee on and after the Effective Date must be
"non-employee directors." The Committee is authorized, subject to the provisions
of the Plan, to establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Awards (as hereinafter defined) granted hereunder as it deems necessary or
advisable. All determinations and interpretations made by the Board and
Committee shall be binding and conclusive on all participants and their legal
representatives. No member of the Board, no member of the Committee and no
employee of the Company shall be liable for any act or failure to act hereunder,
by any other member or employee or by any agent to whom duties in connection
with the administration of this Plan have been delegated or, except in
circumstances involving such person's bad faith, gross negligence or fraud, for
any act or failure to act by the member or employee.
------------
(1) As amended through June 12, 1998
24
3. PARTICIPANTS. Participants will consist of such officers and key
employees or prospective key employees (conditioned upon, and effective not
earlier than his becoming an employee) of the Company, and independent
contractors providing consulting or advisory services to the Company, as the
Committee in its sole discretion determines to be significantly responsible for
the success and future growth and profitability of the Company and whom the
Committee may designate from time to time to receive Awards under the Plan.
Designation of a participant in any year shall not require the Committee to
designate such person to receive an Award in any other year or, once designated,
to receive the same type or amount of Awards as granted to the participant in
any year. The Committee shall consider such factors as it deems pertinent in
selecting participants and in determining the type and amount of their
respective Awards.
4. TYPES OF AWARDS. Awards under the Plan may be granted in any one or
a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
Awards, (d) Performance Shares, and (e) Performance Units, all as described
below (collectively "Awards").
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for
issuance under the Plan an aggregate of 4,000,000 Common Shares, which may be
authorized but unissued shares. Any shares subject to Stock Options or Stock
Appreciation Rights or issued under such options or rights or as Stock Awards
may thereafter be subject to new options, rights or awards under this Plan if
there is a lapse, expiration or termination of any such options or rights prior
to issuance of the shares or the payment of the equivalent or if shares are
issued under such options or rights or as such awards and thereafter are
reacquired by the Company pursuant to rights reserved by the Company upon
issuance thereof.
6. STOCK OPTIONS. Stock Options will consist of awards from the
Company, in the form of agreements, which will enable the holder to purchase a
specific number of Common Shares, at set terms and at a fixed purchase price.
Stock Options may be "incentive stock options" ("Incentive Stock Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or Stock Options which do not constitute Incentive Stock
Options ("Nonqualified Stock Options"). The Committee will have the authority to
grant to any participant one or more Incentive Stock Options, Nonqualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights). Each Stock Option shall be subject to such terms and
conditions consistent with the Plan as the Committee may impose from time to
time, subject to the following limitations:
(a) EXERCISE PRICE. Each Stock Option granted hereunder shall
have such per- share exercise price as the Committee may determine at the date
of grant provided, however, that the per-share exercise price for Incentive
Stock Options shall not be less than 100% of the Fair Market Value (as
hereinafter defined) of the Common Shares on the date the option is granted and
provided further that the per-share exercise price for Nonqualified Stock
Options shall not be less than 85% of the Fair Market Value of the Common Shares
on the date the option is granted. Notwithstanding
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the foregoing, the Committee may grant Nonqualified Stock Options for up to
50,000 Common Shares for a per-share exercise price equal to and/or in excess of
$.01 per share.
(b) PAYMENT OF EXERCISE PRICE. The option exercise price may
be paid by check or, in the discretion of the Committee, by the delivery of
Common Shares of the Company then owned by the participant or a combination of
methods of payment; provided, however, that option agreements may provide that
payment of the exercise price by delivery of Common Shares of the Company then
owned by the participant may be made only if such payment does not result in a
charge to earnings for financial accounting purposes as determined by the
Committee. In the discretion of the Committee, if Common Shares are readily
tradeable on a national securities exchange or other market system at the time
of option exercise, payment may also be made by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more brokerage
firms.
(c) EXERCISE PERIOD. Stock Options granted under the Plan will
be exercisable at such times and subject to such terms and conditions as shall
be determined by the Committee. In addition, Nonqualified Stock Options shall
not be exercisable later than fifteen years after the date they are granted and
Incentive Stock Options shall not be exercisable later than ten years after the
date they are granted. All Stock Options shall terminate at such earlier times
and upon such conditions or circumstances as the Committee shall in its
discretion set forth in such option at the date of grant.
(d) LIMITATIONS ON INCENTIVE STOCK OPTIONS. Incentive Stock
Options may be granted only to participants who are employees of the Company or
one of its subsidiaries (within the meaning of Section 424(f) of the Code) at
the date of grant. The aggregate Fair Market Value (determined as of the time
the option is granted) of the Common Shares with respect to which Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under all option plans of the Company) shall not exceed $100,000.
Incentive Stock Options may not be granted to any participant who, at the time
of grant, owns stock possessing (after the application of the attribution rules
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company, unless the option price is fixed at not
less than 110% of the Fair Market Value of the Common Shares on the date of
grant and the exercise of such option is prohibited by its terms after the
expiration of five years from the date of grant of such option.
(e) REDESIGNATION AS NONQUALIFIED STOCK OPTIONS. Options
designated as Incentive Stock Options that fail to continue to meet the
requirements of Section 422 of the Code shall be redesignated as Nonqualified
Stock Options for Federal income tax purposes automatically without further
action by the Committee on the date of such failure to continue to meet the
requirements of Section 422 of the Code.
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(f) LIMITATION OF RIGHTS IN SHARES. The recipient of a Stock
Option shall not be deemed for any purpose to be a shareholder of the Company
with respect to any of the shares subject thereto except to the extent that the
Stock Option shall have been exercised and, in addition, a certificate shall
have been issued and delivered to the participant.
7. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
grant Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted independently
of and without relation to Stock Options. Each Stock Appreciation Right shall be
subject to such terms and conditions consistent with the Plan as the Committee
shall impose from time to time, including the following:
(a) A Stock Appreciation Right relating to a Nonqualified
Stock Option may be made part of such option at the time of its grant or at any
time thereafter up to six months prior to its expiration, and a Stock
Appreciation Right relating to an Incentive Stock Option may be made part of
such option only at the time of its grant.
(b) Each Stock Appreciation Right will entitle the holder to
elect in lieu of exercising the Stock Option to receive the appreciation in the
Fair Market Value of the shares subject thereto up to the date the right is
exercised. In the case of a right issued in relation to a Stock Option, such
appreciation shall be measured from not less than the option price and in the
case of a right issued independently of any Stock Option, such appreciation
shall be measured from not less than 85% of the Fair Market Value of the Common
Shares on the date the right is granted. Payment of such appreciation shall be
made in cash or in Common Shares, or a combination thereof, as set forth in the
Award, but no Stock Appreciation Right shall entitle the holder to receive, upon
exercise thereof, more than the number of Common Shares (or cash of equal value)
with respect to which the right is granted.
(c) Each Stock Appreciation Right will be exercisable at the
times and to the extent set forth therein, but no Stock Appreciation Right may
be exercisable earlier than six months after the date it was granted or later
than the earlier of (i) the term of the related Stock Option, if any, or (ii)
fifteen years after it was granted. Exercise of a Stock Appreciation Right shall
reduce the number of shares issuable under the Plan (and the related Stock
Option, if any) by the number of shares with respect to which the right is
exercised.
8. STOCK AWARDS. Stock Awards will consist of Common Shares transferred
to participants without other payment therefor or payment at less than Fair
Market Value as additional compensation for services to the Company. Stock
Awards shall be subject to such terms and conditions as the Committee determines
appropriate, including, without limitation, restrictions on the sale or other
disposition of such shares and rights of the Company to reacquire such shares
for no consideration upon termination of the participant's employment within
specified periods. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Shares covered by
such an Award. The Committee may also require that
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the stock certificates evidencing such shares be held in custody until the
restrictions thereon shall have lapsed. The participant shall have, with respect
to the Common Shares subject to a Stock Award, all of the rights of a holder of
Common Shares of the Company, including the right to receive dividends and to
vote the shares.
9. PERFORMANCE SHARES.
(a) Performance Shares may be awarded either alone or in
addition to other Awards granted under this Plan and shall consist of the right
to receive Common Shares or cash of an equivalent value at the end of a
specified Performance Period (defined below). The Committee shall determine the
participants to whom and the time or times at which Performance Shares shall be
awarded, the number of Performance Shares to be awarded to any person, the
duration of the period (the "Performance Period") during which, and the
conditions under which, receipt of the Common Shares will be deferred, and the
other terms and conditions of the Award in addition to those set forth in this
Section 9. The Committee may condition the grant of Performance Shares upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine.
(b) Performance Shares awarded pursuant to this Section 9
shall be subject to the following terms and conditions:
(i) Unless otherwise determined by the
Committee at the time of the grant of the Award, amounts equal to any
dividends declared during the Performance Period with respect to the
number of Common Shares covered by a Performance Share Award will not
be paid to the participant.
(ii) Subject to the provisions of the
Performance Share Award and this Plan, at the expiration of the
Performance Period, share certificates and/or cash of an equivalent
value (as the Committee may determine) shall be delivered to the
participant, or his or her legal representative, in a number equal to
the vested shares covered by the Performance Share Award.
(iii) Subject to the applicable provisions
of the Performance Share Award and this Plan, upon termination of a
participant's employment with the Company for any reason during the
Performance Period for a given Performance Share Award, the Performance
Shares in question will vest or be forfeited in accordance with the
terms and conditions established by the Committee.
10. PERFORMANCE UNITS.
(a) Performance Units may be awarded either alone or in
addition to other Awards granted under this Plan and shall consist of the right
to receive a fixed dollar amount, payable in cash
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or Common Shares or a combination of both. The Committee shall determine the
participants to whom and the time or times at which Performance Units shall be
awarded, the duration of Performance Units to be awarded to any person, the
duration of the period (the "Performance Cycle") during which, and the
conditions under which, a participant's right to Performance Units will be
vested, the ability of participants to defer the receipt of payment of such
Performance Units, and the other terms and conditions of the Award in addition
to those set forth in this Section 10. The Committee may condition the vesting
of Performance Units upon the attainment of specified performance goals or such
other factors or criteria as the Committee shall determine.
(b) The Performance Units awarded pursuant to this Section 10
shall be subject to the following terms and conditions:
(i) At the expiration of the Performance
Cycle, the Committee shall determine the extent to which the
performance goals have been achieved, and the percentage of the
Performance Units of each participant that have vested.
(ii) Subject to the applicable provisions of
the Performance Unit Award and this Plan, at the expiration of the
Performance Cycle, cash and/or share certificates of an equivalent
value (as the Committee may determine) shall be delivered to the
participant, or his or her legal representative, in payment of the
vested Performance Units covered by the Performance Unit Award.
(iii) Subject to the applicable provisions
of the Performance Unit Award and this Plan, upon termination of a
participant's employment with the Company for any reason during the
Performance Cycle for a given Performance Unit Award, the Performance
Units in question will vest or be forfeited in accordance with the
terms and conditions established by the Committee.
11. ADJUSTMENT PROVISIONS.
(a) If the Company shall at any time change the number of
issued Common Shares without new consideration to the Company (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Common Shares) or make a distribution of cash or property which has a
substantial impact on the value of issued Common Shares, the total number of
shares available for Awards under this Plan shall be appropriately adjusted and
the number of shares covered by each outstanding Award and the reference price
or Fair Market Value for each outstanding Award shall be adjusted so that the
net value of such Award shall not be changed.
(b) In the case of any sale of assets, merger, consolidation,
combination or other corporate reorganization or restructuring of the Company
with or into another corporation which results in the outstanding Common Shares
being converted into or exchanged for different securities,
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cash or other property, or any combination thereof (an "Acquisition"), subject
to the provisions of this Plan and any limitation applicable to the Award:
(i) any participant to whom a Stock Option
has been granted shall have the right thereafter and during the term of
the Stock Option to receive upon exercise thereof the Acquisition
Consideration (as defined below) receivable upon the Acquisition by a
holder of the number of Common Shares which might have been obtained
upon exercise of the Stock Option or portion thereof, as the case may
be, immediately prior to the Acquisition;
(ii) any participant to whom a Stock
Appreciation Right has been granted shall have the right thereafter and
during the term of such right to receive upon exercise thereof the
difference on the exercise date between the aggregate Fair Market Value
of the Acquisition Consideration receivable upon such acquisition by a
holder of the number of Common Shares which are covered by such right
and the aggregate reference price of such right; and
(iii) any participant to whom Performance
Shares or Performance Units have been awarded shall have the right
thereafter and during the term of the Award, upon fulfillment of the
terms of the Award, to receive on the date or dates set forth in the
Award, the Acquisition Consideration receivable upon the Acquisition by
a holder of the number of Common Shares which are covered by the Award.
The term "Acquisition Consideration" shall mean the kind and amount of
securities, cash or other property or any combination thereof
receivable in respect of one Common Share upon consummation of an
Acquisition.
(c) Notwithstanding any other provision of this Plan, the
Committee may authorize the issuance, continuation or assumption of Awards or
provide for other equitable adjustments after changes in the Common Shares
resulting from any other merger, consolidation, sale of assets, acquisition of
property or stock, recapitalization, reorganization or similar occurrence upon
such terms and conditions as it may deem equitable and appropriate.
(d) In the event that another corporation or business entity
is being acquired by the Company, and the Company assumes outstanding employee
stock options and/or stock appreciation rights and/or the obligation to make
future grants of options or rights to employees of the acquired entity, the
aggregate number of Common Shares available for Awards under this Plan shall be
increased accordingly.
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12. NONTRANSFERABILITY.
(a) Each Award granted under the Plan to a participant shall
not be transferable by him otherwise than required by law or by will or the laws
of descent and distribution, and shall be exercisable, during his lifetime, only
by him. In the event of the death of a participant while the participant is
rendering services to the Company, each Stock Option or Stock Appreciation Right
theretofore granted to him shall be exercisable during such period after his
death as the Committee shall in its discretion set forth in such option or right
at the date of grant (but not beyond the stated duration of the option or right)
and then only:
(i) By the executor or administrator of the estate of
the deceased participant or the person or persons to whom the deceased
participant's rights under the Stock Option or Stock Appreciation Right
shall pass by will or the laws of descent and distribution; and
(ii) To the extent that the deceased participant was
entitled to do so at the date of his death.
(b) Notwithstanding Section 12(a), in the discretion of the
Committee, Awards granted hereunder may be transferred to members of the
participant's immediate family (which for purposes of this Plan shall be limited
to the participant's children, grandchildren and spouse), or to one or more
trusts for the benefit of such immediate family members or partnerships in which
such immediate family members and/or trusts are the only partners, but only if
the Award expressly so provides.
13. OTHER PROVISIONS. Awards under the Plan may also be subject to such
other provisions (whether or not applicable to any other Awards under the Plan)
as the Committee determines appropriate, including without limitation,
provisions for the installment purchase of Common Shares under Stock Options,
provisions for the installment exercise of Stock Appreciation Rights, provisions
to assist the participant in financing the acquisition of Common Shares,
provisions for the forfeiture of, or restrictions on resale or other disposition
of, Shares acquired under any form of Award, provisions for the acceleration of
exercisability or vesting of Awards in the event of a change of control of the
Company or other reasons, provisions for the payment of the value of Awards to
participants in the event of a change of control of the Company or other
reasons, or provisions to comply with Federal and state securities laws, or
setting forth understandings or conditions as to the participant's employment in
addition to those specifically provided for under the Plan.
14. FAIR MARKET VALUE. For purposes of this Plan and any Awards
hereunder, Fair Market value of Common Shares shall be the mean between the
highest and lowest sale prices for the Company's Common Shares as reported on
the NASDAQ National Market (or such other consolidated transaction reporting
system on which such Common Shares are primarily traded) on
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the date immediately preceding the date of grant (or on the next preceding
trading date if Common Shares were not traded on the date immediately preceding
the date of grant), provided, however, that if the Company's Common Shares are
not at any time readily tradeable on a national securities exchange or other
market system, Fair Market Value shall mean the amount determined in good faith
by the Committee as the fair market value of the Common Shares of the Company.
15. WITHHOLDING. All payments or distributions made pursuant to the
Plan shall be net of any amounts required to be withheld pursuant to applicable
federal, state and local tax withholding requirements. If the Company proposes
or is required to distribute Common Shares pursuant to the Plan, it may require
the recipient to remit to it an amount sufficient to satisfy such tax
withholding requirements prior to the delivery of any certificates for such
Common Shares. The Committee may, in its discretion and subject to such rules as
it may adopt, permit an optionee or Award or right holder to pay all or a
portion of the federal, state and local withholding taxes arising in connection
with (a) the exercise of a Nonqualified Stock Option or a Stock Appreciation
Right, (b) the receipt or vesting of Stock Awards, or (c) the receipt of Common
Shares upon the expiration of the Performance Period or the Performance Cycle,
respectively, with respect to any Performance Shares or Performance Units, by
electing to have the Company withhold Common Shares having a Fair Market Value
equal to the amount to be withheld.
16. TENURE. A participant's right, if any, to continue to serve the
Company as an officer, employee, independent contractor, or otherwise, shall not
be enlarged or otherwise affected by such individual's designation as a
participant under the Plan, nor shall this Plan in any way interfere with the
right of the Company, subject to the terms of any separate employment agreement
to the contrary, at any time to terminate such employment or to increase or
decrease the compensation of the participant from the rate in existence at the
time of the grant of an Award.
17. DURATION, AMENDMENT AND TERMINATION. No Award shall be granted
after May 30, 2006 (the "Expiration Date"); provided, however, that the terms
and conditions applicable to any Award granted prior to such date may thereafter
be amended or modified by mutual agreement between the Company and the
participant or such other persons as may then have an interest therein. Also, by
mutual agreement between the Company and a participant hereunder, under this
Plan or under any other present or future plan of the Company, Awards may be
granted to such participant in substitution and exchange for, and in
cancellation of, any Awards previously granted such participant under this Plan,
or any other present or future plan of the Company. The Board may amend the Plan
from time to time or terminate the Plan at any time. However, no action
authorized by this Section 17 shall reduce the amount of any existing Award or
change the terms and conditions thereof without the participant's consent. The
approval of the Company's shareholders will be required for any amendment to the
Plan which would (i) change the class of persons eligible for the grant of Stock
Options, as specified in Section 3 or otherwise materially modify the
requirements as to eligibility for participation in the Plan, (ii) increase the
maximum number of shares subject to Stock Options, as specified in Section 5
(unless made pursuant to the provisions of Section 11) or (iii) materially
increase the benefits accruing to participants under the Plan, within the
meaning of
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Rule 16b-3 promulgated under Act. With respect to persons subject to Section 16
of the Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Act. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. Moreover, in the event the Plan does not include a
provision required by Rule 16b-3 to be stated therein, such provision (other
than one relating to eligibility requirements, or the price and amount of
Awards) shall be deemed automatically to be incorporated by reference into the
Plan insofar as participants subject to Section 16 of the Act are concerned.
18. GOVERNING LAW. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Florida (regardless of the law that might otherwise govern under applicable
Florida principles of conflict of laws).
19. SHAREHOLDER APPROVAL. The Plan was adopted by the Board of the
Company and approved by the Company's shareholders on May 31, 1996.
20. BOARD AMENDMENT. Section 2 of the Plan was amended by action taken
by the Board of the Company on February 19, 1997, which amendment did not
require approval of the shareholders of the Company.
21. SHAREHOLDERS AMENDMENTS. Section 5 of the Plan was amended to
increase the number of Common Shares reserved for issuance under the Plan (a) to
3,000,000 Common Shares by action taken by the Board on February 19, 1997, which
amendment was approved by the shareholders of the Company at the Company's
annual meeting of shareholders held on May 15, 1997, and (b) to 4,000,000 Common
Shares by action taken by the Board on March 12, 1998, which amendment was
approved by the shareholders of the Company at the Company's annual meeting of
shareholders held on June 12, 1998.
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