Exhibit 10.16

 

EMPLOYMENT AGREEMENT

 

This AGREEMENT, made effective as of August 1, 2002, between BancTec, Inc., a
Delaware corporation (the “Company”), and Brian R. Stone (“Executive”).

 

Preliminary Statement

 

WHEREAS, the Company desires to engage the services and employment of Executive
for the period provided in this Agreement, and Executive is willing to accept
employment by the Company on a full-time basis for such period, upon the terms
and conditions hereinafter set forth; and

 

WHEREAS, the execution of this Agreement and the terms of compensation contained
herein have been duly authorized by the Board of Directors of the Company
(“Board”).

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereto agree as follows:

 

 

1.             Definitions.  Certain capitalized terms used in this Agreement
have the meanings assigned to them on Exhibit A hereto.

 

2.             Employment.  The Company agrees to employ Executive and Executive
agrees to accept employment by the Company, for the period stated in paragraph 3
hereof and upon the other terms and conditions herein provided.  During the
period of his employment hereunder, Executive agrees to serve the Company and
the Company shall employ Executive as Senior Vice President and Chief Financial
Officer.  The Executive shall also serve as a member of the Board.  The
Executive shall report directly to the Chief Executive Officer and to the Board.

 

3.             Terms and Duties.

 

(a)           Term of Employment.  The period of Executive’s employment under
this Agreement shall commence on the date of this Agreement and shall continue
through December 31, 2002; provided, however, that such term shall be
automatically extended for successive one-year periods unless either party shall
give written notice to the other party electing to terminate this Agreement at
least 30 days prior to the scheduled expiration.  Such termination notice shall
indicate whether it is a termination for Cause or without Cause (if delivered by
the Company) or for Good Reason or without Good Reason (if delivered by the
Employee), and the applicable provision of Section 7 or Section 8 shall apply to
such termination.  The period of the Executive’s employment hereunder is
hereafter referred to as the “Term”.

 

(b)           Duties.  During the Term and except for illness, reasonable
vacation periods, and reasonable leaves of absence, Executive shall devote his
best efforts and all his business time, attention, skill and efforts to the
business and affairs of the Company and its subsidiaries, as such business and
affairs now exist and as they may be hereafter changed or

 

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added to, under and pursuant to the general direction of the Board.  The Company
shall retain full direction and control of the means and methods by which
Executive performs the services for which he is employed hereunder; provided,
however, that, Executive may serve, or continue to serve, on the boards of
directors of and hold any other offices or positions in, companies or
organizations which, in such Board’s judgment, will not present any conflict of
interest with the Company or any of its subsidiaries or affiliates or divisions,
or materially affect the performance of Executive’s duties pursuant to this
Agreement, provided that the Executive shall have notified the Board and the
Board shall have adopted a resolution authorizing the Executive to serve, or
continue to serve, such company or organization in such capacity.

 

4.             Compensation and Reimbursement of Expenses; Other Benefits.

 

(a)           Compensation.  The Company shall compensate Executive during the
Term as follows:

 

(i)            Base Salary.  Executive shall be paid a base salary, adjusted as
provided in Section 4(a)(vii), (“Base Salary”) of not less than Three Hundred
Twenty Five Thousand Dollars ($325,000) per year in installments consistent with
the Company’s usual practices.

 

(ii)           Bonus.  The Board may (but shall not be obligated to) award a
discretionary bonus in respect of any calendar year during the Term, in its sole
and absolute discretion.  Any bonus awarded pursuant to this clause (ii) is
sometimes referred to herein as a “Bonus”.

 

(iii)          Vacation.  The Executive shall be entitled to four week’s annual
paid vacation (in addition to customary business holidays) in accordance with
the Company’s policy that may be applicable to executive employees from time to
time.

 

(iv)          Officers and Directors Insurance.  The Company shall maintain
officers and directors insurance covering any actions taken by the Executive in
the performance of his duties hereunder on customary terms in an amount not less
than $10,000,000, provided that the total annual cost of maintaining officers
and directors insurance for the Company and its subsidiaries shall not exceed
$300,000.

 

(v)           Other Benefits.  During the Term, Executive shall be entitled to
participate in any medical and health plans and shall receive all other benefits
of employment generally available to other members of the Company’s senior
management and those benefits for which key executives are or shall become
eligible, including, without limitation, bonus or profit-sharing plans, life
insurance, disability insurance, auto allowance and club membership.

 

(vi)          Base Salary Review.  The Company agrees to review Executive’s Base
Salary within twelve (12) months after his date of employment and annually
thereafter, based on the Company’s performance and the Executive’s performance
of his position and responsibilities.  The Executive’s Base Salary may be

 

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decreased by the Board as a result of financial hardship experienced by the
Company, provided that (A) such decrease shall be made only as a part of a
general senior management salary or benefits reduction which does not affect
Executive disproportionately and (B) such decrease shall be effective only for
so long as such financial hardship shall exist, as determined by the Board.

 

(b)           Reimbursement of Expenses.  The Company shall pay or reimburse
Executive for all reasonable travel, living and other business expenses incurred
by Executive in performing his obligations under this Agreement in accordance
with the policies, practices and procedures established from time to time by the
Board; provided, however, that, such travel and living expenses shall not exceed
$100,000 in any 12-month period.

 

(c)           Withholding, Etc.  The payment of any Base Salary, Bonus,
incentive compensation or other amounts to the Executive as provided hereunder
shall be subject to applicable withholding and payroll taxes and such other
deduc­tions as may be required by law or under any of the Company’s policies or
plans from time to time in effect.

 

5.             Benefits Payable Upon Disability or Death.

 

(a)           Disability.  If during the Term Executive should fail to perform
his duties hereunder on account of illness or other incapacity which the Board
shall in good faith determine renders Executive incapable of substantially
performing his duties hereunder for a period of 180 days, whether or not
consecutive, during any period of 12 consecutive months, the Company shall have
the right, upon written notice to Executive to terminate this Agreement.  If
terminated pursuant to this Section 5(a), (i) the then current Base Salary shall
be paid on a prorated basis to the date of termination (to the extent not
theretofore paid), (ii) any Bonus previously awarded by the Board to Executive
but not yet paid shall be paid (on a prorated basis if such Bonus relates to any
period following such termination), and (iii) Executive shall be entitled to
disability payments and coverage upon the basis available to Company employees
under, and subject to the terms and provisions of, disability benefit plans of
Company which may from time to time be in effect and applicable to employees.

 

(b)           Death.  If Executive shall die during the Term, the employment of
Executive shall thereupon terminate.  If terminated pursuant to this Section
5(b), (i) the then current Base Salary shall be paid on a prorated basis to the
date of termination (to the extent not theretofore paid) and (ii) any Bonus
previously awarded by the Board to Executive buy not yet paid shall be paid (on
a prorated basis if such Bonus relates to any period following such
termination).

 

6.             Obligations of Executive During and After Employment.

 

(a)           Confidentiality.  Executive realizes that during the course of his
employment he will have produced and/or have access to confidential information,
records, notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of Company and its affiliated companies. 
Therefore, during or subsequent to his employment by Company, or by an
affiliated company, Executive agrees to hold in confidence and not directly or
indirectly to disclose or use or copy or make lists of any such information,
except to the extent

 

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authorized by the Company in writing, (ii) during the Term to the extent
necessary or appropriate and in the best interest of the Company in connection
with the performance of Executive’s duties to the Company or (iii) as required
by applicable law or compulsory legal process.  In the event that Executive is
requested or required to disclose any such information pursuant to any
applicable law or compulsory legal process, Executive will give the Company
prompt notice thereof so that it may seek an appropriate protective order or
other remedy, and if such protective order or other remedy is not obtained,
Executive will use his reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded any information so furnished.  All
records, files, drawings, documents, equipment, and the like, or copies thereof,
relating to the Company’s business, or the business of an affiliated company,
which Executive shall prepare, or use, or come into contact with, shall be and
remain the sole property of Company, or of an affiliated company, and shall not
be removed from the Company’s or the affiliated Company’s premises without its
written consent, except during the Term to the extent necessary or appropriate
and in the best interest of the Company in connection with the performance of
Executive’s duties to the Company.  All such items shall be promptly returned to
the Company upon termination of the Executive’s employment with the Company and
its affiliated companies.

 

(b)           Non-Competition.  During the Term and during the twelve-month
period follow­ing the termination of the Executive’s employment hereunder for
any reason whatsoever:

 

(i)            the Executive will not directly or indirectly (as a director,
officer, employee, manager, consultant, indepen­dent contractor, advisor or
otherwise) engage in competition with, or own any interest in, perform any
services for, participate in or be connected with (i) any business or
organization which engages in competition with the Company or any of its
affiliates in any geographical area where any business is presently carried on
by the Company or any of its affiliates, or (ii) any business or organization
which engages in competition with the Company or any of its affiliates in any
geographical area where any business shall be hereafter, during the period of
the Executive’s employment by the Company, carried on by the Company or any of
its affiliates, if such business is then being carried on by the Company or any
of its affiliates in such geographical area;

 

(ii)           the Executive will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its affiliates;
and

 

(iii)          the Executive will not directly or indirectly hire, engage, send
any work to, place orders with, or in any manner be associated with any
supplier, contractor, subcon­tractor or other person or firm which rendered
manufacturing or other services, or sold any products, to the Company or any of
its affiliates if such action by him would have a material adverse effect on the
business, assets or financial condition of the Company or any of its affiliates.

 

For purposes of this Section 6(b), a person or entity (including, without
limitation, the Executive) shall be deemed to be a competitor of the Company or
any of its affiliates, or a person or entity (including, without limitation, the
Executive) shall be deemed to be engaging in competition with the Company or any
of its affiliates, only if such person or entity in any way

 

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conducts, operates, carries out or engages in (i) the design, creation,
manufacture, assembly, integration, installation, service, or maintenance of
document imaging, payments processing, workflow or archiving systems, software,
components or supplies, (ii) on-site computer or network equipment repair and
maintenance services (or any other services which compete with the business of
the Company’s Computer and Network Services division or any successor thereto),
or (iii) such other business or businesses as the Company may conduct during the
Term in such geographical area or areas as such business or businesses are
conducted by the Company.

 

In connection with the foregoing provisions of this Section 6(b), the Executive
represents that his experience, capabilities and circumstances are such that
such provisions will not prevent him from earning a livelihood.  The Executive
further agrees that the limitations set forth in this Section 6(b) (including,
without limitation, any time or territorial limitations) are reasonable and
properly required for the adequate protection of the businesses of the Company
and its affiliates.  It is understood and agreed that the covenants made by the
Executive in this Section 6(b) shall survive the termination of the Term and the
expiration or termination of this Agreement.

 

For purposes of this Section 6(b), proprietary interest in a business is
ownership, whether through direct or indirect stock holdings or otherwise, of
one percent (1%) or more of such business.  The Executive shall be deemed to
acquire a proprietary interest in a business or to be made an officer or
director of such business if Executive shall have entered into a definitive
agreement or letter of intent with respect thereto.

 

The Executive acknowledges and agrees that a remedy at law for any breach or
threatened breach of the provisions of this Section 6(b) would be inadequate
and, therefore, agrees that the Company and any of its affiliates shall be
entitled to injunctive relief in addition to any other available rights and
remedies in cases of any such breach or threatened breach; provided, however,
that nothing contained herein shall be construed as prohibiting the Company or
any of its affiliates from pursuing any other rights and remedies available for
any such breach or threatened breach.

 

7.             Termination By Company.

 

(a)           Termination For Cause.  Except as otherwise provided herein, the
Company may terminate the employment of Executive for Cause at any time upon
written notice to Executive specifying the cause of termination.  If terminated
pursuant to this Section 7(a), (i) the then current Base Salary shall be paid on
a prorated basis to the date of termination (to the extent not theretofore paid)
and (ii) any bonus previously awarded by the Board to Executive buy not yet paid
shall be paid (on a prorated basis if such bonus relates to any period following
such termination.  A termination by the Company under this Section 7(a) shall
not prejudice any remedy to which the Company may be entitled either at law, in
equity, or under this Agreement.

 

(b)           Termination Without Cause.  The Company may terminate the
employment of Executive without Cause at any time upon written notice to
Executive; provided, however, that the Company shall be obligated to pay
Executive, as severance, an amount equal to the sum of the then current Base
Salary and the Bonus awarded to Executive in respect of the preceding 12-month
period (it being understood that to the extent any portion of such Bonus

 

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relates a prior period, such Bonus will be appropriately prorated), which
severance shall be payable in 12 equal monthly installments following the date
of termination.

 

8.             Termination by Executive.

 

(a)           Termination For Good Reason.  If Executive terminates his
employment hereunder for Good Reason, he shall be entitled to the benefits set
forth herein applicable to termination without Cause as set forth in Section
7(b) hereof

 

(b)           Termination Without Good Reason.  If Executive terminates his
employment hereunder without Good Reason, (i) his then current Base Salary shall
be paid on a prorated basis to the date of the termination (to the extent not
theretofore paid) and (ii) any Bonus previously awarded by the Board to
Executive buy not yet paid shall be paid (on a prorated basis if such Bonus
relates to any period following such termination).

 

9.             Company’s Insurance on Executive.  The Company may secure in its
own name, or otherwise, and at its own expense, life, health, accident and other
insurance covering Executive, or Executive and others.  Executive agrees to
assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations and by signing, as the insured, such
applications and other instruments in writing as may be reasonably required by
the insurance companies to which application is made for such insurance. 
Executive agrees that he shall have no rights, title or interest in or to any
insurance policies or the proceeds thereof which the Company may so elect to
take out or to continue on his life.

 

10.           No Obligation to Mitigate Damages.

 

(a)           Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Agreement
be reduced by any compensation earned by Executive as a result of employment by
another employer or by payment to him of retirement benefits after the date of
termination of his employment.

 

(b)           The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish Executive’s existing rights, or rights which would accrue solely as a
result of the passage of time, under any benefit plan, employment agreement or
other contract, plan or arrangement.

 

11.           Arbitration.  Any dispute, controversy or claim arising under or
in connection with this Agreement, or the breach hereof, shall be settled
exclusively by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then in effect.  Judgment upon the award
rendered by the Arbitrator(s) may be entered in any court having jurisdiction
thereof.  Any arbitration held pursuant to this Section 12 shall take place in
New York, New York.

 

12.           Notice.  For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:

 

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If to the Company:

 

Welsh Carson Anderson & Stowe

320 Park Avenue

Suite 2500

New York, NY 10022

Attention:  Robert Minicucci and Sanjay Swani

 

If to the Executive:

 

Brian R. Stone

3 Trieste

Irvine, CA 92606

 

 

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

13.           Non-Waiver, Complete Agreement, Governing Law.  No provisions of
this Agreement may be modified, waived or discharged except in writing signed by
both parties.  No waiver by either party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement. 
This Agreement shall be governed by and construed in accordance with the laws of
the State of Texas.

 

14.           Severability.  The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

15.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

 

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Executive and the Company (pursuant to a resolution of
its Board adopted at a duly constitute meeting) have executed this Agreement,
effective as of the date first above written.

 

 

BANCTEC, INC.,

 

a Delaware corporation

 

 

 

 

 

By

/s/ Robert Minicucci

 

 

 

Name: Robert Minicucci

 

 

Title: Director

 

 

 

 

 

 

 

 

 

/s/ Brian R. Stone

 

 

Brian R. Stone, Executive

 

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EXHIBIT A

to Employment Agreement

 

Definitions

 

“Cause” shall exist if Executive (i) has been convicted or entered a plea of
nolo contendere to a felony or a misdemeanor involving moral turpitude,
including fraud, theft or embezzlement; (ii) has failed or refused (in a
material respect) to follow reasonable policies or directives established by the
Board which failure or refusal continues for ten (10) days following written
notice thereof to Executive; (iii) has willfully and persistently failed to
attend to material duties or obligations imposed on him under this Agreement
which failure continues for ten (10) days following written notice thereof to
Executive; or (iv) has engaged in any act that constitutes a breach of his
fiduciary duties to, or involves a conflict of interest with, the Company or
involves a usurpation of a material opportunity of the Company or
misappropriation or conversion of assets, which act or breach continues or is
not cured within ten (10) days following written notice thereof to Executive.

 

“Change of Control” means (i) a merger or consolidation of the Company with or
into another entity (other than a merger in which the Company is the surviving
Company and which will not result in more than 50% of the capital stock of the
Company outstanding immediately after the effective date of such merger being
owned of record or beneficially by persons other than the holders of such
capital stock immediately prior to such merger), (ii) the sale or other
disposition of all or substantially all of the assets or properties of the
Company, (iii) the acquisition of “beneficial ownership” by any “person” or
“group” (other than Welsh, Carson, Anderson & Stowe VIII, L.P. or its
affiliates) of voting stock of the Company representing more than 50% of the
voting power of all outstanding shares of such voting stock, whether by way of
merger or consolidation or otherwise, whether or not Executive shall have voted
for such Change of Control as a director or consented thereto expressly in
writing.  As used herein, (i) the terms “person” and “group” shall have the
meaning set forth in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), whether or not applicable, (ii) the term
“beneficial owner” shall have the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, whether or not applicable, except that a person shall be
deemed to have “beneficial ownership” of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events, and (iii) any
“person” or “group” will be deemed to beneficially own any voting stock of an
issuer held by a registered holder so long as such person or group beneficially
owns, directly or indirectly, in the aggregate a majority of the voting stock of
such registered holder.

 

“Good Reason” means:

 

(i)            the assignment to the Executive of any duties or responsibilities
which result in any substantial diminution of or material change in Executive’s
position, status or circumstances of employment, or any removal of Executive
from, or failure to re-elect Executive to, any of such positions, except as may
occur in connection with the termination of the Executive’s employment for
Cause;

 

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(ii)           reduction by the Company in the Executive’s Base Salary, except
for any decrease by the Board as a result of financial hardship experienced by
the Company, provided that (A) such decrease shall be made only as a part of a
general senior management salary or benefits reduction which does not affect
Executive disproportionately and (B) such decrease shall be effective only for
so long as such financial hardship shall exist, as determined by the Board;

 

(iii)          a relocation of the Executive or the Company’s principal office
to a location more than fifty (50) miles from the location of its principal
office in the State of Texas on the date of this Agreement, except for any
relocation accepted by the Executive in writing;

 

(iv)          any material breach by the Company of any provision of this
Agreement (which breach has not been cured within ten (10) days following
written notice thereof to the Company), unless the Executive has committed any
material breach of his obligations hereunder (which breach has not been cured
within ten (10) days following written notice thereof to the Executive);

 

(v)           a Change of Control, unless the Executive shall have approved such
Change of Control and agreed to remain employed by the Company or its successor
following such Change of Control; or

 

(vi)          Executive and the Company shall agree in writing that Executive
shall resign his position with the Company and such agreement provides that such
resignation shall constitute “Good Reason”.

 

“WCAS Investors” means Welsh, Carson, Anderson & Stowe VIII, L.P., Welsh Carson
Capital Partners III, L.P., each of their Affiliates, and each officer,
director, member, shareholder, partner, family member or Affiliate of any such
Person, in each case who owns or becomes the owner of any Securities of the
Company.

 

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