**Exhibit 10.16**

** **

**EMPLOYMENT AGREEMENT**

 

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

 

PreliminaryStatement

 

WHEREAS, the Company desiresto engage the services and employment of Executive for the period provided inthis Agreement, and Executive is willing to accept employment by the Company ona full-time basis for such period, upon the terms and conditions hereinafterset forth; and

 

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

 

NOW, THEREFORE, inconsideration of the foregoing premises and the mutual covenants hereincontained, the parties hereto agree as follows:

 

 

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

 

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

 

3.             Terms and Duties.

 

(a)           Term of Employment.  The period of Executive’s employment underthis Agreement shall commence on the date of this Agreement and shall continuethrough December 31, 2002; provided, however, that such termshall be automatically extended for successive one-year periods unless eitherparty shall give written notice to the other party electing to terminate thisAgreement at least 30 days prior to the scheduled expiration.  Such termination notice shall indicatewhether it is a termination for Cause or without Cause (if delivered by theCompany) or for Good Reason or without Good Reason (if delivered by theEmployee), and the applicable provision of Section 7 or Section 8 shall applyto such termination.  The period of theExecutive’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 shalldevote his best efforts and all his business time, attention, skill and effortsto the business and affairs of the Company and its subsidiaries, as suchbusiness and affairs now exist and as they may be hereafter changed or

 

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

 

4.             Compensationand Reimbursement of Expenses; Other Benefits.

 

(a)           Compensation.  The Company shall compensate Executiveduring 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 lessthan Three Hundred Twenty Five Thousand Dollars ($325,000)**per year in installmentsconsistent with the Company’s usual practices.

 

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

 

(iii)          Vacation.  The Executive shall be entitled to fourweek’s annual paid vacation (in addition to customary business holidays) inaccordance with the Company’s policy that may be applicable to executiveemployees from time to time.

 

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

 

(v)           Other Benefits.  During the Term, Executive shall be entitledto participate in any medical and health plans and shall receive all otherbenefits of employment generally available to other members of the Company’ssenior management and those benefits for which key executives are or shallbecome 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’sBase Salary within twelve (12) months after his date of employment and annuallythereafter, based on the Company’s performance and the Executive’s performanceof his position and responsibilities. The Executive’s Base Salary may be

 

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decreased by theBoard as a result of financial hardship experienced by the Company, providedthat (A) such decrease shall be made only as a part of a general seniormanagement salary or benefits reduction which does not affect Executivedisproportionately and (B) such decrease shall be effective only for so long assuch financial hardship shall exist, as determined by the Board.

 

(b)           Reimbursement of Expenses.  The Company shall pay or reimburse Executivefor all reasonable travel, living and other business expenses incurred byExecutive in performing his obligations under this Agreement in accordance withthe policies, practices and procedures established from time to time by theBoard; provided, however, that, such travel and living expensesshall 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 hereundershall be subject to applicable withholding and payroll taxes and such otherdeduc­tions as may be required by law or under any of the Company’s policies orplans from time to time in effect.

 

5.             Benefits Payable Upon Disability or Death.

 

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

 

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

 

6.             Obligations of Executive During and After Employment.

 

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

 

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

 

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

 

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

 

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

 

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

 

For purposes of this Section6(b), a person or entity (including, without limitation, the Executive) shallbe deemed to be a competitor of the Company or any of its affiliates, or aperson or entity (including, without limitation, the Executive) shall be deemedto be engaging in competition with the Company or any of its affiliates, onlyif 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 orarchiving systems, software, components or supplies, (ii) on-site computeror network equipment repair and maintenance services (or any other serviceswhich compete with the business of the Company’s Computer and Network Servicesdivision or any successor thereto), or (iii) such other business or businessesas the Company may conduct during the Term in such geographical area or areasas such business or businesses are conducted by the Company.

 

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

 

Forpurposes of this Section 6(b), proprietary interest in a business isownership, whether through direct or indirect stock holdings or otherwise, ofone percent (1%) or more of such business. The Executive shall be deemed to acquire a proprietary interest in abusiness or to be made an officer or director of such business if Executiveshall have entered into a definitive agreement or letter of intent with respectthereto.

 

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

 

7.             TerminationBy Company.

 

(a)           TerminationFor Cause.  Except as otherwiseprovided herein, the Company may terminate the employment of Executive forCause at any time upon written notice to Executive specifying the cause oftermination.  If terminated pursuant tothis Section 7(a), (i) the then current Base Salary shall be paid on aprorated 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 yetpaid shall be paid (on a prorated basis if such bonus relates to any periodfollowing such termination.  Atermination by the Company under this Section 7(a) shall not prejudice anyremedy to which the Company may be entitled either at law, in equity, or underthis Agreement.

 

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

 

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

 

8.             Terminationby Executive.

 

(a)           TerminationFor Good Reason.  If Executiveterminates his employment hereunder for Good Reason, he shall be entitled tothe benefits set forth herein applicable to termination without Cause as setforth in Section 7(b) hereof

 

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

 

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

 

10.           No Obligation to Mitigate Damages.

 

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

 

(b)           The provisions of this Agreement, andany payment provided for hereunder, shall not reduce any amounts otherwisepayable, or in any way diminish Executive’s existing rights, or rights whichwould 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 arisingunder or in connection with this Agreement, or the breach hereof, shall besettled exclusively by arbitration in accordance with the CommercialArbitration Rules of the American Arbitration Association then in effect.  Judgment upon the award rendered by theArbitrator(s) may be entered in any court having jurisdiction thereof.  Any arbitration held pursuant to thisSection 12 shall take place in New York, New York.

 

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

 

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If to the Company:

 

Welsh Carson Anderson &Stowe

320Park Avenue

Suite2500

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 mayhave furnished to the other in writing in accordance herewith, except thatnotices of change of address shall be effective only upon receipt.

 

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

 

14.           Severability.  The invalidity or unenforceability of anyprovisions of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement, which shall remain in full force andeffect.

 

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

 

 

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, theExecutive and the Company (pursuant to a resolution of its Board adopted at aduly constitute meeting) have executed this Agreement, effective as of the datefirst 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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EXHIBITA

toEmployment Agreement

 

Definitions

 

“Cause”shall exist if Executive (i) has been convicted or entered a plea of nolocontendere to a felony or a misdemeanor involving moral turpitude, includingfraud, theft or embezzlement; (ii) has failed or refused (in a materialrespect) to follow reasonable policies or directives established by the Boardwhich failure or refusal continues for ten (10) days following written noticethereof to Executive; (iii) has willfully and persistently failed to attend tomaterial duties or obligations imposed on him under this Agreement whichfailure continues for ten (10) days following written notice thereof toExecutive; or (iv) has engaged in any act that constitutes a breach of hisfiduciary duties to, or involves a conflict of interest with, the Company orinvolves a usurpation of a material opportunity of the Company ormisappropriation or conversion of assets, which act or breach continues or isnot cured within ten (10) days following written notice thereof to Executive.

 

“Change ofControl” means (i) a merger or consolidation of the Company with or intoanother entity (other than a merger in which the Company is the survivingCompany and which will not result in more than 50% of the capital stock of theCompany outstanding immediately after the effective date of such merger beingowned of record or beneficially by persons other than the holders of suchcapital stock immediately prior to such merger), (ii) the sale or otherdisposition of all or substantially all of the assets or properties of theCompany, (iii) the acquisition of “beneficial ownership” by any “person”or “group” (other than Welsh, Carson, Anderson & Stowe VIII, L.P. or itsaffiliates) of voting stock of the Company representing more than 50% of thevoting power of all outstanding shares of such voting stock, whether by way ofmerger or consolidation or otherwise, whether or not Executive shall have votedfor such Change of Control as a director or consented thereto expressly inwriting.  As used herein, (i) the terms“person” and “group” shall have the meaning set forth in Section 13(d)(3) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”), whetheror not applicable, (ii) the term “beneficial owner” shall have the meaning setforth in Rules 13d-3 and 13d-5 under the Exchange Act, whether or notapplicable, 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 rightis exercisable immediately or only after the passage of time or upon theoccurrence of certain events, and (iii) any “person” or “group” will be deemedto beneficially own any voting stock of an issuer held by a registered holderso long as such person or group beneficially owns, directly or indirectly, inthe aggregate a majority of the voting stock of such registered holder.

 

“Good Reason”means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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