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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File Number 000-21771
West TeleServices Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 47-0777362
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation
or organization)
11808 Miracle Hills Drive, Omaha, Nebraska 68154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402) 963-1500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No __
At May 7, 1999, 63,330,000 shares of Common Stock, par value $.01 per share, of
the registrant were outstanding.
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INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION.................................................. 3
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1999 and December 31, 1998... 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1999 and 1998......................... 4
Consolidated Statements of Cash Flows - Three Months Ended
March 31, 1999 and 1998............................................ 5
Notes to Consolidated Financial Statements........................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8
Item 3. Quantitative and Qualitative Disclosure About Market Risk............ 11
PART II. OTHER INFORMATION..................................................... 12
Item 1. Legal Proceedings.................................................... 12
Item 5. Other Information.................................................... 13
Item 6. Exhibits and Reports on Form 8-K..................................... 13
SIGNATURES...................................................................... 14
</TABLE>
2
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
WEST TELESERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,836 $ 6,928
Accounts receivable, net of allowance for doubtful accounts of $2,533 and $1,870 106,730 98,300
Notes receivable 4,412 3,462
Accounts receivable - financing 3,546 2,637
Other 18,445 14,798
--------- ---------
Total current assets 148,969 126,125
PROPERTY AND EQUIPMENT:
Land and improvements 5,274 5,183
Buildings 28,010 27,746
Telephone and computer equipment 139,795 124,950
Office furniture and equipment 30,386 25,982
Leasehold improvements 38,755 34,703
Construction in progress 3,025 7,117
--------- ---------
Total property and equipment 245,245 225,681
Accumulated depreciation and amortization (86,833) (81,542)
--------- ---------
Total property and equipment, net 158,412 144,139
GOODWILL, net of accumulated amortization of $3,959 and $3,537 46,574 46,996
NOTES RECEIVABLE AND OTHER ASSETS 8,828 8,879
--------- ---------
TOTAL ASSETS $ 362,783 $ 326,139
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable - bank $ 3,000 $ 2,000
Notes payable - financing 240 344
Accounts payable 15,633 12,857
Customer deposits and holdbacks 15,644 13,476
Accrued wages and benefits 9,536 5,305
Accrued phone expense 7,076 9,052
Other current liabilities 4,641 4,146
Current maturities of long-term obligations 10,331 8,246
Income tax payable 8,241 -
--------- ---------
Total current liabilities 74,342 55,426
LONG TERM OBLIGATIONS, less current maturities 26,789 22,706
DEFERRED INCOME TAXES 5,535 5,799
COMMITMENTS AND CONTINGENCIES (Note 2) - -
STOCKHOLDERS' EQUITY
Preferred stock $0.01 par value, 10,000 shares authorized,
no shares issued and outstanding - -
Common stock $0.01 par value, 200,000 shares authorized,
63,330 shares issued and outstanding 633 633
Additional paid-in capital 157,647 157,647
Retained earnings 97,837 83,928
--------- ---------
Total stockholders' equity 256,117 242,208
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 362,783 $ 326,139
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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WEST TELESERVICES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
-------------------------
1999 1998
--------- ---------
REVENUE $ 137,992 $ 116,075
COST OF SERVICES 71,729 62,734
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 44,461 33,356
--------- ---------
NET OPERATING INCOME 21,802 19,985
OTHER INCOME (EXPENSE):
Interest income 1,048 770
Interest expense - including interest
expense - financing of $172 and $154 (779) (278)
Other income (expense), net 109 (254)
--------- ---------
Net other income 378 238
--------- ---------
NET INCOME BEFORE INCOME TAX EXPENSE 22,180 20,223
INCOME TAX EXPENSE:
Current income tax expense 8,790 7,722
Deferred income tax expense (benefit) (519) 89
--------- ---------
Total income tax expense 8,271 7,811
--------- ---------
NET INCOME $ 13,909 $ 12,412
========= =========
EARNINGS PER COMMON SHARE:
Basic $ 0.22 $ 0.20
========= =========
Diluted $ 0.22 $ 0.20
========= =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic common shares 63,330 63,330
Dilutive impact of potential common shares
from stock options 459 -
--------- ---------
Diluted common shares 63,789 63,330
========= =========
The accompanying notes are an integral part of these financial statements.
4
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WEST TELESERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE> <CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,909 $12,412
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 8,342 6,175
(Gain) loss on sale of equipment 14 (2)
Deferred income tax expense (benefit) (519) 89
Changes in operating assets and liabilities:
Accounts receivable (8,430) (18,121)
Other assets and vendor receivables (3,560) (4,266)
Accounts payable 2,776 3,684
Other liabilities and accrued expenses 2,750 (236)
Customer deposits and holdbacks 2,168 1,593
Income tax payable 8,438 7,612
--------- ---------
Net cash flows from operating activities 25,888 8,940
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (13,005) (15,905)
Proceeds from disposal of property and equipment 55 32
Issuance of notes receivable (2,153) (1,949)
Proceeds from payments of notes receivable 1,225 524
--------- ---------
Net cash flows from investing activities (13,878) (17,298)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term obligations (3,089) (1,694)
Net change in line of credit agreement 1,000 -
Net change in accounts receivable financing and notes payable financing (1,013) 460
---------- --------
Net cash flows from financing activities (3,102) (1,234)
---------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 8,908 (9,592)
CASH AND CASH EQUIVALENTS, Beginning of period 6,928 39,820
--------- ---------
CASH AND CASH EQUIVALENTS, End of period $ 15,836 $ 30,228
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 781 $ 278
========= =========
Cash paid during the period for income taxes $ 274 $ 116
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Reduction of accounts receivable through issuance of notes receivable $ - $ 715
========= =========
Acquisition of property through assumption of long-term obligations $ 9,257 $ -
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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WEST TELESERVCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF CONSOLIDATION AND PRESENTATION
West TeleServices Corporation and its direct and indirect subsidiaries (the
"Company") provide a full range of customized telecommunications-based services
to business clients on an outsourced basis. The Company is a leading provider
in each of inbound operator services, automated voice response services and
outbound direct teleservices through its call centers throughout the United
States. The Company's inbound operator services consist of live operator call-
processing applications such as order capture, customer service and product
support. The Company's automated voice response services consist of
computerized call-processing applications such as automated product information
requests, pre-paid calling card services and secure automated credit card
activation. The Company's outbound direct teleservices consist of live operator
direct marketing applications such as product sales and customer acquisition and
retention campaigns. All significant intercompany balances and transactions
have been eliminated.
The accompanying unaudited consolidated financial statements reflect all
normal and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position, operating results,
and cash flows for the interim periods. The consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Form 10-K for
the year ended December 31, 1998.
Certain amounts in prior fiscal periods have been reclassified for
comparative purposes.
2. COMMITMENTS AND CONTINGENCIES
From time to time, the Company is subject to lawsuits and claims which arise
out of its operations in the normal course of its business. The Company and
certain of its subsidiaries are defendants in various litigation matters in the
ordinary course of business, some of which involve claims for damages that are
substantial in amount. The Company believes, except for the items discussed
below and in its Form 10-K for the year ended December 31, 1998, for which the
Company is currently unable to predict the outcome, the disposition of claims
currently pending will not have a material adverse effect on the Company's
financial position or results of operations.
West Interactive Corporation, a wholly owed subsidiary of the Company, is a
defendant in a case brought in the United States District Court for the Southern
District of Georgia, Augusta Division, on September 12, 1991. This case is
currently captioned Lamar Andrews, et al., Plaintiff v. American Telephone &
Telegraph Company, et al., Defendants, No. CV 191-175. The seven named
plaintiffs allege that they paid for one or more "900" number calls pertaining
to programs offering sweepstakes, games of chance, awards, cash or other prizes,
gifts or information on unclaimed funds. West Interactive Corporation provided
interactive voice processing and other services to one or more customers which
conducted some of the programs at issue in the litigation. The billing and
collection services were provided through AT&T and US Sprint Communication
Company Limited Partnership. The plaintiffs' second amended complaint alleges
that the programs at issue involved, among other things, acts of unlawful
gambling and the collection of illegal gambling debts, mail fraud and wire fraud
in violation of the Racketeering Influenced and Corrupt Organizations Act
("RICO"), the Communications Act of 1934, the federal common law of
communications, the Georgia RICO statute, and other state and federal laws.
AT&T has asserted a cross-claim against West Interactive Corporation seeking
contractual and common law indemnity and contribution. The action seeks
recovery of treble damages, punitive damages, costs and attorneys' fees. On
October 2, 1998, the court heard argument on cross-motions for summary judgment
by all parties. On March 30, 1999, the district court entered an order
dismissing the plaintiffs' mail and wire fraud claims under RICO, as well as its
claims under the
6
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Georgia RICO statute. The court also held that some of the "900" number programs
conducted by the customers of West Interactive Corporation violated the gambling
laws of Nebraska and Georgia and directed that the remaining issues of the case
proceed to trial on the plaintiffs' claims under RICO based on the alleged
collection of illegal gambling debts.
West Interactive Corporation, and Troy Eaden and Gary West, Co-Chairmen of
the Board and directors of the Company, are named as defendants in a case filed
on August 19, 1997, which is pending in the United States District Court for the
Southern District of Georgia. The case is captioned Janie Gilchrist,
individually and on behalf of a class of all other persons similarly situated,
v. Direct American Marketers, Inc., Anthony Brown, Integretel, Inc., Troy Eaden,
Gary West, West Interactive Corporation and Bellsouth Corporation, File No.
CV197-233. Plaintiff alleges claims under the Georgia RICO statute in connection
with certain "900" number sweepstakes programs that were promoted by Direct
American Marketers, Inc. West Interactive Corporation provided interactive voice
processing and other services with regard to some of the programs. Plaintiff
seeks to recover treble damages and punitive damages, together with expenses,
attorney's fees and injunctive relief. The plaintiff filed a motion for class
certification on November 17, 1997. On April 9, 1999, the court entered an order
denying plaintiff's motion for class certification.
7
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto. Certain statements under this
caption constitute forward-looking statements, which involve risks and
uncertainties. The Company's actual results in the future could differ
significantly from the results discussed or implied in such forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, the effect on financial performance of increased
competition in the teleservices industry, potential future competition,
competitive pricing for services, potential future competing technologies and
trends, dependence on technology and phone service, dependence on the Company's
labor force, reliance on major clients, the success of new product innovations,
legal proceedings and government regulation.
Results of Operations
Comparison of the Three Months Ended March 31, 1999 and 1998
Revenue: For the three months ended March 31, 1999, revenue increased
$21.9 million, or 18.9%, to $138.0 million up from $116.1 million for the three
months ended March 31, 1998. For the three months ended March 31, 1999, revenue
from inbound operator teleservices increased approximately $12.9 million to
$58.9 million. Revenue from interactive teleservices decreased approximately
$2.7 million to $29.2 million. Revenue from outbound direct teleservices
increased approximately $11.7 million to $49.9 million. The increases in inbound
operator teleservices and outbound direct teleservices are primarily the result
of servicing the growing needs of the Company's existing clients. The decrease
in interactive teleservices is a result of the reduction in 900 pay-per-call
volume due to a shift in the emphasis by the Company's clients to 800
interactive programs and pre-paid calling card services in the three months
ended March 31, 1999, compared to the comparable period of 1998.
Cost of services: Cost of services represents direct labor, telephone
expense and other costs directly related to teleservices activities. Costs of
services increased $9.0 million, or 14.3%, in the first quarter of 1999 to $71.7
million, up from $62.7 million for the comparable period of 1998. As a
percentage of revenue, cost of services decreased to 52.0% for the first quarter
of 1999 compared to 54.1% for the comparable period in 1998. The decrease in
cost of services as a percentage of revenue can be attributed to the Company's
ability to continue to hire cost effective quality labor as it enters new
markets through the addition of call centers, lower telecommunication costs due
to lower service rates negotiated with AT&T Corp. ("AT&T") and the change in the
service mix from interactive teleservices to outbound direct and inbound
operator teleservices divisions. Outbound direct and inbound operator
teleservices traditionally have lower direct costs as a percentage of revenue.
Selling, general and administrative ("SG&A") expenses: SG&A expenses
increased by $11.1 million, or 33.3%, to $44.5 million for the first quarter of
1999 up from $33.4 million for the comparable period of 1998. As a percentage
of revenue, SG&A expenses increased to 32.2% for the first quarter of 1999
compared to 28.7% for the comparable period of 1998. The increase can be
attributed to increased depreciation expense and other costs associated with
call center expansion and the change in the service mix from interactive
teleservices to outbound direct and inbound operator teleservices divisions.
Outbound direct and inbound operator teleservices traditionally have higher
SG&A expenses as a percentage of revenue.
Net operating income: Net operating income increased by $1.8 million, or
9.1%, to $21.8 million in the first quarter of 1999 up from $20.0 million in the
first quarter of 1998. As a percentage of revenue, net operating income
decreased to 15.8% for the first quarter of 1999 compared to 17.2% for the
corresponding period of 1998 due to the factors discussed above for Revenue,
Cost of Services and SG&A expenses.
8
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Net other income: Net other income includes interest income from short-term
investments, interest income from an accounts receivable financing program (net
of the related interest expense to fund the program), interest income from
customer notes receivable and interest expense from short-term and long-term
borrowings under credit facilities, a mortgage note and capital leases. Other
income for the first quarter of 1999 totaled $378,000 compared to $238,000 for
the first quarter of 1998.
Net income: Net income increased by $1.5 million, or 12.1%, for the first
quarter of 1999, to $13.9 million from net income of $12.4 million for the first
quarter of 1998. Net income includes a provision for income tax expense at an
effective rate of approximately 37.3% for the three months ended March 31, 1999,
and approximately 38.6% for the comparable periods of 1998.
Liquidity and Capital Resources
The Company's primary source of liquidity has been cash flow from operations,
supplemented by proceeds from notes payable, capital leases and borrowings under
its revolving bank lines of credit.
The Company has a $20.0 million unsecured revolving credit facility. Advances
under the revolving credit facility bear interest at the prime rate less 1.0%.
The revolving credit facility expires on June 29, 1999. There was $3.0 million
outstanding under this facility at March 31, 1999. The Company's credit facility
contains certain financial covenants and restrictions, which were met at March
31, 1999. The Company expects to renew the unsecured revolving credit facility
when it expires and believes it could increase the amount of the facility, if
needed.
The Company also has a $15.0 million revolving bank line used to fund an
accounts receivable financing program offered to certain customers in the
pay-per-call industry. Borrowings under the facility are limited to a borrowing
base of pledged accounts receivable from certain of the Company's qualified
customers which were assigned by the Company to the bank. There was $240,000
outstanding under this facility at March 31, 1999. The credit facility expires
on June 29, 1999. The Company expects to renew the revolving bank line when it
expires and believes it could increase the amount of the facility, if needed.
Net cash flow from operating activities increased $17.0 million, or 191.0%, to
$25.9 million for the three months ended March 31, 1999, compared to a net cash
flow from operating activities of $8.9 million for the three months ended March
31, 1998. The increase was due principally to collection of trade accounts
receivable, increased accrued expenses and other liabilities, higher net income
and higher depreciation and amortization.
Net cash flow used in investing activities was $13.9 million for the three
months ended March 31, 1999, compared to $17.3 million for the comparable period
of 1998. The decrease was primarily due to lower decreased cash investments in
call center expansion in the three months ended March 31, 1999. The Company
invested $9.3 million in call center expansion to support the growth of the
Company's businesses through the assumption of long-term obligations during the
first quarter of 1999.
Net cash flow used in financing activities was $3.0 million for the three
months ended March 31, 1999, compared to $1.2 million for the comparable period
of 1998. In the three months ended March 31, 1999 and 1998, net cash flow used
in financing activities was primarily for payments of debt and capital lease
obligations.
Capital Expenditures
The Company's operations continue to require significant capital expenditures
for capacity expansion and upgrades. Capital expenditures were $22.3 million for
the three months ended March 31, 1999. Capital expenditures for the three months
ended March 31, 1999 consisted primarily of equipment purchases. The Company
projects its capital expenditures for the remainder of 1999 to be approximately
$18.0 million to $28.0 million, primarily for capacity expansion and upgrades at
existing facilities.
9
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The Company believes cash flow from operations, together with existing cash
and cash equivalents, financing through capital or operating leases, and
available borrowings under its credit facilities will be adequate to meet its
capital requirements for the foreseeable future. The Company may pledge
additional property or assets of the Company or its subsidiaries, which
are not already pledged as collateral securing existing credit facilities. The
Company or any of its affiliates may be required to guarantee any existing or
additional credit facilities.
Impact of Year 2000 Issue
The Year 2000 Issue is a result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs having date-sensitive software may calculate "00" as 1900
instead of the desired 2000. This could result in system failure or
miscalculations causing disruptions in operation, including, among other things,
a temporary inability to process transactions, send invoices or engage in
similar normal business activities.
Based on hardware and software assessments, the Company is in the process of
modifying or replacing portions of its information and non-information
technology systems. These adaptations will prepare the Company for continued
operation beyond December 31, 1999. The Company believes that the modifications
to existing software and conversions to new hardware and software should
mitigate the impact of the Year 2000 Issue. The Company is also in the process
of validating non-information technology systems utilized to support the
Company's operations. The Company is requesting compliance data from vendors and
is modifying or replacing equipment if necessary. Internal testing of the non-
information technology systems is being conducted where possible. However, if
the modifications and the conversions are not completed, the Year 2000 Issue
could subject the Company to potential liability claims from its customers and
could have a material adverse impact on the operations of the Company.
Contingency plans are being developed and put into place to control the impact
of single point failures. A major contingency already in place is backup power
capabilities within the Company's call centers. Most call centers are equipped
with both battery and generator power availability protecting the Company in the
event of local utility company failures.
The Company is communicating with all of its significant suppliers and
customers to determine the extent to which the Company is vulnerable to those
third parties' failure to remediate their own Year 2000 Issues. The Company's
current assessment is based on presently available information. However, there
can be no guarantee that the systems of other companies on which the Company's
system relies, will be converted on a timely basis, or that failure to convert
by another company, or a conversion is incompatible with the Company's systems,
would not have material adverse effect on the Company. In the event the Company
is unable to initiate phone calls or receive phone calls on behalf of its
clients, loss of revenue will result, the extent and materiality of which would
depend on the length of the time required to restore access.
The Company is utilizing both internal and external resources to reprogram or
replace incompatible hardware and software. The Company has targeted the third
quarter of 1999 to be compliant on all critical production systems and overall
completion of the year 2000 project before the end of 1999. The Company has
implemented a year 2000 test lab facility which is dedicated to testing systems
for year 2000 compliance. The test lab is designed to replicate, as closely as
possible, the Company production environments in each of the Company's
divisions, allowing testing of all systems without impacting the production or
normal development systems. The Company is also conducting internal system
testing and, where possible, external system compatibility testing to validate
operational capabilities beyond December 31, 1999.
The total cost of the year 2000 project was estimated at $5.6 million for the
Company's critical systems and is being funded through operating cash flows. Of
the total projected cost, approximately $1.9 million is attributable to the
purchase of new hardware and software which is being capitalized. The remaining
$3.7 million is to cover personnel and non-capital expenses which will be
expensed as incurred and is not expected to have a material effect on the
results of operations. To date, the Company has expended $1.5 million towards
the purchase of new hardware and software and $1.7 million to cover personnel
and non-capital expense. The costs of the
10
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project and date on which the Company plans to complete the year 2000
modifications and conversions are based on management's best estimates which
were derived utilizing numerous assumptions of future events, including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, failure of third parties on
which the Company relies and similar uncertainties.
Inflation
The Company does not believe that inflation has had a material effect on its
results of operations. However, there can be no assurance that the Company's
business will not be affected by inflation in the future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Certain statements under this caption constitute forward-looking statements
which involve risks and uncertainties. The Company's actual results in the
future could differ significantly from the results discussed or implied in such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, the effect on financial performance
of increased competition in the teleservices industry, potential future
competition, competitive pricing for services, potential future competing
technologies and trends, dependence on technology and phone service, dependence
on the Company's labor force, reliance on major clients, the success of new
product innovations, legal proceedings and government regulation.
The Company does not use derivative financial and commodity instruments. The
Company's other financial instruments include cash and cash equivalents,
accounts and notes receivable, accounts and notes payable and long-term
obligations. The Company's cash and cash equivalents, accounts and notes
receivable and accounts and notes payable balances are generally short-term in
nature and do not expose the Company to material market risk. At March 31,
1999, the Company had $37.1 million of long-term obligations and $35.0 million
of credit facilities. (See Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources.) At March 31, 1999, approximately $3.2 million was outstanding under
these variable rate credit facilities. Management does not believe that changes
in future interest rates on these fixed and variable rate long-term obligations
and credit facilities would have a material effect on the Company's results of
operations given the Company's currently existing obligations under such long-
term obligations and credit facilities.
11
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company is subject to lawsuits and claims which arise
out of its operations in the normal course of its business. The Company and
certain of its subsidiaries are defendants in various litigation matters in the
ordinary course of business, some of which involve claims for damages that are
substantial in amount. The Company believes, except for the items discussed
below and in its Form 10-K for the year ended December 31, 1998, for which the
Company is currently unable to predict the outcome, the disposition of claims
currently pending will not have a material adverse effect on the Company's
financial position or results of operations.
West Interactive Corporation, a wholly owned subsidiary of the Company, is
a defendant in a case brought in the United States District Court for the
Southern District of Georgia, Augusta Division, on September 12, 1991. This
case is currently captioned Lamar Andrews, et al., Plaintiff v. American
Telephone & Telegraph Company, et al., Defendants, No. CV 191-175. The seven
named plaintiffs allege that they paid for one or more "900" number calls
pertaining to programs offering sweepstakes, games of chance, awards, cash or
other prizes, gifts or information on unclaimed funds. West Interactive
Corporation provided interactive voice processing and other services to one or
more customers which conducted some of the programs at issue in the litigation.
The billing and collection services were provided through AT&T and US Sprint
Communication Company Limited Partnership. The plaintiffs' second amended
complaint alleges that the programs at issue involved, among other things, acts
of unlawful gambling and the collection of illegal gambling debts, mail fraud
and wire fraud in violation of the RICO statute, the Communications Act of
1934, the federal common law of communications, the Georgia RICO statute, and
other state and federal laws. AT&T has asserted a cross-claim against West
Interactive Corporation seeking contractual and common law indemnity and
contribution. The action seeks recovery of treble damages, punitive damages,
costs and attorneys' fees. On October 2, 1998, the court heard argument on
cross-motions for summary judgment by all parties. On March 30, 1999, the
district court entered an order dismissing the plaintiffs' mail and wire fraud
claims under RICO, as well as its claims under the Georgia RICO statute. The
court also held that some of the "900" number programs conducted by the
customers of West Interactive Corporation violated the gambling laws of Nebraska
and Georgia and directed that the remaining issues of the case proceed to trial
on the plaintiffs' claims under RICO based on the alleged collection of illegal
gambling debts.
West Interactive Corporation, and Troy Eaden and Gary West, Co-Chairmen of
the Board and directors of the Company, are named as defendants in a case filed
on August 19, 1997, which is pending in the United States District Court for the
Southern District of Georgia. The case is captioned Janie Gilchrist,
individually and on behalf of a class of all other persons similarly situated,
v. Direct American Marketers, Inc., Anthony Brown, Integretel, Inc., Troy Eaden,
Gary West, West Interactive Corporation and Bellsouth Corporation, File No.
CV197-233. Plaintiff alleges claims under the Georgia RICO statute in connection
with certain "900" number sweepstakes programs that were promoted by Direct
American Marketers, Inc. West Interactive Corporation provided interactive voice
processing and other services with regard to some of the programs. Plaintiff
seeks to recover treble damages and punitive damages, together with expenses,
attorney's fees and injunctive relief. The plaintiff filed a motion for class
certification on November 17, 1997. On April 9, 1999, the court entered an order
denying plaintiff's motion for class certification.
12
<PAGE>
Item 5. Other Information
During 1998, AT&T was the Company's largest client and accounted for 33% of
total revenue. AT&T has recently informed the Company that it it will reduce the
amount of outbound teleservices they intend to procure for the balance of 1999.
The Company believes that this will result in a reduction of up to $30 million
in revenue in 1999 for the outbound direct teleservices division. This decision
was not driven by the quality of the work performed by the Company. The Company
believes its relationship with AT&T remains strong. The Company believes AT&T
will contribute a smaller percent of the Company's total revenue going forward.
The Company will focus on expanding and diversifying its roster of clients as it
continues to successfully cross-sell its services in the targeted vertical
markets of financial services, pharmaceuticals and non-AT&T communication
services.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------------------------------------------------------------------
<C> <S>
10.01 Employment Agreement between the Company and Tom Barker dated
January 1, 1999
10.02 Employment Agreement between the Company and Michael A. Micek dated
January 1, 1999
10.03 Employment Agreement between the Company and Nancee R. Berger dated
January 1, 1999
10.04 Employment Agreement between the Company and Michael Sturgeon dated
January 1, 1999
27.01 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEST TELESERVICES CORPORATION
By: /s/ Thomas B. Barker
----------------------------------
Thomas B. Barker
President and Chief Executive Officer
By: /s/ Michael A. Micek
----------------------------------
Michael A. Micek
Chief Financial Officer,
Executive Vice President-Finance and
Treasurer
Date: May 14, 1999
14
<PAGE>
INDEX TO EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description Number
------ ----------- ------
<S> <C> <C>
___________________________________________________________________________________________________________
10.01 Employment Agreement between the Company and Tom Barker
dated January 1, 1999
___________________________________________________________________________________________________________
10.02 Employment Agreement between the Company and Michael A. Micek
dated January 1, 1999
___________________________________________________________________________________________________________
10.03 Employment Agreement between the Company and Nancee R. Berger
dated January 1, 1999
___________________________________________________________________________________________________________
10.04 Employment Agreement between the Company and Michael Sturgeon
dated January 1, 1999
27.01 Financial Data Schedule
___________________________________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT 10.01
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective the 1st day of January, 1999,
between West TeleServices Corporation a Delaware corporation ("Employer") and
TOM BARKER ("Employee").
RECITALS
A. WHEREAS, Employer and Employee have agreed to certain terms and conditions
of employment between the parties; and
B. WHEREAS, the parties desire to enter into this Agreement to memorialize
the terms and conditions of the employment relationship and any prior and
existing employment agreement(s) between the parties.
NOW THEREFORE, the parties agree as follows;
1. Employment. Employer agrees to employ Employee in his capacity as
-----------
PRESIDENT AND CHIEF EXECUTIVE OFFICER of Employer. Employer may also direct
Employee to perform such duties for other entities which now are, or in the
future may be, affiliated with Employer (the "Affiliates"), subject to the
limitation that Employee's total time commitment shall be consistent with that
normally expected of similarly situated executive level employees. Employee
shall serve Employer and the Affiliates faithfully, diligently and to the best
of his ability. Employee agrees during the term of this Agreement to devote his
best efforts, attention, energy and skill to the performance of his employment
and/or consulting duties and to furthering the interest of Employer and the
Affiliates.
2. Term of Employment. Employee's employment under this Agreement shall
-------------------
commence effective the 1st day of January, 1999, and shall continue for a
period of two years unless terminated or renewed under the provisions of
Paragraph 6 below.
(a) Unless terminated pursuant to paragraph 6(a), the term of employment
shall be extended by one year at the end of each successive year so
that at the beginning of each successive year the term of this
Agreement will be two years.
3. Compensation. Employer shall pay Employee as set forth in Exhibit A
-------------
attached hereto and incorporated herein as is fully set forth in this paragraph.
Employee may receive additional discretionary bonuses as determined by the Board
of Directors of Employer in its sole discretion provided nothing contained
herein shall be construed as a commitment by the corporation to declare or pay
any such bonuses.
4. Benefits. In addition to the compensation provided for in Paragraph 3
---------
above, Employer will provide Employee with employment benefits commensurate to
those received by other executive level employees of Employer during the term of
this Agreement.
<PAGE>
5. Other Activities. Employee shall devote substantially all of his
-----------------
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and to the duties and responsibilities
assigned to him pursuant to this Agreement. Employee may devote a reasonable
amount of his time to civic, community or charitable activities. Employee in
all events shall be free to invest his assets in such manner as will not require
any substantial services by Employee in the conduct of the businesses or affairs
of the entities or in the management of the assets in which such investments are
made.
6. Term and Termination. The termination of this Agreement shall be
--------------------
governed by the following:
(a) The term of this Agreement shall be for the period set out in
paragraph 2 unless earlier terminated in one of the following ways:
(1) Death. This Agreement shall immediately terminate upon the death
------
of Employee.
(2) For Cause. The Employer, upon written notice to Employee, may
----------
terminate the employment of Employee at any time for "cause."
For purposes of this paragraph, "cause" shall be deemed to exist
if, and only if, two (2) members of the Board of Directors
Employer, in good faith, determine that Employee has engaged,
during the performance of his duties hereunder, in significant
objective acts or omissions constituting dishonesty, willful
misconduct or gross negligence relating to the business of
Employer.
(3) Without Cause. The Employer, upon written notice to Employee,
-------------
may terminate the employment of Employee at any time without
cause.
(4) Resignation. Employee, upon written notice to Employer, may
-----------
resign from the employment of Employer at any time.
(b) Accrued Compensation on Termination. In the event of termination of
------------------------------------
the Agreement, Employee shall be entitled to receive:
(1) salary earned prior to and including the date of termination;
(2) any bonus earned as of the end of the month immediately preceding
the date of termination; and
(3) all benefits, if any, which have vested as of the date of
termination.
7. Consulting.
-----------
(a) In the event of termination of employment pursuant to paragraph
6(a)(3) or 6(a)(4) above, Employer and Employee agree that Employee
shall, for a minimum
3
<PAGE>
period of twenty-four (24) months from the date of termination serve
as a consultant to Employer.
(b) In the event of termination pursuant to paragraph 6(a)(2), Employer
and Employee agree that Employer may, at its sole option, elect to
retain the services of Employee as a consultant for a period of
twenty-four (24) months from the date of termination and that Employee
will serve as a consultant to Employer if Employer so elects.
c) During any period of consulting, Employee shall be acting as an
independent contractor. As part of the consulting services, Employee
agrees to provide certain services to Employer, including, but not
limited to, the following:
(1) oral and written information with reference to continuing
programs and new programs which were developed or under
development under the supervision of Employee;
(2) meeting with officers and managers of Employer to discuss and
review programs and to make recommendations;
(3) analysis, opinion and information regarding the effectiveness and
public acceptance of their programs.
d) During the consulting period, Employee shall continue to receive, as
compensation for his consulting, the annualized salary set forth in
Exhibit A. No bonus of any kind will be paid during any period of
consulting.
e) Employee hereby agrees that during any period of consulting, he will
devote his full attention, energy and skill to the performance of his
duties and to furthering the interest of Employer and the affiliates,
which shall include, and Employee acknowledges a fiduciary duty and
obligation to Employer. Employee acknowledges that this prohibition
includes, but is not necessarily limited to, a preclusion from any
other employment or consulting by Employee during the consulting
period except pursuant to paragraph 7(f) hereafter.
f) During the term of this Agreement, including any period of consulting,
Employee shall not, singly, jointly, or as a member, employer or agent
of any partnership, or as an officer, agent, employee, director,
stockholder or investor of any other corporation or entity, or in any
other capacity, engage in any business endeavors of any kind or nature
whatsoever, other than those of Employer or its Affiliates without the
express written consent of Employer, provided, however, that Employee
may own stock in a publicly traded corporation. Employee agrees that
Employer may in its sole discretion give or withhold its consent and
understands that Employer's consent will not be unreasonably withheld
if the following conditions are met:
4
<PAGE>
(1) Employee's intended employment will not interfere in Employer's
opinion with Employee's duties and obligations as a consultant,
including the fiduciary duty assumed hereunder; and
(2) Employee's intended employment or activity would not, in the
opinion of Employer, place Employee in a situation where
confidential information of Employer or its Affiliates known to
Employee may benefit Employee's new employer; and
(3) Employee's new employment will not, in Employer's opinion,
result, directly or indirectly, in competition with Employer or
its Affiliates, then or in the future.
g) Notwithstanding any provisions in this Agreement to the contrary, the
provisions of paragraph 7 shall survive the termination of this
Agreement.
h) Employer shall reimburse Employee for all reasonable expenses incurred
by Employee in furtherance of his consulting duties pursuant to this
Agreement provided the expenses are pre-approved by Employer.
i) Benefits During Consulting Period. Employee and his dependents shall
----------------------------------
be entitled to continue their participation in all benefit plans in
effect on the date of Employee's termination from employment during
the period of consulting, under the same terms and conditions and at
the same net cost to Employee as when employed by Employer unless
Employee accepts new employment during the consulting term in
accordance with paragraph 7 above, in which event all benefits will
cease, at Employer's option, when the new employment is accepted by
Employee.
8. Confidential Information. In the course of Employee's employment,
-------------------------
Employee will be provided with certain information, technical data and know-how
regarding the business of Employer and its Affiliates and their products, all of
which is confidential (hereinafter referred to as "Confidential Information").
Employee agrees to receive, hold and treat all confidential information received
from Employer and its Affiliates as confidential and secret and agrees to
protect the secrecy of said Confidential Information. Employee agrees that the
Confidential Information will be disclosed only to those persons who are
required to have such knowledge in connection with their work for Employer and
that such Confidential Information will not be disclosed to others without the
prior written consent of the Employer. The provisions hereof shall not be
applicable to: (a) information which at the time of disclosure to Employee is a
matter of public knowledge; or (b) information which, after disclosure to
Employee, becomes public knowledge other than through a breach of this
Agreement. Unless the Confidential Information shall be of the type herein
before set forth, Employee shall not use such Confidential Information for his
own benefit or for a third party's or parties' benefit at any time. Upon
termination of employment, Employee will return all books, records and other
materials provided
5
<PAGE>
to or acquired by Employee during the course of employment which relate in any
way to Employer or its business. The obligations imposed upon Employee by this
paragraph shall survive the expiration or termination of this Agreement.
9. Covenant Not to Compete. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Employee covenants and agrees that for the period of
two (2) years following termination of his employment with Employer for any
reason he will not:
a) directly or indirectly, for himself, or as agent of, or on behalf of,
or in connection with, any person, firm, association or corporation,
engage in any business competing directly for the customers,
prospective customers or accounts of the Employer or any of its
Affiliates with whom Employee had contact or about whom Employee
learned during the course of his employment with Employer and during
the one (1) year immediately preceding the end of his employment.
b) induce or attempt to induce any person employed by Employer or any of
its Affiliates, in any capacity, at the time of the termination of
Employee's service with Employer, to leave his employment, agency
directorship or office with Employer or the Affiliate.
c) induce or attempt to induce any customer of Employer or any of its
Affiliates to terminate or change in any way its business relationship
with Employer or the Affiliate.
Employee agrees the knowledge and information gained by him in the
performance of his duties would be valuable to those who are now, or might
become, competitors of the Employer or its Affiliates and that the business of
Employer and its Affiliates by its nature, covers at least the entire United
States of America and Canada. In the event these covenants not to compete are
held, in any respect, to be an unreasonable restriction upon the Employee, the
Court so holding may reduce the territory, or time, to which it pertains or
otherwise reasonably modify the covenant to the extent necessary to render this
covenant enforceable by said Court for the reasonable protection of Employer and
its Affiliates. The obligations imposed upon Employee by this paragraph are
severable from, and shall survive the expiration or termination of, this
Agreement.
10. Developments.
-------------
a) Employee will make full and prompt disclosure to Employer of all
inventions, improvements, discoveries, methods, developments, software
and works of authorship, whether patentable or not, which are created,
made, conceived, reduced to practice by Employee or under his
direction or jointly with others during his employment by Employer,
whether or not during normal working hours or on the premises of
Employer which relate to the business of Employer as conducted from
time to time (all of which are collectively referred to in this
Agreement as "Developments").
6
<PAGE>
b) Employee agrees to assign, and does hereby assign, to Employer (or any
person or entity designated by Employer) all of his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications.
c) Employee agrees to cooperate fully with Employer, both during and
after his employment with Employer, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments.
Employee shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths,
formal assignments, assignment or priority rights, and powers of
attorney, which Employer may deem necessary or desirable in order to
protect its rights and interest in any Developments.
11. Injunction and Other Relief. Both parties hereto recognize that the
----------------------------
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach of Employee of
the terms and conditions of this Agreement to be performed by him, or in the
event Employee performs services for any person, firm or corporation engaged in
the competing line of business with Employer as provided in Paragraph 9, or if
Employee shall breach the provisions of this Agreement with respect to
Confidential Information or consulting services, then Employer shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity to affirmative injunctive relief.
12. Severability. In the event that any of the provisions of this
-------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. In the event any court
would invalidate or fail to enforce any provision of Paragraph 7 and or
Paragraph 9 of this Agreement, Employee shall return any sums paid to Employee
by Employer pursuant to the consulting provision in paragraph 7 hereof.
13. Governing Law. This Agreement shall be governed by the laws of the
--------------
State of Nebraska.
14. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties respecting the employment of Employee by Employer and
supersedes all prior understandings, arrangements and agreements, whether oral
or written, including without limitation, any existing employment agreement, and
may not be amended except by a writing signed by the parties hereto.
7
<PAGE>
15. Notice. Notices to Employer under this Agreement shall be in writing
-------
and sent by registered mail, return receipt requested, at the following address:
General Counsel
West TeleServices Corporation
11808 Miracle Hills Drive
Omaha, Nebraska 68154
16. Miscellaneous. Employee acknowledges that:
--------------
a) He has consulted with or had an opportunity to consult with an
attorney of Employee's choosing regarding this Agreement.
b) He will receive substantial and adequate consideration for his
obligations under this Agreement.
c) He believes the obligations, terms and conditions hereof are
reasonable and necessary for the protectable interests of Employer and
are enforceable.
d) This Agreement contains restrictions on his post-employment
activities.
IN WITNESS WHEREOF, Employer has, by its appropriate officers, executed
this Agreement and Employee has executed this Agreement as of the day and year
first above written.
WEST TELESERVICES CORPORATION,
Employer
By: /S/ Troy L. Eaden
_______________________________
Its: Co-Chairman of the Board
_______________________________
/S/ Tom Barker
____________________________________
_____________________, Employee
8
<PAGE>
To: Tom Barker
From: Troy Eaden
Date: September 1, 1998
Subject: Revised Compensation Plan - Exhibit A
================================================================================
Your Compensation Plan through December 31, 1999 while you are employed as
President and Chief Executive Officer of West TeleServices Corporation is
outlined below:
1. Your annual base salary will be $415,000 while you are employed as President
and Chief Executive Officer of WTSC. Should you elect to voluntarily
terminate your employment, you will be compensated for your services through
the date of your actual termination, per your Employment Agreement.
2. Effective January 1, 1999, you will be eligible to receive a performance
bonus based on year-to-date growth of profits over the same period of the
prior year. This bonus will be calculated by multiplying the year-to-date
growth in profits for each quarter by the corresponding profit growth
participation factor from the table below, minus bonus paid year-to-date for
the respective calendar year.
<TABLE>
<CAPTION>
Profit Growth Profit Growth Participation Factor
------------- ----------------------------------
<S> <C>
12% 0
12.1% - 14.99% .0125
15% - 16.99% .015
17% - 19.99% .0175
20% - 21.99% .02
22% + .025
</TABLE>
Please note a negative year-to-date profit calculation at the end of any
given quarter will result in "loss carry forward" to be applied to the next
quarterly year-to-date calculation. All bonuses will be paid within thirty
days of the end of each quarter.
3. For the purposes for this Exhibit A, profit shall be defined as pre-tax
profit growth of the Company on a consolidated basis.
4. At the discretion of management, you may receive an additional bonus based on
the Companies' and your individual performance.
5. Your Compensation Plan for the year 2000 will be presented no later than
December 1, 1999.
/S/ TB
------
<PAGE>
EXHIBIT 10.02
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective the 1st day of January, 1999,
between West TeleServices Corporation a Delaware corporation ("Employer") and
MICHAEL A. MICEK ("Employee").
RECITALS
A. WHEREAS, Employer and Employee have agreed to certain terms and conditions
of employment between the parties; and
B. WHEREAS, the parties desire to enter into this Agreement to memorialize
the terms and conditions of the employment relationship and any prior and
existing employment agreement(s) between the parties.
NOW THEREFORE, the parties agree as follows;
1. Employment. Employer agrees to employ Employee in his capacity as
-----------
EXECUTIVE VICE PRESIDENT - FINANCE, CHIEF FINANCIAL OFFICER & TREASURER of
Employer. Employer may also direct Employee to perform such duties for other
entities which now are, or in the future may be, affiliated with Employer (the
"Affiliates"), subject to the limitation that Employee's total time commitment
shall be consistent with that normally expected of similarly situated executive
level employees. Employee shall serve Employer and the Affiliates faithfully,
diligently and to the best of his ability. Employee agrees during the term of
this Agreement to devote his best efforts, attention, energy and skill to the
performance of his employment and/or consulting duties and to furthering the
interest of Employer and the Affiliates.
2. Term of Employment. Employee's employment under this Agreement shall
-------------------
commence effective the 1st day of January, 1999, and shall continue for a
period of two years unless terminated or renewed under the provisions of
Paragraph 6 below.
(a) Unless terminated pursuant to paragraph 6(a), the term of employment
shall be extended by one year at the end of each successive year so
that at the beginning of each successive year the term of this
Agreement will be two years.
3. Compensation. Employer shall pay Employee as set forth in Exhibit A
-------------
attached hereto and incorporated herein as is fully set forth in this paragraph.
Employee may receive additional discretionary bonuses as determined by the Board
of Directors of Employer in its sole discretion provided nothing contained
herein shall be construed as a commitment by the corporation to declare or pay
any such bonuses.
4. Benefits. In addition to the compensation provided for in Paragraph 3
--------
above, Employer will provide Employee with employment benefits commensurate to
those received by other executive level employees of Employer during the term of
this Agreement.
<PAGE>
5. Other Activities. Employee shall devote substantially all of his
-----------------
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and to the duties and responsibilities
assigned to him pursuant to this Agreement. Employee may devote a reasonable
amount of his time to civic, community or charitable activities. Employee in
all events shall be free to invest his assets in such manner as will not require
any substantial services by Employee in the conduct of the businesses or affairs
of the entities or in the management of the assets in which such investments are
made.
6. Term and Termination. The termination of this Agreement shall be
--------------------
governed by the following:
(a) The term of this Agreement shall be for the period set out in
paragraph 2 unless earlier terminated in one of the following ways:
(1) Death. This Agreement shall immediately terminate upon the death
------
of Employee.
(2) For Cause. The Employer, upon written notice to Employee, may
----------
terminate the employment of Employee at any time for "cause."
For purposes of this paragraph, "cause" shall be deemed to exist
if, and only if, the CEO and COO of Employer, in good faith,
determine that Employee has engaged, during the performance of
his duties hereunder, in significant objective acts or omissions
constituting dishonesty, willful misconduct or gross negligence
relating to the business of Employer.
(3) Without Cause. The Employer, upon written notice to Employee,
-------------
may terminate the employment of Employee at any time without
cause.
(4) Resignation. Employee, upon written notice to Employer, may
------------
resign from the employment of Employer at any time.
(b) Accrued Compensation on Termination. In the event of termination of
------------------------------------
the Agreement, Employee shall be entitled to receive:
(1) salary earned prior to and including the date of termination;
(2) any bonus earned as of the end of the month immediately preceding
the date of termination; and
(3) all benefits, if any, which have vested as of the date of
termination.
2
<PAGE>
7. Consulting.
-----------
(a) In the event of termination of employment pursuant to paragraph
6(a)(3) or 6(a)(4) above, Employer and Employee agree that Employee
shall, for a minimum period of twenty-four (24) months from the date
of termination serve as a consultant to Employer.
(b) In the event of termination pursuant to paragraph 6(a)(2), Employer
and Employee agree that Employer may, at its sole option, elect to
retain the services of Employee as a consultant for a period of
twenty-four (24) months from the date of termination and that Employee
will serve as a consultant to Employer if Employer so elects.
c) During any period of consulting, Employee shall be acting as an
independent contractor. As part of the consulting services, Employee
agrees to provide certain services to Employer, including, but not
limited to, the following:
(1) oral and written information with reference to continuing
programs and new programs which were developed or under
development under the supervision of Employee;
(2) meeting with officers and managers of Employer to discuss and
review programs and to make recommendations;
(3) analysis, opinion and information regarding the effectiveness and
public acceptance of their programs.
d) During the consulting period, Employee shall continue to receive, as
compensation for his consulting, the annualized salary set forth in
Exhibit A. No bonus of any kind will be paid during any period of
consulting.
e) Employee hereby agrees that during any period of consulting, he will
devote his full attention, energy and skill to the performance of his
duties and to furthering the interest of Employer and the affiliates,
which shall include, and Employee acknowledges a fiduciary duty and
obligation to Employer. Employee acknowledges that this prohibition
includes, but is not necessarily limited to, a preclusion from any
other employment or consulting by Employee during the consulting
period except pursuant to paragraph 7(f) hereafter.
f) During the term of this Agreement, including any period of consulting,
Employee shall not, singly, jointly, or as a member, employer or agent
of any partnership, or as an officer, agent, employee, director,
stockholder or investor of any other corporation or entity, or in any
other capacity, engage in any business endeavors of any kind or nature
whatsoever, other than those of Employer or its Affiliates without the
express written consent of Employer, provided, however, that Employee
may own stock in a publicly traded corporation. Employee agrees that
3
<PAGE>
Employer may in its sole discretion give or withhold its consent and
understands that Employer's consent will not be unreasonably withheld
if the following conditions are met:
(1) Employee's intended employment will not interfere in Employer's
opinion with Employee's duties and obligations as a consultant,
including the fiduciary duty assumed hereunder; and
(2) Employee's intended employment or activity would not, in the
opinion of Employer, place Employee in a situation where
confidential information of Employer or its Affiliates known to
Employee may benefit Employee's new employer; and
(3) Employee's new employment will not, in Employer's opinion,
result, directly or indirectly, in competition with Employer or
its Affiliates, then or in the future.
g) Notwithstanding any provisions in this Agreement to the contrary, the
provisions of paragraph 7 shall survive the termination of this
Agreement.
h) Employer shall reimburse Employee for all reasonable expenses incurred
by Employee in furtherance of his consulting duties pursuant to this
Agreement provided the expenses are pre-approved by Employer.
i) Benefits During Consulting Period. Employee and his dependents shall
----------------------------------
be entitled to continue their participation in all benefit plans in
effect on the date of Employee's termination from employment during
the period of consulting, under the same terms and conditions and at
the same net cost to Employee as when employed by Employer unless
Employee accepts new employment during the consulting term in
accordance with paragraph 7 above, in which event all benefits will
cease, at Employer's option, when the new employment is accepted by
Employee.
8. Confidential Information. In the course of Employee's employment,
-------------------------
Employee will be provided with certain information, technical data and know-how
regarding the business of Employer and its Affiliates and their products, all of
which is confidential (hereinafter referred to as "Confidential Information").
Employee agrees to receive, hold and treat all confidential information received
from Employer and its Affiliates as confidential and secret and agrees to
protect the secrecy of said Confidential Information. Employee agrees that the
Confidential Information will be disclosed only to those persons who are
required to have such knowledge in connection with their work for Employer and
that such Confidential Information will not be disclosed to others without the
prior written consent of the Employer. The provisions hereof shall not be
applicable to: (a) information which at the time of disclosure to Employee is a
matter of public knowledge; or (b) information which, after disclosure to
Employee, becomes public knowledge other than through a breach of this
Agreement. Unless the Confidential
4
<PAGE>
Information shall be of the type herein before set forth, Employee shall not use
such Confidential Information for his own benefit or for a third party's or
parties' benefit at any time. Upon termination of employment, Employee will
return all books, records and other materials provided to or acquired by
Employee during the course of employment which relate in any way to Employer or
its business. The obligations imposed upon Employee by this paragraph shall
survive the expiration or termination of this Agreement.
9. Covenant Not to Compete. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Employee covenants and agrees that for the period of
two (2) years following termination of his employment with Employer for any
reason he will not:
a) directly or indirectly, for himself, or as agent of, or on behalf of,
or in connection with, any person, firm, association or corporation,
engage in any business competing directly for the customers,
prospective customers or accounts of the Employer or any of its
Affiliates with whom Employee had contact or about whom Employee
learned during the course of his employment with Employer and during
the one (1) year immediately preceding the end of his employment.
b) induce or attempt to induce any person employed by Employer or any of
its Affiliates, in any capacity, at the time of the termination of
Employee's service with Employer, to leave his employment, agency
directorship or office with Employer or the Affiliate.
c) induce or attempt to induce any customer of Employer or any of its
Affiliates to terminate or change in any way its business relationship
with Employer or the Affiliate.
Employee agrees the knowledge and information gained by him in the
performance of his duties would be valuable to those who are now, or might
become, competitors of the Employer or its Affiliates and that the business of
Employer and its Affiliates by its nature, covers at least the entire United
States of America and Canada. In the event these covenants not to compete are
held, in any respect, to be an unreasonable restriction upon the Employee, the
Court so holding may reduce the territory, or time, to which it pertains or
otherwise reasonably modify the covenant to the extent necessary to render this
covenant enforceable by said Court for the reasonable protection of Employer and
its Affiliates. The obligations imposed upon Employee by this paragraph are
severable from, and shall survive the expiration or termination of, this
Agreement.
10. Developments.
-------------
a) Employee will make full and prompt disclosure to Employer of all
inventions, improvements, discoveries, methods, developments, software
and works of authorship, whether patentable or not, which are created,
made, conceived, reduced to practice by Employee or under his
direction or jointly with others during his employment by Employer,
whether or not during normal working
5
<PAGE>
hours or on the premises of Employer which relate to the business of
Employer as conducted from time to time (all of which are collectively
referred to in this Agreement as "Developments").
b) Employee agrees to assign, and does hereby assign, to Employer (or any
person or entity designated by Employer) all of his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications.
c) Employee agrees to cooperate fully with Employer, both during and
after his employment with Employer, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments.
Employee shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths,
formal assignments, assignment or priority rights, and powers of
attorney, which Employer may deem necessary or desirable in order to
protect its rights and interest in any Developments.
11. Injunction and Other Relief. Both parties hereto recognize that the
---------------------------
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach of Employee of
the terms and conditions of this Agreement to be performed by him, or in the
event Employee performs services for any person, firm or corporation engaged in
the competing line of business with Employer as provided in Paragraph 9, or if
Employee shall breach the provisions of this Agreement with respect to
Confidential Information or consulting services, then Employer shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity to affirmative injunctive relief.
12. Severability. In the event that any of the provisions of this
-------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. In the event any court
would invalidate or fail to enforce any provision of Paragraph 7 and or
Paragraph 9 of this Agreement, Employee shall return any sums paid to Employee
by Employer pursuant to the consulting provision in paragraph 7 hereof.
13. Governing Law. This Agreement shall be governed by the laws of the
--------------
State of Nebraska.
14. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties respecting the employment of Employee by Employer and
supersedes all prior understandings, arrangements and agreements, whether oral
or written, including without limitation, any existing employment agreement, and
may not be amended except by a writing signed by the parties hereto.
6
<PAGE>
15. Notice. Notices to Employer under this Agreement shall be in writing
-------
and sent by registered mail, return receipt requested, at the following address:
President and CEO
West TeleServices Corporation
11808 Miracle Hills Drive
Omaha, Nebraska 68154
16. Miscellaneous. Employee acknowledges that:
--------------
a) He has consulted with or had an opportunity to consult with an
attorney of Employee's choosing regarding this Agreement.
b) He will receive substantial and adequate consideration for his
obligations under this Agreement.
c) He believes the obligations, terms and conditions hereof are
reasonable and necessary for the protectable interests of Employer and
are enforceable.
d) This Agreement contains restrictions on his post-employment
activities.
IN WITNESS WHEREOF, Employer has, by its appropriate officers, executed
this Agreement and Employee has executed this Agreement as of the day and year
first above written.
WEST TELESERVICES CORPORATION,
Employer
By: /S/ Tom Barker
______________________________________
Its: President and Chief Executive Officer
_____________________________________
/S/ Michael A. Micek
__________________________________________
___________________________, Employee
7
<PAGE>
To: Mike Micek
From: Tom Barker
Date: September 1, 1998
Subject: 1998 Compensation Plan - Exhibit A (Revision)
===============================================================================
Mike, below is a revision of your Compensation Plan for 1998. Your Compensation
Plan will be reviewed by December 15/th/ of each year for the following year.
If changes are made for an upcoming year, a new Exhibit a will be created.
1. Annual Salary - You will be paid an annual salary of $200,000.
2. Effective January 1, 1998, you will be eligible to receive a quarterly
performance bonus based on year-to-date growth of profits over the same
period of the prior year.
This quarterly bonus will be calculated by multiplying the year-to-date growth
in profits each quarter by the corresponding "Profit Growth Participation"
factor from the table below, minus bonus paid year-to-date for the respective
calendar year.
<TABLE>
<CAPTION>
Profit Growth Profit Growth Participation
------------- ---------------------------
<S> <C>
0 - 19.99% 1.0 %
20 - 29.99% 1.25%
30 - Above 1.40%
</TABLE>
As an example, if profits for the first quarter of calendar year 1998
increases by 20% compared to the same period of the previous year representing
a $2,000,000 increase in profits, you would earn a bonus of $25,000
($2,000,000 x 1.25%).
Please note a negative year-to-date profit calculation at the end of any given
quarter will result in a "loss carry forward" to be applied to the next
quarterly year-to-date calculation. All quarterly bonuses will be paid within
30 days after the end of each quarter.
3. For purposes of this Exhibit A, profits shall be defined as pre-tax profit
growth of the Company.
4. At the discretion of management, you may receive an additional bonus based
on the Companies' and your individual performance.
5. Your Compensation Plan for the year 2000 will be presented no later than
December 1, 1999.
/S/ MM
------
<PAGE>
EXHIBIT 10.03
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective the 1st day of January, 1999, between
West TeleServices Corporation, a Delaware corporation ("Employer"), and NANCEE
R. BERGER ("Employee").
RECITALS
A. WHEREAS, Employer and Employee have agreed to certain terms and conditions
of employment between the parties; and
B. WHEREAS, the parties desire to enter into this Agreement to memorialize
the terms and conditions of the employment relationship and any prior and
existing employment agreement(s) between the parties.
NOW THEREFORE, the parties agree as follows;
1. Employment. Employer agrees to employ Employee in her capacity as CHIEF
-----------
OPERATING OFFICER of Employer. Employer may also direct Employee to perform
such duties for other entities which now are, or in the future may be,
affiliated with Employer (the "Affiliates"), subject to the limitation that
Employee's total time commitment shall be consistent with that normally expected
of similarly situated executive level employees. Employee shall serve Employer
and the Affiliates faithfully, diligently and to the best of her ability.
Employee agrees during the term of this Agreement to devote her best efforts,
attention, energy and skill to the performance of her employment and/or
consulting duties and to furthering the interest of Employer and the Affiliates.
2. Term of Employment. Employee's employment under this Agreement shall
--------------------
commence effective the 1st day of January, 1999, and shall continue for a period
of two years unless terminated or renewed under the provisions of Paragraph 6
below.
(a) Unless terminated pursuant to paragraph 6(a), the term of employment shall
be extended by one year at the end of each successive year so that at the
beginning of each successive year the term of this Agreement will be two
years.
3. Compensation. Employer shall pay Employee as set forth in Exhibit A
-------------
attached hereto and incorporated herein as is fully set forth in this paragraph.
Employee may receive additional discretionary bonuses as determined by the Board
of Directors of Employer in its sole discretion provided nothing contained
herein shall be construed as a commitment by the corporation to declare or pay
any such bonuses.
4. Benefits. In addition to the compensation provided for in Paragraph 3
--------
above, Employer will provide Employee with employment benefits commensurate to
those received by other executive level employees of Employer during the term of
this Agreement.
<PAGE>
5. Other Activities. Employee shall devote substantially all of her
-----------------
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and to the duties and responsibilities
assigned to her pursuant to this Agreement. Employee may devote a reasonable
amount of her time to civic, community or charitable activities. Employee in
all events shall be free to invest her assets in such manner as will not require
any substantial services by Employee in the conduct of the businesses or affairs
of the entities or in the management of the assets in which such investments are
made.
6. Term and Termination. The termination of this Agreement shall be
--------------------
governed by the following:
(a) The term of this Agreement shall be for the period set out in
paragraph 2 unless earlier terminated in one of the following ways:
(1) Death. This Agreement shall immediately terminate upon the
------
death of Employee.
(2) For Cause. The Employer, upon written notice to Employee, may
----------
terminate the employment of Employee at any time for "cause."
For purposes of this paragraph, "cause" shall be deemed to exist
if, and only if, the CEO of Employer, in good faith, determine
that Employee has engaged, during the performance of her duties
hereunder, in significant objective acts or omissions
constituting dishonesty, willful misconduct or gross negligence
relating to the business of Employer.
(3) Without Cause. The Employer, upon written notice to Employee,
-------------
may terminate the employment of Employee at any time without
cause.
(4) Resignation. Employee, upon written notice to Employer, may
-----------
resign from the employment of Employer at any time.
(b) Accrued Compensation on Termination. In the event of termination of
------------------------------------
the Agreement, Employee shall be entitled to receive:
(1) salary earned prior to and including the date of termination;
(2) any bonus earned as of the end of the month immediately
preceding the date of termination; and
(3) all benefits, if any, which have vested as of the date of
termination.
2
<PAGE>
7. Consulting.
-----------
(a) In the event of termination of employment pursuant to paragraph
6(a)(3) or 6(a)(4) above, Employer and Employee agree that Employee
shall, for a minimum period of twenty-four (24) months from the date
of termination serve as a consultant to Employer.
(b) In the event of termination pursuant to paragraph 6(a)(2), Employer
and Employee agree that Employer may, at its sole option, elect to
retain the services of Employee as a consultant for a period of
twenty-four (24) months from the date of termination and that Employee
will serve as a consultant to Employer if Employer so elects.
c) During any period of consulting, Employee shall be acting as an
independent contractor. As part of the consulting services, Employee
agrees to provide certain services to Employer, including, but not
limited to, the following:
(1) oral and written information with reference to continuing
programs and new programs which were developed or under
development under the supervision of Employee;
(2) meeting with officers and managers of Employer to discuss and
review programs and to make recommendations;
(3) analysis, opinion and information regarding the effectiveness and
public acceptance of their programs.
d) During the consulting period, Employee shall continue to receive, as
compensation for her consulting, the annualized salary set forth in
Exhibit A. No bonus of any kind will be paid during any period of
consulting.
e) Employee hereby agrees that during any period of consulting, he will
devote her full attention, energy and skill to the performance of her
duties and to furthering the interest of Employer and the affiliates,
which shall include, and Employee acknowledges a fiduciary duty and
obligation to Employer. Employee acknowledges that this prohibition
includes, but is not necessarily limited to, a preclusion from any
other employment or consulting by Employee during the consulting
period except pursuant to paragraph 7(f) hereafter.
f) During the term of this Agreement, including any period of consulting,
Employee shall not, singly, jointly, or as a member, employer or agent
of any partnership, or as an officer, agent, employee, director,
stockholder or investor of any other corporation or entity, or in any
other capacity, engage in any business endeavors of any kind or nature
whatsoever, other than those of Employer or its Affiliates without the
express written consent of Employer, provided, however, that Employee
may own stock in a publicly traded corporation. Employee agrees that
3
<PAGE>
Employer may in its sole discretion give or withhold its consent and
understands that Employer's consent will not be unreasonably withheld
if the following conditions are met:
(1) Employee's intended employment will not interfere in Employer's
opinion with Employee's duties and obligations as a consultant,
including the fiduciary duty assumed hereunder; and
(2) Employee's intended employment or activity would not, in the
opinion of Employer, place Employee in a situation where
confidential information of Employer or its Affiliates known to
Employee may benefit Employee's new employer; and
(3) Employee's new employment will not, in Employer's opinion,
result, directly or indirectly, in competition with Employer or
its Affiliates, then or in the future.
g) Notwithstanding any provisions in this Agreement to the contrary, the
provisions of paragraph 7 shall survive the termination of this
Agreement.
h) Employer shall reimburse Employee for all reasonable expenses incurred
by Employee in furtherance of her consulting duties pursuant to this
Agreement provided the expenses are pre-approved by Employer.
i) Benefits During Consulting Period. Employee and her dependents shall
----------------------------------
be entitled to continue their participation in all benefit plans in
effect on the date of Employee's termination from employment during
the period of consulting, under the same terms and conditions and at
the same net cost to Employee as when employed by Employer unless
Employee accepts new employment during the consulting term in
accordance with paragraph 7 above, in which event all benefits will
cease, at Employer's option, when the new employment is accepted by
Employee.
8. Confidential Information. In the course of Employee's employment,
-------------------------
Employee will be provided with certain information, technical data and know-how
regarding the business of Employer and its Affiliates and their products, all of
which is confidential (hereinafter referred to as "Confidential Information").
Employee agrees to receive, hold and treat all confidential information received
from Employer and its Affiliates as confidential and secret and agrees to
protect the secrecy of said Confidential Information. Employee agrees that the
Confidential Information will be disclosed only to those persons who are
required to have such knowledge in connection with their work for Employer and
that such Confidential Information will not be disclosed to others without the
prior written consent of the Employer. The provisions hereof shall not be
applicable to: (a) information which at the time of disclosure to Employee is a
matter of public knowledge; or (b) information which, after disclosure to
Employee, becomes public knowledge other than through a breach of this
Agreement. Unless the Confidential
4
<PAGE>
Information shall be of the type herein before set forth, Employee shall not use
such Confidential Information for her own benefit or for a third party's or
parties' benefit at any time. Upon termination of employment, Employee will
return all books, records and other materials provided to or acquired by
Employee during the course of employment which relate in any way to Employer or
its business. The obligations imposed upon Employee by this paragraph shall
survive the expiration or termination of this Agreement.
9. Covenant Not to Compete. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Employee covenants and agrees that for the period of
two (2) years following termination of her employment with Employer for any
reason she will not:
a) directly or indirectly, for herself, or as agent of, or on behalf of,
or in connection with, any person, firm, association or corporation,
engage in any business competing directly for the customers,
prospective customers or accounts of the Employer or any of its
Affiliates with whom Employee had contact or about whom Employee
learned during the course of her employment with Employer and during
the one (1) year immediately preceding the end of her employment.
b) induce or attempt to induce any person employed by Employer or any of
its Affiliates, in any capacity, at the time of the termination of
Employee's service with Employer, to leave her employment, agency
directorship or office with Employer or the Affiliate.
c) induce or attempt to induce any customer of Employer or any of its
Affiliates to terminate or change in any way its business relationship
with Employer or the Affiliate.
Employee agrees the knowledge and information gained by her in the
performance of her duties would be valuable to those who are now, or might
become, competitors of the Employer or its Affiliates and that the business of
Employer and its Affiliates by its nature, covers at least the entire United
States of America and Canada. In the event these covenants not to compete are
held, in any respect, to be an unreasonable restriction upon the Employee, the
Court so holding may reduce the territory, or time, to which it pertains or
otherwise reasonably modify the covenant to the extent necessary to render this
covenant enforceable by said Court for the reasonable protection of Employer and
its Affiliates. The obligations imposed upon Employee by this paragraph are
severable from, and shall survive the expiration or termination of, this
Agreement.
10. Developments.
-------------
a) Employee will make full and prompt disclosure to Employer of all
inventions, improvements, discoveries, methods, developments, software
and works of authorship, whether patentable or not, which are created,
made, conceived, reduced to practice by Employee or under her
direction or jointly with others during her employment by Employer,
whether or not during normal working
5
<PAGE>
hours or on the premises of Employer which relate to the business of
Employer as conducted from time to time (all of which are collectively
referred to in this Agreement as "Developments").
b) Employee agrees to assign, and does hereby assign, to Employer (or any
person or entity designated by Employer) all of her right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications.
c) Employee agrees to cooperate fully with Employer, both during and
after her employment with Employer, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments.
Employee shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths,
formal assignments, assignment or priority rights, and powers of
attorney, which Employer may deem necessary or desirable in order to
protect its rights and interest in any Developments.
11. Injunction and Other Relief. Both parties hereto recognize that the
---------------------------
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach of Employee of
the terms and conditions of this Agreement to be performed by her, or in the
event Employee performs services for any person, firm or corporation engaged in
the competing line of business with Employer as provided in Paragraph 9, or if
Employee shall breach the provisions of this Agreement with respect to
Confidential Information or consulting services, then Employer shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity to affirmative injunctive relief.
12. Severability. In the event that any of the provisions of this
-------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. In the event any court
would invalidate or fail to enforce any provision of Paragraph 7 and or
Paragraph 9 of this Agreement, Employee shall return any sums paid to Employee
by Employer pursuant to the consulting provision in paragraph 7 hereof.
13. Governing Law. This Agreement shall be governed by the laws of the
----------------
State of Nebraska.
14. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties respecting the employment of Employee by Employer and
supersedes all prior understandings, arrangements and agreements, whether oral
or written, including without limitation, any existing employment agreement, and
may not be amended except by a writing signed by the parties hereto.
6
<PAGE>
15. Notice. Notices to Employer under this Agreement shall be in writing
-------
and sent by registered mail, return receipt requested, at the following address:
President and CEO
West TeleServices Corporation
11808 Miracle Hills Drive
Omaha, NE 68154
16. Miscellaneous. Employee acknowledges that:
--------------
a) She has consulted with or had an opportunity to consult with an
attorney of Employee's choosing regarding this Agreement.
b) She will receive substantial and adequate consideration for her
obligations under this Agreement.
c) She believes the obligations, terms and conditions hereof are
reasonable and necessary for the protectable interests of Employer and
are enforceable.
d) This Agreement contains restrictions on her post-employment
activities.
IN WITNESS WHEREOF, Employer has, by its appropriate officers, executed
this Agreement and Employee has executed this Agreement as of the day and year
first above written.
WEST TELESERVICES CORPORATION,
Employer
By: /S/ Tom Barker
_____________________________________________
Its: President and Chief Executive Officer
_____________________________________________
/S/ Nancee R. Berger
_________________________________________________
____________________________, Employee
7
<PAGE>
To: Nancee Berger
From: Tom Barker
Date: September 1, 1998
Subject: WTSC - C.O.O. Compensation Plan
================================================================================
Your Compensation Plan through December 31, 1999 while you are employed as Chief
Operating Officer of West TeleServices Corporation is outlined below.
1. Your annual base salary will be $250,000.00 while you are employed as Chief
Operating Officer of West TeleServices Corporation. Should you elect to
voluntarily terminate your employment, you will be compensated for your
services through the date of your actual termination, per your Employment
Agreement.
2. You will be paid at the annual rate of $350,000.00 through December 31, 1999.
This represents your base salary plus an annualized incentive of $100,000.00
as you learn the operations of the other two West divisions. You will also
be eligible for a quarterly bonus of $50,000.00 for third and fourth quarter
of 1999 if WTSC meets or exceeds the consensus street estimate for those
quarters. This bonus will be paid after consolidated financial statements
are prepared for the quarter, but in any event will be paid no later than
thirty days after the end of the quarter.
3. At the discretion of Management, you may receive an additional bonus based on
the Companies and your individual performance.
4. Your Compensation Plan for the year 2000 will be presented no later than
December 1, 1999.
/S/ N Berger 9/17/98
<PAGE>
EXHIBIT 10.04
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into effective the 1st day of January, 1999,
between West TeleServices Corporation a Delaware corporation ("Employer") and
MICHAEL STURGEON ("Employee").
RECITALS
A. WHEREAS, Employer and Employee have agreed to certain terms and
conditions of employment between the parties; and
B. WHEREAS, the parties desire to enter into this Agreement to
memorialize the terms and conditions of the employment relationship and any
prior and existing employment agreement(s) between the parties.
NOW THEREFORE, the parties agree as follows;
1. Employment. Employer agrees to employ Employee in his capacity as
-----------
EXECUTIVE VICE PRESIDENT -- SALES AND MARKETING of Employer. Employer may also
direct Employee to perform such duties for other entities which now are, or in
the future may be, affiliated with Employer (the "Affiliates"), subject to the
limitation that Employee's total time commitment shall be consistent with that
normally expected of similarly situated executive level employees. Employee
shall serve Employer and the Affiliates faithfully, diligently and to the best
of his ability. Employee agrees during the term of this Agreement to devote his
best efforts, attention, energy and skill to the performance of his employment
and/or consulting duties and to furthering the interest of Employer and the
Affiliates.
2. Term of Employment. Employee's employment under this Agreement shall
-------------------
commence effective the 1st day of January, 1999, and shall continue for a
period of two years unless terminated or renewed under the provisions of
Paragraph 6 below.
(a) Unless terminated pursuant to paragraph 6(a), the term of employment
shall be extended by one year at the end of each successive year so
that at the beginning of each successive year the term of this
Agreement will be two years.
3. Compensation. Employer shall pay Employee as set forth in Exhibit A
-------------
attached hereto and incorporated herein as is fully set forth in this paragraph.
Employee may receive additional discretionary bonuses as determined by the Board
of Directors of Employer in its sole discretion provided nothing contained
herein shall be construed as a commitment by the corporation to declare or pay
any such bonuses.
4. Benefits. In addition to the compensation provided for in Paragraph 3
--------
above, Employer will provide Employee with employment benefits commensurate to
those received by other executive level employees of Employer during the term of
this Agreement.
<PAGE>
5. Other Activities. Employee shall devote substantially all of his
-----------------
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and to the duties and responsibilities
assigned to him pursuant to this Agreement. Employee may devote a reasonable
amount of his time to civic, community or charitable activities. Employee in
all events shall be free to invest his assets in such manner as will not require
any substantial services by Employee in the conduct of the businesses or affairs
of the entities or in the management of the assets in which such investments are
made.
6. Term and Termination. The termination of this Agreement shall be
--------------------
governed by the following:
(a) The term of this Agreement shall be for the period set out in
paragraph 2 unless earlier terminated in one of the following ways:
(1) Death. This Agreement shall immediately terminate upon the death
------
of Employee.
(2) For Cause. The Employer, upon written notice to Employee, may
----------
terminate the employment of Employee at any time for "cause."
For purposes of this paragraph, "cause" shall be deemed to exist
if, and only if, the CEO and COO of Employer, in good faith,
determine that Employee has engaged, during the performance of
his duties hereunder, in significant objective acts or omissions
constituting dishonesty, willful misconduct or gross negligence
relating to the business of Employer.
(3) Without Cause. The Employer, upon written notice to Employee,
-------------
may terminate the employment of Employee at any time without
cause.
(4) Resignation. Employee, upon written notice to Employer, may
-----------
resign from the employment of Employer at any time.
(b) Accrued Compensation on Termination. In the event of termination of
------------------------------------
the Agreement, Employee shall be entitled to receive:
(1) salary earned prior to and including the date of termination;
(2) any bonus earned as of the end of the month immediately preceding
the date of termination; and
(3) all benefits, if any, which have vested as of the date of
termination.
2
<PAGE>
7. Consulting.
-----------
(a) In the event of termination of employment pursuant to paragraph
6(a)(3) or 6(a)(4) above, Employer and Employee agree that Employee
shall, for a minimum period of twenty-four (24) months from the date
of termination serve as a consultant to Employer.
(b) In the event of termination pursuant to paragraph 6(a)(2), Employer
and Employee agree that Employer may, at its sole option, elect to
retain the services of Employee as a consultant for a period of
twenty-four (24) months from the date of termination and that Employee
will serve as a consultant to Employer if Employer so elects.
c) During any period of consulting, Employee shall be acting as an
independent contractor. As part of the consulting services, Employee
agrees to provide certain services to Employer, including, but not
limited to, the following:
(1) oral and written information with reference to continuing
programs and new programs which were developed or under
development under the supervision of Employee;
(2) meeting with officers and managers of Employer to discuss and
review programs and to make recommendations;
(3) analysis, opinion and information regarding the effectiveness and
public acceptance of their programs.
d) During the consulting period, Employee shall continue to receive, as
compensation for his consulting, the annualized salary set forth in
Exhibit A. No bonus of any kind will be paid during any period of
consulting.
e) Employee hereby agrees that during any period of consulting, he will
devote his full attention, energy and skill to the performance of his
duties and to furthering the interest of Employer and the affiliates,
which shall include, and Employee acknowledges a fiduciary duty and
obligation to Employer. Employee acknowledges that this prohibition
includes, but is not necessarily limited to, a preclusion from any
other employment or consulting by Employee during the consulting
period except pursuant to paragraph 7(f) hereafter.
f) During the term of this Agreement, including any period of consulting,
Employee shall not, singly, jointly, or as a member, employer or agent
of any partnership, or as an officer, agent, employee, director,
stockholder or investor of any other corporation or entity, or in any
other capacity, engage in any business endeavors of any kind or nature
whatsoever, other than those of Employer or its Affiliates without the
express written consent of Employer, provided, however, that Employee
may own stock in a publicly traded corporation. Employee agrees that
3
<PAGE>
Employer may in its sole discretion give or withhold its consent and
understands that Employer's consent will not be unreasonably withheld
if the following conditions are met:
(1) Employee's intended employment will not interfere in Employer's
opinion with Employee's duties and obligations as a consultant,
including the fiduciary duty assumed hereunder; and
(2) Employee's intended employment or activity would not, in the
opinion of Employer, place Employee in a situation where
confidential information of Employer or its Affiliates known to
Employee may benefit Employee's new employer; and
(3) Employee's new employment will not, in Employer's opinion,
result, directly or indirectly, in competition with Employer or
its Affiliates, then or in the future.
g) Notwithstanding any provisions in this Agreement to the contrary, the
provisions of paragraph 7 shall survive the termination of this
Agreement.
h) Employer shall reimburse Employee for all reasonable expenses incurred
by Employee in furtherance of his consulting duties pursuant to this
Agreement provided the expenses are pre-approved by Employer.
i) Benefits During Consulting Period. Employee and his dependents shall
----------------------------------
be entitled to continue their participation in all benefit plans in
effect on the date of Employee's termination from employment during
the period of consulting, under the same terms and conditions and at
the same net cost to Employee as when employed by Employer unless
Employee accepts new employment during the consulting term in
accordance with paragraph 7 above, in which event all benefits will
cease, at Employer's option, when the new employment is accepted by
Employee.
8. Confidential Information. In the course of Employee's employment,
-------------------------
Employee will be provided with certain information, technical data and know-how
regarding the business of Employer and its Affiliates and their products, all of
which is confidential (hereinafter referred to as "Confidential Information").
Employee agrees to receive, hold and treat all confidential information received
from Employer and its Affiliates as confidential and secret and agrees to
protect the secrecy of said Confidential Information. Employee agrees that the
Confidential Information will be disclosed only to those persons who are
required to have such knowledge in connection with their work for Employer and
that such Confidential Information will not be disclosed to others without the
prior written consent of the Employer. The provisions hereof shall not be
applicable to: (a) information which at the time of disclosure to Employee is a
matter of public knowledge; or (b) information which, after disclosure to
Employee, becomes public knowledge other than through a breach of this
Agreement. Unless the Confidential
4
<PAGE>
Information shall be of the type herein before set forth, Employee shall not use
such Confidential Information for his own benefit or for a third party's or
parties' benefit at any time. Upon termination of employment, Employee will
return all books, records and other materials provided to or acquired by
Employee during the course of employment which relate in any way to Employer or
its business. The obligations imposed upon Employee by this paragraph shall
survive the expiration or termination of this Agreement.
9. Covenant Not to Compete. Notwithstanding any other provision of this
------------------------
Agreement to the contrary, Employee covenants and agrees that for the period of
two (2) years following termination of his employment with Employer for any
reason he will not:
a) directly or indirectly, for himself, or as agent of, or on behalf of,
or in connection with, any person, firm, association or corporation,
engage in any business competing directly for the customers,
prospective customers or accounts of the Employer or any of its
Affiliates with whom Employee had contact or about whom Employee
learned during the course of his employment with Employer and during
the one (1) year immediately preceding the end of his employment.
b) induce or attempt to induce any person employed by Employer or any of
its Affiliates, in any capacity, at the time of the termination of
Employee's service with Employer, to leave his employment, agency
directorship or office with Employer or the Affiliate.
c) induce or attempt to induce any customer of Employer or any of its
Affiliates to terminate or change in any way its business relationship
with Employer or the Affiliate.
Employee agrees the knowledge and information gained by him in the
performance of his duties would be valuable to those who are now, or might
become, competitors of the Employer or its Affiliates and that the business of
Employer and its Affiliates by its nature, covers at least the entire United
States of America and Canada. In the event these covenants not to compete are
held, in any respect, to be an unreasonable restriction upon the Employee, the
Court so holding may reduce the territory, or time, to which it pertains or
otherwise reasonably modify the covenant to the extent necessary to render this
covenant enforceable by said Court for the reasonable protection of Employer and
its Affiliates. The obligations imposed upon Employee by this paragraph are
severable from, and shall survive the expiration or termination of, this
Agreement.
10. Developments.
-------------
a) Employee will make full and prompt disclosure to Employer of all
inventions, improvements, discoveries, methods, developments, software
and works of authorship, whether patentable or not, which are created,
made, conceived, reduced to practice by Employee or under his
direction or jointly with others during his employment by Employer,
whether or not during normal working
5
<PAGE>
hours or on the premises of Employer which relate to the business of
Employer as conducted from time to time (all of which are collectively
referred to in this Agreement as "Developments").
b) Employee agrees to assign, and does hereby assign, to Employer (or any
person or entity designated by Employer) all of his right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications.
c) Employee agrees to cooperate fully with Employer, both during and
after his employment with Employer, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments.
Employee shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths,
formal assignments, assignment or priority rights, and powers of
attorney, which Employer may deem necessary or desirable in order to
protect its rights and interest in any Developments.
11. Injunction and Other Relief. Both parties hereto recognize that the
---------------------------
services to be rendered under this Agreement by Employee are special, unique and
of extraordinary character, and that in the event of the breach of Employee of
the terms and conditions of this Agreement to be performed by him, or in the
event Employee performs services for any person, firm or corporation engaged in
the competing line of business with Employer as provided in Paragraph 9, or if
Employee shall breach the provisions of this Agreement with respect to
Confidential Information or consulting services, then Employer shall be
entitled, if it so elects, in addition to all other remedies available to it
under this Agreement or at law or in equity to affirmative injunctive relief.
12. Severability. In the event that any of the provisions of this
-------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such invalidity or unenforceability shall not affect the remainder
of this Agreement and same shall be construed as if such invalid or
unenforceable provisions had never been a part hereof. In the event any court
would invalidate or fail to enforce any provision of Paragraph 7 and or
Paragraph 9 of this Agreement, Employee shall return any sums paid to Employee
by Employer pursuant to the consulting provision in paragraph 7 hereof.
13. Governing Law. This Agreement shall be governed by the laws of the
----------------
State of Nebraska.
14. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties respecting the employment of Employee by Employer and
supersedes all prior understandings, arrangements and agreements, whether oral
or written, including without limitation, any existing employment agreement, and
may not be amended except by a writing signed by the parties hereto.
6
<PAGE>
15. Notice. Notices to Employer under this Agreement shall be in writing
-------
and sent by registered mail, return receipt requested, at the following address:
President and CEO
West TeleServices Corporation
11808 Miracle Hills Drive
Omaha, Nebraska 68154
16. Miscellaneous. Employee acknowledges that:
--------------
a) He has consulted with or had an opportunity to consult with an
attorney of Employee's choosing regarding this Agreement.
b) He will receive substantial and adequate consideration for his
obligations under this Agreement.
c) He believes the obligations, terms and conditions hereof are
reasonable and necessary for the protectable interests of Employer and
are enforceable.
d) This Agreement contains restrictions on his post-employment
activities.
IN WITNESS WHEREOF, Employer has, by its appropriate officers, executed
this Agreement and Employee has executed this Agreement as of the day and year
first above written.
WEST TELESERVICES CORPORATION,
Employer
By: /S/ Tom Barker
_____________________________________
Its: President and Chief Executive Officer
_____________________________________
/S/ Michael Sturgeon
__________________________________________
_____________________, Employee
7
<PAGE>
TO: MIKE STURGEON
FROM: TOM BARKER
SUBJECT: 1999 COMPENSATION PLAN EXHIBIT A
DATE: 02/22/99
________________________________________________________________________________
Your Compensation Plan for 1999 while you are employed as Executive Vice
President - Sales and Marketing for West TeleServices Corporation is outlined
below:
1. Your base salary will be $190,000. Should you elect to voluntarily
terminate your employment you will be compensated for your services through
the date of your actual termination, per your Employment Agreement.
2. You will be eligible to receive a monthly performance bonus based on 1999
revenue, net of Quintel, Psychic Readers Network, Access Resources and
other affiliated companies revenue, compared to 1998 revenue less Quintel,
Psychic Readers Network, Access Resources and other affiliated companies
minus bonus paid year-to-date for the respective calendar year. This
monthly bonus will be calculated by multiplying year-to-date qualifying
revenue growth times the incentive factors indicated below. A negative
calculation at the end of any given month will result in a loss carry
forward to be applied to the next monthly bonus calculation. All bonuses
will be paid within 30 days of the end of the month.
1999 Revenue Growth Compensation Rate Factor
------------------- ------------------------
0 - $100 Million .002
$100 Million + .004
3. You will be eligible to receive a one-time bonus of $50,000.00 if WTSC
consolidated revenue for 1999 is at least $570 million. Revenue derived
from acquisitions or marketing services related programs will not be
considered when calculating revenue for this bonus. If earned, this bonus
will be paid within 30 days after 12/31/99 financials are prepared, but no
later than 02/26/00.
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER 1999 FORM 10-Q OF WEST TELESERVICES CORPORATION, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS CONTAINED THEREIN.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 15,836
<SECURITIES> 0
<RECEIVABLES> 109,263
<ALLOWANCES> 2,533
<INVENTORY> 0
<CURRENT-ASSETS> 148,969
<PP&E> 245,245
<DEPRECIATION> 86,833
<TOTAL-ASSETS> 362,783
<CURRENT-LIABILITIES> 74,342
<BONDS> 0
0
0
<COMMON> 633
<OTHER-SE> 255,484
<TOTAL-LIABILITY-AND-EQUITY> 362,783
<SALES> 137,992
<TOTAL-REVENUES> 137,992
<CGS> 71,729
<TOTAL-COSTS> 116,190
<OTHER-EXPENSES> 109
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 779
<INCOME-PRETAX> 22,180
<INCOME-TAX> 8,271
<INCOME-CONTINUING> 13,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,909
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
