CONSULTING AGREEMENT
Consulting Agreement ("Agreement") dated as of August 13,
1997 effective as of July 18, 1997 (the "Effective Date"),
between SA Telecommunications, Inc., a Delaware corporation with
offices at 0000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, Xxxxx
(the "Company"), and Xxxxxx X. Xxxx, residing at 00 Xxx Xxx Xxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Consultant").
RECITALS:
A. The Company desires to engage the services of
Consultant as Chairman of the Board of Directors of the Company.
B. Consultant has agreed to serve as Chairman of the Board
of Directors the Company pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and
Consultant hereby agree as follows:
1. TERM AND RENEWAL.
The Company agrees to engage the services of Consultant, and
Consultant agrees to serve, as Chairman of the Board of Directors
of the Company on the terms and conditions of this Agreement for
a period commencing on the Effective Date and ending on the
earliest to occur of (a) July 17, 1998, (b) the day immediately
following the occurrence of a Significant Change, or (c) such
shorter period as may be provided for in Section 9 hereof (the
"Consulting Period"). Notwithstanding the foregoing, on each
July 17th (the "Renewal Date") while this Agreement is in effect,
the term of this Agreement shall be automatically extended one
(1) additional year from the Renewal Date unless and until
terminated by the Company or Consultant, upon notice to the other
party on or prior to April 15th immediately preceding the Renewal
Date, in which case there shall be no automatic extension and
this Agreement shall end on July 17th of the year following the
year in which the termination notice is given.
2. DUTIES AND SERVICES.
During the Consulting Period, Consultant shall serve as the
Chairman of the Board of Directors of the Company. In
performance of his duties, Consultant shall perform the following
duties and such other duties as may from time to time be
prescribed by resolution of the Board of Directors in accordance
with the Company's bylaws, and shall be subject to the direction
of the Board of Directors of the Company: (a) improve the
Company's short term cash flow; (b) develop and implement a long-
term financial structure for the Company; and (c) develop and
implement a long term strategic business plan for maximization of
the value of the Company.
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Consultant agrees to his engagement as described in this Section
2 and agrees to devote such of his business time and efforts as
are necessary to the performance of his duties under this
Agreement. Consultant shall be available to travel as the needs
of the business require. The duties of Consultant may be changed
from time to time by the Board of Directors and the engagement of
the Consultant shall be construed as continuing under this
Agreement as modified, provided that no such change will result
in a change of Consultant's title or to any compensation payable
to Consultant, except as contemplated by Section 3 hereof.
3. COMPENSATION.
As compensation for his services hereunder, the Company
shall pay Consultant, during the Consulting Period, base
compensation payable on the first day of each month of $10,000;
provided, however, that during the first two months of the
Consulting Period in 1997, Consultant's monthly compensation
shall be $15,000 per month and Consultant shall receive no
compensation in the third month of the Consulting Period 1997.
Consultant will not be eligible to participate in the regular
employee benefit programs now or hereafter established by the
Company. Consultant waives any compensation to which he may be
entitled for prior services performed as a member of the
Executive Oversight Committee of the Board of Directors
4. BONUS.
(a) Upon the occurrence of a Significant Change (as
defined below), Consultant shall be entitled to a bonus in
an amount equal to $240,000 (the "Significant Change
Bonus"). For purposes of this subsection, "Significant
Change" shall be deemed to occur: (a) upon the consummation
of any consolidation or merger of the Company in which the
Common Stock of the Company would be converted into cash,
securities or other property; (b) upon the consummation of
any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (c) in
the event that the Company shall file a voluntary or
involuntary petition in bankruptcy or file a petition or
answer seeking reorganization under any bankruptcy or
insolvency laws ("Bankruptcy Proceeding"), upon approval by
the creditors of a Chapter 11 reorganization plan for the
Company to emerge from Bankruptcy Proceedings as a viable
operating entity with at least $1,000,000 of new working
capital after payment of such Significant Change Bonus.
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(b) Upon the consummation of a transaction that
results in a significant capital infusion in the Company
which also results in a Change in Management Control (as
defined below) on terms approved by the Company's Board of
Directors, Consultant shall be entitled to a bonus in an
amount equal to $120,000. For purposes of this Section 4, a
"Change of Management Control of the Company" shall mean
either (a) a change in the Board of Directors of the Company
in which the individuals who constituted the Board of
Directors of the Company as of the date of this Agreement
(other than Xxxx X. Xxxxxx) together with any other director
whose election by the Board of Directors of the Company or
whose nomination for election by the shareholders of the
Company was approved by a vote of at least a majority of the
directors then in office who were directors at the date of
this Agreement) cease to constitute a majority of the
directors then in office; or (b) change resulting in the
Company's Fully Diluted Shares ceasing to represent more
than 50% of the total voting power of all outstanding Voting
Shares of the Company. "Voting Shares" shall mean all
shares of any class or classes (however designated) of
capital stock of the Company entitled to vote generally in
the election of members of the Board of Directors plus any
shares of capital stock which would be so entitled to vote
upon conversion or exercise of any debt or equity securities
of the Company (including without limitation notes,
debentures, warrants and options). "Fully Diluted Shares"
shall mean all Voting Shares on the date of this Agreement
plus any Voting Shares issuable upon conversion of the
Company's 10% Convertible Debenture Due 2006 to be issued in
August 1997.
5. BUSINESS EXPENSES.
The Company will, in accordance with its rules and
regulations, reimburse the Consultant for business expenses
incurred in the performance of his duties. Such reimbursement
shall occur within forty-five (45) days of submission by the
Consultant of such business expenses with corresponding receipts.
No reimbursement will be given by policy of the Board unless it
is in strict compliance with applicable provisions of the
Internal Revenue Code and the regulations promulgated thereunder.
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6. NONCOMPETITION.
Without prior approval of the Board of Directors of the
Company, Consultant agrees that (a) he will not during the
Consulting Period engage in, or otherwise directly or indirectly
be employed by, or act as a consultant or lender to, or be a
director, officer, employee, owner or partner of, any other
business or organization that directly or indirectly competes
with the business of the Company or any of its subsidiaries and
(b) for a period of three (3) years after he voluntarily
terminates this Agreement, Consultant shall not directly or
indirectly compete with or be engaged in the same business as the
Company or any of its subsidiaries or be employed by, or act as
consultant or lender to, or be a director, officer, employee,
owner, or partner of, any business or organization which, at the
time of such cessation, directly or indirectly competes with or
is engaged in the same business as the Company or any of its
subsidiaries; provided, however, that notwithstanding the
foregoing, the provisions of this Section 6 will not be deemed
breached merely because Consultant (i) owns not more than one (1)
percent of the outstanding equity securities of an entity, if, at
the time of its acquisition by Consultant, such securities are
listed on a national securities exchange, is reported on NASDAQ,
or is regularly traded in the over-the-counter market by a member
of a national securities exchange.
7. CONFIDENTIAL INFORMATION.
All confidential information which Consultant may now
possess, may obtain from the Company or its subsidiaries during
or after the Consulting Period, or may create prior to the end of
the Consulting Period or otherwise relating to the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or of any
customer or supplier of any of them shall not be published,
disclosed, or made accessible by him to any other person or
entity either during or after the termination of his services
hereunder or used by him except during the Consulting Period in
the business and for the benefit of the Company and its
subsidiaries, in each case without approval of the Board of
Directors of the Company. The provisions of this Section 7 shall
survive the termination of this Agreement by either party.
8. BEST EFFORTS.
(a) Best Efforts. Consultant agrees that he will be at all
times faithfully, industriously, and to the best of his ability,
experience, and talents, perform all of the duties that may be
required of and from him pursuant to the express and implicit
terms hereof, to the reasonable satisfaction of Company. Such
duties shall be rendered at the home office of Company, and at
such other place or places as the Consultant and the Board of
Directors of the Company shall agree or as the interest, needs,
business or opportunities of the Company shall require.
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(b) Recommendations for Improving Operations. Consultant
shall make available to Company all information of which
Consultant shall have any knowledge and shall make all
suggestions and recommendations that will be of benefit to the
Company.
9. TERMINATION.
(a) Consultant's Death. If Consultant shall die during the
Consulting Period, this Agreement shall terminate, except that
Consultant's estate shall be entitled to receive the monthly base
compensation payable to Consultant pursuant to Section3 hereof,
earned to the last day of the month in which his death occurs.
(b) Consultant's Disability. If, during the Consulting
Period, Consultant shall become physically or mentally disabled,
whether totally or partially, so that he is prevented from
performing his usual duties and services hereunder for a period
of six (6) consecutive or nonconsecutive months during any twelve
(12) month period, this Agreement shall terminate effective on
such incapacity, and Consultant (or his legal representatives)
shall be entitled only to the base compensation earned to the
date of termination with no entitlement to any additional
compensation.
(c) Termination by the Company Without Cause. This
Agreement may be terminated by the Company without cause by
thirty (30) days prior written notice thereof given to
Consultant. In the event of termination without cause, the
Company shall pay Consultant the base compensation for a period
beginning effective at the time of termination to the July 17th
next following such effective time of termination.
(d) Termination by the Company for Cause. This Agreement
may be terminated by the Company "for cause" (as defined below)
by delivering to Consultant written notice describing the cause
and granting Consultant thirty (30) days to respond to the Board
of Directors. If this Agreement is terminated by the Company for
cause, Consultant shall only be entitled to the base compensation
earned by him to the date of termination with no entitlement to
any additional compensation. Termination of this Agreement by
the Company for cause shall be deemed to have occurred only if:
(i) termination shall have been the result of an act
or acts of dishonesty on the Consultant's part constituting
a felony or intended to result directly or indirectly in
substantial gain or personal enrichment to him at the
expense of the Company; or
(ii) termination shall have been the result of the
Consultant's willful and continued failure to perform his
duties and responsibilities as Chairman of the Board of
Directors of the Company (other than such failure resulting
from his incapacity due to physical or mental illness) after
a written demand for substantial performance is delivered to
the Consultant by the Board of Directors of the Company
which specifically identifies the manner in which such Board
believes that the Consultant has not substantially performed
his duties and the Consultant is given a reasonable time
after such demand substantially to perform his duties;
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Provided that Consultant's services shall in no event be
considered to have been terminated by the Company for cause
under (i) or (ii) above if the act or failure to act upon
which the termination is based is an act or failure to act
in respect of which the Consultant meets the applicable
standard of conduct prescribed for indemnification or
reimbursement of expenses under the By-laws of the Company
or the laws of the state of incorporation; or
(iii) at least 75% of the members of the Board of
Directors determine to terminate this Agreement.
(e) Voluntary Termination by Consultant. Consultant may
terminate this Agreement at any time upon delivering thirty (30)
days' prior written notice to the Company specifying the date of
termination. In the event of such voluntary termination,
Consultant shall be entitled to his base compensation earned to
the date specified for termination, but no base compensation
continuation payment or any bonus awards which have not been
vested on the date specified for termination. On or after the
date the Company receives notice of Consultant's termination, the
Company may, at its option, pay Consultant his base compensation
through the date of specified for termination and terminate his
services immediately.
(f) Termination by End of Term. This Agreement shall
terminate and Consultant's services hereunder shall terminate (i)
on July 17, 1998 if this Agreement not automatically renewed
pursuant to Section 1 hereof or (ii) if this Agreement is
automatically renewed in accordance with Section 1 hereof, on the
date of termination as so extended.
(g) Limitation of Payments. Any payments or grants
provided upon termination as set forth herein shall be in lieu of
any other obligations of the Company that may arise hereunder and
Consultant shall have no right to any subsequent payments or
bonuses hereunder.
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10. SURVIVAL.
The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive the
termination of this Agreement.
11. MODIFICATION.
This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all
existing agreement (whether written or oral) between the Company
and any of its previous or current subsidiaries on the one hand
and Consultant on the other concerning such subject matter, and
may be modified only by a written instrument duly executed by
each party.
12. ATTORNEYS' FEES AND COSTS.
If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which he may be
entitled.
13. NOTICES.
Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or by Federal Express,
Express Mail, or similar overnight delivery or courier service or
delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in
the preamble to this Agreement (or to such other address as the
party shall have furnished in writing in accordance with the
provisions of this Section 13). Any notice given to the Company
shall be addressed to the attention of the President with a copy
to the General Counsel. Notice to the estate of Consultant shall
be sufficient if addressed to Consultant as provided in this
Section 13. Any notice or other communication given by certified
mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be
deemed given at the time of receipt thereof. Any notice given by
other means permitted by this Section 13 shall be deemed given at
the time of receipt thereof.
14. WAIVER.
Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a
waiver of any other breach of that provision or of any breach of
any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
15. BINDING EFFECT.
Consultant's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance, or the claims
of Consultant's creditors, and any attempt to do any of the
foregoing shall be void. The provisions of this Agreement shall
be binding upon and inure to the benefit of Consultant and his
heirs and personal representatives, shall be binding upon and
inure to the benefit of the Company and its successors and
assigns.
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16. HEADINGS.
The headings of this Agreement are solely for the
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
17. COUNTERPARTS; GOVERNING LAW.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
It shall be governed by and construed in accordance with the laws
of the State of Texas, without giving effect to the conflict of
laws rules. Any action, suit, or proceeding arising out of,
based on, or in connection with this Agreement, any document or
instrument delivered pursuant to, in connection with, or
simultaneously with this Agreement, any breach of this Agreement
or any such document or instrument, or any transaction
contemplated hereby or thereby may be brought only in the
District Courts of Dallas County, Texas, or the United States
District Court for the Northern District of Texas, Dallas
Division and each party covenants and agrees not to assert, by
way of motion, as a defense, or otherwise, in any such action,
suit, proceeding, any claim that such party is not subject
personally to the jurisdiction of such court, that such party's
property is exempt or immune from attachment or execution, that
the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter
18. RELATIONSHIP.
Consultant and the Company understand and agree that
Consultant is an independent contractor and there is no employer-
employee relationship, joint venture or partnership created
hereby.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
COMPANY:
SA TELECOMMUNICATIONS, INC.
By: /s/ XXXX X. XXXXXX
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Title: President
CONSULTANT:
/s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
