EMPLOYMENT AGREEMENT
EXHIBIT 10.27
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and effective as of March 30,
2007, between EQUITY MEDIA HOLDINGS CORPORATION, a Delaware corporation (the “Parent” or
the “Company”) and XXXXX X. XXXXXX, a resident of the State of Arkansas (the
“Employee”).
RECITALS
This Agreement is entered into in connection with that certain Agreement and Plan of Merger
dated April 7, 2006, as amended on May 5, 2006 and September 14, 2006 (the “Merger
Agreement”) among the Parent, Equity Broadcasting Corporation (“EBC”), and certain
majority shareholders of EBC, pursuant to which EBC will merge with and into Parent with Parent
being the surviving corporation.
Terms of Agreement
In consideration of the premises and mutual covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows.
1. Employment. The Company hereby employs the Employee and the Employee hereby
accepts employment by the Company, upon all of the terms and conditions set forth in this
Agreement.
2. Employment Period. The period during which the Employee shall serve as an employee
of the Company shall commence on the date hereof and, unless earlier terminated pursuant to this
Agreement, shall expire on the third anniversary of the date hereof (the “Employment
Period”).
3. Duties and Responsibilities. The Employee agrees to perform all duties required of
President and Chief Executive Officer of the Company. On the third anniversary of the date hereof,
or as otherwise sooner agreed to by the Employee and the Company, the Employee agrees to step down
as President and Chief Executive Officer and for two years following the termination of this
agreement, the Employee will serve as Vice Chairman of the Board of Directors and will perform such
duties as the Board of Directors and Employee mutually agree. Employee further agrees to perform
his duties honestly, diligently, competently, in good faith and in the best interests of the
Company and shall give his best efforts in performing these duties for the Company. The Employee
further agrees that during his tenure as President and Chief Executive Officer of the Company, the
Employee shall devote his full time to the rendering of services on behalf of the Company.
4. Compensation. In consideration for the Employee’s services hereunder and the
restrictive covenants contained herein, and subject to the terms and conditions herein during the
Employment Period, the Company shall pay to the Employee an annual base salary of Five Hundred and
Twenty Thousand Dollars and 00/100 (US $520,000.00) payable in accordance with the Company’s
customary payroll practices, which salary will be reviewed annually by the
Board of Directors of the Company (the “Base Salary”); provided however, that during
the Employment Period the Base Salary shall not be reduced. Any bonus compensation in addition to
the Base Salary shall be determined at the discretion of the compensation committee of the Board of
Directors of the Company.
There shall be withheld from all amounts due to the Employee as compensation for services
performed by him such federal and state income taxes, FICA and other amounts as may be required to
be withheld under applicable law.
5. Grant of Stock Options. The Company shall grant the Employee 2,000,000 stock
options, adjusted for any and all splits, for stock in the Company with an exercise price at fair
market value which options shall vest in four equal installments commencing at the signing of this
agreement and on each anniversary thereafter and which shall be a part of and granted pursuant to
the terms of the Company’s 2007 Stock Incentive Plan adopted in connection with the Merger
Agreement. Said Stock Options shall be exercisable for a minimum of five (5) years.
Notwithstanding any provisions contained herein to the contrary, in the event Employee is
terminated for any reason whatsoever the termination shall be structured such that Employee shall
have two years to exercise his options.
6. Management Incentive Pool. During the Employment Period, Employee will be entitled
to maximum participation in the Company’s Management Incentive Compensation Plan, to be established
for current and future executives in conjunction with the Merger Agreement, with a minimum amount
of not less than $3,040,000.00, subject to Employee‘s employment at the time the target
stock price is obtained.
7. Vacation and Holidays; Insurance
(a) During the Employment Period, the Employee shall be entitled to twenty (20) business days
of vacation leave each calendar year to be taken at such times as the Employee and the Company
shall mutually determine and provided that no vacation time shall significantly interfere with the
duties required to be rendered by the Employee hereunder. Any vacation time not taken by the
Employee during any calendar year may not be carried forward into any succeeding calendar year.
(b) During the Employment Period, the Employee shall also be entitled to take regular office
holidays in addition to the vacation leave provided in Section 7(a) above.
(c) During the Employment Period, the Employee shall be entitled to health, medical, dental,
disability, retirement, and life insurance benefit plans fully funded by the Company in the
normal course and comparable at least to the level of benefits as those benefit plans that were in
place with Employee’s employment prior to the Merger Agreement, and including any further benefit
enhancements to the extent exceeding such pre-merger benefit levels hereinafter offered by the
Company to its executive personnel as may be approved by the Company’s Board of Director’s for all
employees..
8. Expenses. During the Employment Period, the Employee shall be entitled to
reimbursement of reasonable expenses incurred by him which reimbursement shall be subject to and
made in accordance with such policies and procedures as may be established by the
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Company and as requested by the Board of Directors of the Company. Employee shall be provided
with a corporate credit card for out of pocket business expenses, including but not limited to,
travel and accommodations.
9. Termination.
(a) Termination with Notice by Either Party. The Company or the Employee may
terminate this Agreement for any reason or no reason upon sixty (60) days prior written notice to
the other. If the Company terminates the employment of the Employee without Good Cause (as defined
below), the Company shall pay the Employee the remainder of Employee’s Compensation at the rate of
the Base Salary in effect as of the date immediately preceding the date of termination and the cost
of premiums for any Company sponsored insurance policies or other benefits, medical, dental,
disability, retirement and travel plans (or the cash equivalent) for the greater of twelve (12)
months or the remainder of the Employment Period, payable in the manner and at such times as the
Base Salary and benefits otherwise would have been payable to the Employee hereunder were the
Employee to continue to be employed by the Company. If the Employee terminates his employment with
the Company hereunder without Good Cause (as defined below), the Company shall pay the Employee the
Base Salary earned and reasonable expenses reimbursable under this Agreement incurred through the
date of Employee’s termination; provided that the Company shall not be under any obligation to pay
the Employee any unearned or non-accrued Compensation, and the Employee shall not be entitled to,
any such severance compensation.
(b) Termination for Good Cause by Company. In the case of the Company terminating
this Agreement, “Good Cause” means any one or more of the following:
(i) a material breach or default by the Employee of the terms of this Agreement which
remains uncured after thirty (30) days following Employee’s receipt from the Company of
written notice specifying such breach or default;
(ii) gross negligence or willful misfeasance by Employee or the breach of fiduciary duty
by Employee in the performance of his duties as an employee hereunder;
(iii) the commission by Employee of an act of fraud, embezzlement or any other crime in
connection with Employee’s duties;
(iv) conviction of Employee of a felony which involves dishonesty or a breach of trust;
(v) the Employee is unable to perform any of the functions of his position for which he
was hired, because such performance is prohibited or enjoined by a judicial or administrative
order or other agreement enforcing any non-competition, non-solicitation or other restrictive
covenant or agreement to which the Employee is a party.
In the event of a termination for Good Cause, the Company will pay the Employee the Base
Salary earned and reasonable expenses reimbursable under this Agreement incurred through the date
of Employee’s termination; except in the case of theft or fraud against the Company in which case
no payments of any kind shall be made by the Company to the
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Employee. Upon termination of the employee for Good Cause, as provided above, all outstanding
and unexercised stock options, vested shall remain with the employee. Upon termination of Employee
for Good Cause, as provided above, the Employee shall also be deemed to have resigned as a director
of the Company (if such Employee is then a director) and shall deliver to the Company a letter of
resignation to this effect. Other than as provided in this paragraph, the Company shall have no
further liability to the Employee in the event of termination of Employee for Good Cause. A change
in the Employee’s duties from President and Chief Executive Officer to Vice Chairman of the Board,
whether after three years or sooner as agreed to by Employee and the Company.
(c) Termination for Good Cause by Employee. In the case of the Employee terminating
this Agreement, “Good Cause” means any one or more of the following: (i) there shall be a
continuing breach or continuing default by the Company of the terms of this Agreement which remains
uncured after thirty (30) days following the Company’s receipt from the Employee of written notice
specifying such breach or default; (ii) requirement by Company for Employee to relocate more than
fifty (50) miles; or (iii) a substantial change in Employee’s requirements or duties except as
provided hereunder. If the Employee terminates his employment with Good Cause, the Company shall
pay the Employee the remainder of Employee’s Compensation at the rate of the Base Salary in effect
as of the date immediately preceding the date of termination and the cost of premiums for any
Company sponsored insurance policies or other benefits, medical, dental, disability or retirement
and travel plans (or the cash equivalent) for the greater of twelve (12) months or the remainder of
the Employment Period, payable in the manner and at such times as the Base Salary and benefits
otherwise would have been payable to the Employee hereunder were the Employee to continue to be
employed by the Company.
(d) In the event of death of the Employee, Employee’s spouse, or in the event of a death of
the spouse, Employee’s children, shall receive all payments and benefits contained herein.
10. Change in Control and Other Grounds Entitling Employee to Terminate. “Change
in Control” shall mean (a) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions) of all or substantially all of the assets of the Company; (b) any
consolidation or merger or other business combination of the Company with any other entity where
the shareholders of the Company, immediately prior to the consolidation or merger or other business
combination would not, immediately after the consolidation or merger or other business combination,
beneficially own, directly or indirectly, shares representing fifty percent (50%) of the combined
voting power of all of the outstanding securities of the entity issuing cash or securities in the
consolidation or merger or other business combination (or its ultimate parent corporation, if any);
or (c) the Board of Directors of the Company adopts a resolution to the effect that a “Change In
Control” has occurred for purposes of this Agreement. Notwithstanding the foregoing, no transaction
shall be deemed to constitute a “Change in Control” for purposes of this Agreement if such
transaction involves or relates to any existing or former business segment or division in which the
Company operates.
Upon a Change in Control, 100% of all unvested stock options and/or restricted shares, if any,
held by Employee shall immediately vest.
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11. Confidential Information and Trade Secrets. As consideration for and to induce
the engagement of the Employee by the Company, the Employee hereby covenants and agrees to the
provisions set forth below.
(a) Except in the performance of his duties under this Agreement or as the Board of Directors
of the Company may expressly authorize or direct in writing, the Employee agrees that he will not
at any time during the Employment Period or at any time thereafter for any reason, either directly
or indirectly, (i) copy, reproduce, divulge, disclose or communicate to any person or entity, in
any manner whatsoever, any Confidential Information (as defined below), (ii) remove from the
custody and control of the Company any physical or electronic manifestation of the Confidential
Information or (iii) utilize, or permit others to utilize, the Confidential Information for
personal use. All Confidential Information, including all physical or electronic manifestations
thereof, shall be the exclusive property of the Company, whether prepared, compiled or obtained by
the Employee or by the Company, prior to the Employment Period.
(b) Upon termination of this Agreement by either party, or upon the request of the Company
during the Employment Period, the Employee will immediately return to the Company all of the
proprietary items of the Company (whether they include Confidential Information or not) in the
Employee’s possession or subject to the Employee’s control, and the Employee shall not retain any
copies, abstracts, sketches, or other physical or electronic embodiment of any proprietary items of
the Company.
(c) “Confidential Information” shall mean all information and trade secrets relating
to or used in the business and operations of the Company (including, but not limited to, marketing
methods and procedures, customer lists, sources of supplies and materials, business systems and
procedures, information regarding its financial matters, or any other information concerning the
personnel, operations, trade secrets, know how, or business or planned business of the Company),
whether prepared, compiled, developed or obtained by the Employee or by the Company prior to or
during the term of this Agreement and the engagement of the Employee hereunder, that is marked
“confidential” or “proprietary” (or something similar), is treated by the Company as confidential
or proprietary or is reasonably considered to be confidential or proprietary. The provisions of
this Section shall not apply to: (i) information that is public knowledge other than as a result of
a breach of an obligation of confidence; (ii) information lawfully received by the Employee from a
third party who, based upon inquiry by the Employee, is not bound by a confidential relationship to
the Company or otherwise; (iii) information independently developed by the Employee prior to the
date hereof as evidenced by written documentation in existence prior to the date hereof; or (iv)
information disclosed under a requirement of law or as directed by applicable legal authority
having jurisdiction over the Employee, provided the Employee shall deliver written notice to the
Company of such required disclosure and afford the Company the opportunity to legally curtail such
disclosure within the time period required for disclosure. For the purposes of this Section, as
the context permits, all references to Company shall be deemed to include its wholly owned
subsidiaries.
12. Non-Competition and Non-Solicitation. As consideration for and to induce the
employment of the Employee by the Company, the Employee hereby covenants and agrees that he will
not:
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(a) Except as authorized herein or unless Employee terminates for Good Cause or is terminated
without Good Cause, during the term of this Agreement and for a period of two (2) years from the
date the Employment Period is terminated, alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor or stockholder of any company or business,
engage in any business activity which is in competition with the business conducted by the Company
or any of its subsidiaries or affiliates, including without limitation those related to the
business of the Company, provided, however, that the beneficial ownership of less than five percent
(5%) of the shares of stock of any corporation having a class of equity securities actively traded
on a national securities exchange or over-the-counter market shall not be deemed, in and of itself,
to violate the prohibitions of this Section 9;
(b) Except as authorized herein or unless Employee terminates for Good Cause or is terminated
without Good Cause, during the term of this Agreement and for a period of two (2) years from the
date the Employment Period is terminated: (i) induce any person or entity which is a customer of
the Company or any of its subsidiaries or affiliates to patronize any business directly or
indirectly in competition with the business conducted by the Company or any of its subsidiaries,
affiliates, and/or distributors; (ii) canvass, solicit or accept from any person or entity which
is a customer of the Company or any of its subsidiaries or affiliates any such competitive
business; or (iii) request or advise any person or entity which has a business relationship with
the Company or any of its subsidiaries or affiliates to withdraw, curtail or cancel any business
with such entity; or
(c) Except as authorized herein or unless Employee terminates for Good Cause or is terminated
without Good Cause, during the term of this Agreement and for a period of two (2) years from the
date the Employment Period is terminated, employ or knowingly permit any company or business
directly or indirectly controlled by it to employ, any person who was employed by the Company or
any of its subsidiaries, affiliates at or within the prior six months, or in any manner seek to
induce any such person to leave his or her employment.
(d) Permitted Conflicts.
(i) Notwithstanding anything contained herein, Employee shall be authorized to continue
to serve as Chairman of Retro Television, LLC and be an equity owner of the stock.
(ii) Notwithstanding anything contained herein, Employee shall continue to employ and
supervise Xxxx X. Xxxxxxx as Corporate Counsel and Xxxxxxx XxXxxxx as Administrative Assistant
in their current positions. Any new raises, other than normal cost of living raises, and any
job promotions for these employees shall be approved by the Compensation Committee of the
Board of Directors.
(iii) The parties acknowledge that prior to the merger certain other conflicts or
potential conflicts of interest exist. Employee shall make reasonable best efforts to
eliminate such conflicts as quickly as possible. If an existing action is subsequently deemed
to be a conflict, Employee shall have a reasonable period of time to correct and/or eliminate
the conflict.
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13. Remedies Upon Breach. The Employee acknowledges that his services hereunder are
of a special and unique character and places him in a position of trust and confidence with
confidential and proprietary documents and information and employees, customers and suppliers of
the Company, and that such information and documents are of a special and unique character that
give them a peculiar value, and, as a result, any breach of the Employee’s obligations under
Sections 11 or 12 of this Agreement will cause the Company irreparable injury that cannot
be adequately compensated by the payment of damages in an action at law. Accordingly, the parties
agree that the Company shall be entitled exclusively to the remedies of injunction and/or specific
performance and the Company shall not be required to post a bond in connection thereof and the
Employee shall pay any and all costs and expenses (including reasonable attorneys’ fees and
expenses) incurred by the Company in enforcing its rights hereunder, provided a court of competent
jurisdiction grants the Company such equitable relief.
14. Assignment of Intellectual Property Rights. The Employee hereby acknowledges and
agrees that any and all Intellectual Property (as defined below) developed in the course of
performing his duties during the term of this Agreement is automatically, immediately and
irrevocably assigned to and is the sole property of the Company, including all right, title and
interest and goodwill relating thereto of whatever kind or nature, without any further remuneration
or compensation to Employee. All right, title and interest in and to the foregoing shall be vested
in the Company immediately upon development, conception or reduction to practice. Employee further
agrees that, when requested, Employee will, without charge to the Company, but at the Company’s
expense, sign all papers and do all other acts which may be necessary, desirable or convenient in
connection with the foregoing and for the securing and maintaining of patents, copyrights and legal
protection for the foregoing and for the vesting of title in and to the foregoing to the Company.
The Company is irrevocably designated by Employee as Employee’s attorney-in-fact to do all such
things and execute all such documents as may be reasonably necessary to effectuate the foregoing.
“Intellectual Property” means any and all methods, procedures, processes, formulae, techniques,
innovations, works, discoveries, concepts, products, properties, compositions, improvements,
systems, software, inventions, designs, formulations, drawings, notes, analyses, records, plans,
specifications, data, patents, copyrights, trademarks, proprietary information, writings, sketches,
specifications, technology, knowledge, ideas, ideas developed, ideas conceived and ideas reduced to
practice and other data, things and information of any nature whatsoever in whole or in part
prepared, written, contributed, conceived, developed, reduced to practice, produced or discovered
by the Employee or resulting from or suggested by (directly or indirectly, in whole or in part) any
of the foregoing during the Employment Period.
15. Miscellaneous.
(a) Notices. Except as otherwise specified in this Agreement, all notices, requests,
consents, approvals and other communications required or permitted under this Agreement will be in
writing and will be deemed given (a) when delivered personally against a signed receipt, or (b)
One (1) business day after being sent by facsimile to the number specified below (with telecopier
confirmation slip retained by the sender and followed by a copy sent by first class mail not later
than the next business day), or (c) one business day after being sent by
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express mail or by reputable overnight courier service, delivery charges prepaid; in each
case, to the person, facsimile number and/or addresses specified below:
In the case of the Company:
Equity Media Holdings Corporation
000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Chairman
Facsimile: 000-000-0000
In the case of Employee:
Xxxxx Xxxxxx
Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: 000-000-0000
Equity Media Holdings Corporation
000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Chairman
Facsimile: 000-000-0000
In the case of Employee:
Xxxxx Xxxxxx
Xxx Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: 000-000-0000
Either party may from time to time change its contact person, address or facsimile number for
notification purposes upon at least five (5) business days’ notice to the other party of the new
contact person, address or facsimile number.
(b) Arm’s Length Negotiations. Each party herein expressly represents and warrants to
all other parties hereto that: (a) before executing this Agreement, said party has fully informed
itself of the terms, contents, conditions and effects of this Agreement; (b) said party has relied
solely and completely upon its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this Agreement; (d)
said party has acted voluntarily and of its own free will in executing this Agreement; (e) said
party is not acting under duress, whether economic or physical, in executing this Agreement; and
(f) this Agreement is the result of arm’s length negotiations conducted by and among the parties
and their respective counsel.
(c) Expenses. Except as otherwise provided herein, each party shall each bear their
own respective costs and expenses, including all legal and accounting fees, with respect to this
transaction.
(d) Assignment. This Agreement, and the rights, interest and benefits hereunder shall
not be assigned, transferred, pledged or hypothecated in any way by the Employee and shall not be
subject to execution, attachment or similar process. Any attempt to assign, transfer, pledge or
hypothecate or make any other disposition of this Agreement or of such rights, interest and
benefits contrary to the foregoing provision or the levy of any attachment or similar process
thereon shall be null and void and without effect.
(e) Benefit. The rights and obligations of this Agreement shall be binding upon and
shall inure to the benefit of the respective successors and permitted assigns of the parties
hereunder. Nothing expressed or implied herein shall be construed to give any person other than
the parties to this Agreement and their permitted successors and assignees any legal or equitable
rights hereunder.
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(f) Amendment; Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all parties. No failure to
exercise, and no delay in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right, power or privilege
hereunder preclude the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any course of dealing between the
parties. No extension of time for performance of any obligations or other acts hereunder or under
any other agreement shall be deemed to be an extension of the time for performance of any other
obligations or any other acts
(g) Applicable Law. This Agreement has been executed and it is expected by the
parties that its primary consummation by Employee shall occur in Arkansas, and therefore it shall
be governed by, and shall be construed, interpreted and enforced in accordance with, the laws of
the State of Arkansas, without regard to the application of the principles of conflicts of law.
(h) Jurisdiction and Venue. Any suit, action or proceeding with respect to this
Agreement shall be brought in the courts of Pulaski County, Arkansas. The parties hereto hereby
accept the exclusive jurisdiction of those courts for the purpose of any such suit, action or
proceeding. Venue for any such action, in addition to any other venue permitted by statute, will
be Pulaski County, Arkansas or such other location mutually agreed to by the Parties. The parties
hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that any of
them may now or hereafter have to delaying of venue of any suit, action or proceeding arising out
of or relating to this Agreement or any judgment entered by any court in respect thereof brought in
Pulaski County, Arkansas or such other location mutually agreed to by the Parties, and hereby
further irrevocably waive any claim that any such suit, action or proceeding brought in Pulaski
County, Arkansas has been brought in an inconvenient forum.
(i) Entire Agreement. This Agreement (including any Exhibits) contains the entire
understanding of the parties with respect to the transactions contemplated hereby and supersedes
all prior written or oral commitments, arrangements or understanding with respect thereto. There
are no restrictions, agreements, promises, warranties, covenants or undertakings other than those
expressly set forth in this Agreement (including the Exhibits).
(j) Severability Survival. The invalidity of any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any one or more of the
words, phrases, sentences, clauses, sections or subsections contained in this Agreement shall be
declared invalid by a court of competent jurisdiction, this Agreement shall be construed as if such
invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, section or
sections, or subsection or subsections had not been inserted. The provisions of Sections 11,
12, 13 and 15 will survive the expiration or termination for any reason of the Employee’s
relationship with the Company and will survive the expiration or termination of this Agreement.
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(k) Attorneys’ Fees. Should it become necessary for any party to institute legal
action to enforce the terms and conditions of this Agreement, each party shall be responsible for
its attorneys fees, costs and legal expenses.
(l) Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in two or more counterparts all of
which shall be considered one and the same agreement and each of which shall be deemed an original.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date written above.
| EQUITY MEDIA HOLDINGS CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice Chairman | |||
| EMPLOYEE: |
||||
| /s/ Xxxxx X. Xxxxxx | ||||
| Xxxxx X. Xxxxxx | ||||
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