Exhibit 10.2
MIVA, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this ___th day of July
2005, (this "Agreement") between MIVA, Inc. ("MIVA" or the "Company"), a
Delaware corporation, and Xxxxxxx Xxxxxxx ("Executive").
RECITALS
The Company wishes to employ Executive and Executive wishes to be
employed by the Company on the terms and conditions set forth in this Agreement.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's employment, the
parties agree as follows:
1. Employment. Executive's employment with MIVA shall be upon the terms
and conditions hereinafter set forth to become effective upon execution of this
Agreement (the "Effective Time").
2. Duties.
(a) Executive's first day of employment shall be July 18, 2005
(the "Start Date"). Executive is being hired as the Chief Financial Officer of
the Company, and he shall perform such other or additional duties and
responsibilities consistent with Executive's title(s), status, and position as
the Board of Directors of MIVA may, from time to time, prescribe.
(b) So long as he is employed under this Agreement, Executive
agrees to devote his full working time and efforts exclusively on behalf of the
Company and to competently, diligently and effectively discharge all duties of
Executive hereunder. Executive shall not be prohibited from engaging in such
personal, charitable, or other nonemployment activities as do not interfere with
full time employment hereunder and which do not violate the other provisions of
this Agreement. Executive further agrees to comply fully with all reasonable
generally applicable policies of the Company as are from time to time in effect.
(c) The Executive shall be based out of the Company's Ft.
Xxxxx, Florida office. If the Company decides to move its operations more than
35 miles from its current offices in Fort Xxxxx, Florida, Executive shall not be
required to relocate and, to the extent the Executive cannot perform his duties
hereunder as a result of such a move, his non-performance will not constitute
Cause (as defined below). On or before January 18, 2006, the Executive shall
relocate his principal residence to within 35 miles of the Company's Fort Xxxxx,
Florida office.
3. Compensation.
(a) As compensation for all services rendered to the Company
pursuant to this Agreement, in whatever capacity rendered, the Company will pay
to Executive during the term hereof a minimum base salary at the rate of
$275,000 per year (the "Basic Salary"), payable in accordance with the usual
payroll practices of the Company. Except as provided below, the Basic Salary
thereafter may be increased, but not decreased, from time to time, by the Board
of Directors in connection with reviews of Executive's performance occurring no
less frequently than annually. Notwithstanding the foregoing, Executive's Basic
Salary shall be $300,000, payable in accordance with the usual payroll practices
of the Company, until the first to occur of (i) the closing of the sale of
Executive's home in Roswell, Georgia, or (ii) January 18, 2006.
(b) Executive will be entitled to receive incentive
compensation pursuant to the terms of plans adopted by the Board of Directors or
its Compensation Committee from time to time. For fiscal 2005 such incentive
compensation shall not be less than $50,000 payable by March 31, 2006, provided
Executive continues to be employed by the Company as of that date (the
"Guaranteed Bonus").
(c) On the Start Date and pursuant to the Company's 2004 Stock
Incentive Plan, the Company will grant to Executive options to acquire an
aggregate of 100,000 shares of the Company's Common Stock, of which 25,000
options will vest on each of the first four anniversaries of this Agreement. The
Board of Directors or its Compensation Committee, as applicable, shall review
Executive's performance on an annual basis and pursuant to the same review
process employed by the Board of Directors for the Company's other executive
officers. In connection with such annual review, the Executive may be entitled
to receive additional grants of stock options. Such additional options will be
granted, if at all, in the sole discretion of the Board of Directors or its
Compensation Committee on terms and conditions they determine. Notwithstanding
the foregoing and provided Executive continues to be employed by the Company on
the grant date, Executive shall receive an additional grant of stock options on
each of March 31, 2006 and March 31, 2007 for 62,500 shares (each grant),
subject to standard vesting and termination provisions (the "Additional Equity
Compensation"). If there is a change in control of the Company (as that term is
used in the governing documents of any stock option agreement) consummated (i)
within three months of the Start Date, 50% of any stock options granted to
Executive shall fully vest on the date the change in control is consummated and
shall remain exercisable during the term of such option(s) as if the Executive
were still employed by the Company or (ii) after three months of the Start Date,
any stock options granted to Executive shall fully vest on the date the change
in control is consummated and shall remain exercisable during the term of such
option(s) as if the Executive were still employed by the Company. Additionally,
notwithstanding any provisions to the contrary in any stock option agreements or
plans, if the Executive's employment with the Company is terminated by the
Company without Cause (as defined below) or by Executive for Good Reason (as
defined below), any stock options granted to Executive shall immediately fully
vest and remain exercisable during the term of such options as if the Executive
were still employed by the Company.
(d) Notwithstanding anything herein to the contrary, the Company IN ITS
SOLE DISCRETION may grant to Executive restricted stock units or other equity
compensation in lieu of stock options, provided the substituted equity
compensation gives Executive the opportunity to acquire the same or a
substantially similar amount of equity ownership in the Company as if he had
been granted stock options, but adjusting such equity compensation award to take
into account whether Executive is required to pay any consideration for the
equity compensation as well as such other factors as the Board of Directors or
the Compensation Committee, as applicable, shall determine IN ITS SOLE
DISCRETION.
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4. Business Expenses. The Company shall promptly pay directly, or
reimburse Executive for, all business expenses to the extent such expenses are
paid or incurred by Executive during the term of employment in accordance with
Company policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Executive of the Company's business
and properly substantiated. Additionally, the Company shall reimburse Executive
for his reasonable documented expenses incurred in relocating his household from
metropolitan Atlanta, Georgia area to Florida in accordance with Section 2(c)
hereof.
5. Benefits. During the term of this Agreement and Executive's
employment hereunder, the Company shall provide to Executive such insurance,
vacation, sick leave and other like benefits as are provided to other executive
officers of the Company from time to time. Executive will use his reasonable
best efforts to schedule vacation periods to minimize disruption of the
Company's business.
6. Term; Termination.
(a) The Company shall employ the Executive, and the Executive
accepts such employment, for an initial term commencing on the date of this
Agreement and ending on the first anniversary of the date of this Agreement.
Thereafter, this Agreement shall be extended automatically for additional
twelve-month periods, unless terminated as described herein. Executive's
employment may be terminated at any time as provided in this Section 6. For
purposes of this Section 6, "Termination Date" shall mean the date on which any
notice period required under this Section 6 expires or, if no notice period is
specified in this Section 6, the effective date of the termination referenced in
the notice.
(b) The Company may terminate Executive's employment without
Cause (as defined below) upon giving 30 days' advance written notice to
Executive. If Executive's employment is terminated without Cause under this
Section 6(b), the Executive shall be entitled to receive (A) the earned but
unpaid portion of Executive's Basic Salary and pro rata portion of Executive's
bonus, if any, through the Termination Date; (B) over a period of twelve (12)
months following such Termination Date (the "Severance Period") an amount equal
to the sum of his (i) Basic Salary at the time of Termination, plus (ii) the
Termination Bonus (as defined below); (C) any other amounts or benefits owing to
Executive under the then applicable employee benefit, long term incentive or
equity plans and programs of the Company, which shall be paid or treated in
accordance with Section 3 hereof and otherwise in accordance with the terms of
such plans and programs; and (D) benefits, (including, without limitation
health, life, disability and pension) as if Executive were an employee during
the Severance Period; provided, however, that if the Company determines that any
amounts to be paid to Executive hereunder are subject to Section 409A of the
Internal Revenue Code of 1986, as amended, then the Company shall in good faith
adjust the form or timing of such payments as it reasonably determines to be
necessary or advisable to be in compliance with Section 409A.
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(c) The Company may terminate Executive's employment upon a
determination by the Company that "Cause" exists for Executive's termination and
the Company serves written notice of such termination upon Executive. As used in
this Agreement, the term Cause shall refer only to any one or more of the
following grounds:
(i) commission of a material and substantive act of
theft, including, but not limited to, misappropriation of funds or any
property of the Company;
(ii) intentional engagement in activities or conduct
clearly injurious to the best interests or reputation of the Company
which in fact result in material and substantial injury to the Company;
(iii) refusal to perform his assigned duties and
responsibilities (so long as the Company does not assign any duties or
responsibilities which would give the Executive Good Reason to
terminate his employment as described in Section 6(e)) after receipt by
Executive of written detailed notice and reasonable opportunity to
cure;
(iv) gross insubordination by Executive, which shall
consist only of a willful refusal to comply with a lawful written
directive to Executive issued pursuant to a duly authorized resolution
adopted by the Board of Directors (so long as the directive does not
give the Executive Good Reason to terminate his employment as described
in Section 6(e));
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or agreements
Executive may from time to time have with the Company (following 30
days' written notice from the Company specifying the violation and
Executive's failure to cure such violation within such 30 day period);
(vi) Executive's substantial dependence, as
reasonably determined by the Board of Directors of the Company, on
alcohol or any narcotic drug or other controlled or illegal substance
which materially and substantially prevents Executive from performing
his duties hereunder; or
(vii) the final and unappealable conviction of
Executive of a crime which is a felony or a misdemeanor involving an
act of moral turpitude, or a misdemeanor committed in connection with
his employment by the Company, which causes the Company a substantial
detriment.
In the event of a termination under this Section 6(c), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(c)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(d) of this Agreement. If any determination of "Cause" is made under
items 6(c), (i), (ii), (iii), (iv), (v), (vii), or (viii) which Executive
contests, Executive shall have the opportunity, within 30 days of such
determination, to personally appear in front of the Board of Directors and
present his case to the Board of Directors and have the Board of Directors
reconsider the determination of Cause.
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(d) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent disability,"
shall mean the inability of the Executive, as determined by the Board of
Directors of MIVA, by reason of physical or mental illness to perform the duties
required of him under this Agreement with or without reasonable accommodation
for more than 120 days in any 360 day period. Upon a determination by the Board
of Directors of MIVA that Executive's employment shall be terminated under this
Section 6(d), the Board of Directors shall give Executive 30 days' prior written
notice of the termination. If Executive disputes a determination of the Board of
Directors under this Section 6(d), the parties agree to abide by the decision of
a panel of three physicians. MIVA will select a physician, Executive will select
a physician and the physicians selected by MIVA and Executive will select a
third physician. Executive agrees to make himself available for and submit to
examinations by such physicians as may be directed by the Company. Failure to
submit to any examination shall constitute a breach of a material part of this
Agreement. In the event of termination due to death or permanent disability, the
Company will pay Executive, or his legal representative, the earned but unpaid
portion of Executive's Basic Salary through the Termination Date and any other
amounts or benefits owing to Executive under the then applicable employee
benefit, long term incentive or equity plans and programs of the Company, which
shall be paid or treated in accordance with Section 3 hereof and otherwise in
accordance with the terms of such plans and programs; provided, however, that if
the Company determines that any amounts to be paid to Executive hereunder are
subject to Section 409A of the Internal Revenue Code of 1986, as amended, then
the Company shall in good faith adjust the form or timing of such payments as it
reasonably determines to be necessary or advisable to be in compliance with
Section 409A.
(e) The Executive may terminate his employment for Good Reason
(as defined below) upon giving 30 days advance written notice to the Company. If
Executive's employment is terminated with Good Reason under this Section 6(e),
the Executive shall be entitled to receive (A) the earned but unpaid portion of
Executive's Basic Salary and pro rata portion of Executive's bonus, if any,
through the Termination Date; (B) during the Severance Period an amount equal to
the sum of his (i) Basic Salary at the time of the Termination Date, plus (ii)
the Termination Bonus (as defined below); (C) any other amounts or benefits
owing to Executive under the then applicable employee benefit, long term
incentive or equity plans and programs of the Company, which shall be paid or
treated in accordance with Section 3 hereof and otherwise in accordance with the
terms of such plans and programs; and (D) benefits, (including, without
limitation health, life, disability and pension) as if Executive were an
employee during the Severance Period; provided, however, that if the Company
determines that any amounts to be paid to Executive hereunder are subject to
Section 409A of the Internal Revenue Code of 1986, as amended, then the Company
shall in good faith adjust the form or timing of such payments as it reasonably
determines to be necessary or advisable to be in compliance with Section 409A.
As used in this Agreement, the term "Good Reason" means any one or more of the
following grounds:
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(i) a change in Executive's title(s), status, position or
responsibilities without Executive's written consent,
which does not represent a promotion from his existing
status, position or responsibilities, despite
Executive's written notice to the Company of his
objection to such change and the Company's failure to
address such notice in a reasonable fashion within 30
days of such notice;
(ii) the assignment to Executive of any duties or
responsibilities which are inconsistent with his status,
position or responsibilities as set forth in Section 2
hereof, despite Executive's written notice to the
Company of his objection to such change and the
Company's failure to address such notice in a reasonable
fashion within 30 days of such notice;
(iii) if there is a reduction in Executive's Basic Salary or
the Company fails to pay the Guaranteed Bonus or issue
the Additional Equity Compensation;
(iv) if there is a Change in Control of the Company and
Executive terminates his employment during the "Window
Period" (as defined below);
(v) a breach by the Company of any material term or
provision of this Agreement; or
(vi) a relocation of the Company's offices in Fort Xxxxx,
Florida to a location more than 35 miles from the
current location.
(f) The Executive may terminate his employment for any reason
(other than Good Reason) upon giving 30 days' advance written notice to the
Company. If Executive's employment is so terminated under this Section 6(f), the
Company will pay Executive the earned but unpaid portion of Executive's Basic
Salary through the Termination Date and any other amounts or benefits owing to
Executive under the then applicable employee benefit, long term incentive or
equity plans and programs of the Company, which shall be paid or treated in
accordance with Section 3 hereof and otherwise in accordance with the terms of
such plans and programsincentive compensation under and consistent with plans
adopted by the Company prior to the Termination Date.
(g) In the event of the Executive's death during the Severance
Period, payments of Basic Salary under this paragraph 6 and payments under the
Company's employee benefit plan(s) shall continue to be made in accordance with
their terms during the remainder of the Severance Period to the beneficiary
designated in writing for such purpose by the Executive or, if no such
beneficiary is specifically designated, to the Executive's estate.
(h) As used in this Agreement, the term "Bonus" shall mean any
bonus, incentive compensation or any other cash benefit paid or payable to the
Executive under any incentive compensation grant or plan, excluding signing
bonuses and the Company's stock incentive plan. For purposes of this Agreement,
the Executive's "Termination Bonus" shall be equal to the amount of the
Executive's Bonus for the four (4) fiscal quarters immediately preceding the
Termination Date, provided, however, if there has been a Change in Control of
the Company the Termination Bonus shall be an amount equal to the greater of (i)
the preceding calculation or (ii) Executive's Bonus for the four (4) fiscal
quarters immediately preceding the Change in Control of the Company.
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(i) As used in this Agreement, the term "Window Period" shall
mean the period of time after a Change in Control in which Executive can
terminate his employment with the Company for any reason and the termination
shall be deemed a termination for Good Reason for purposes of this Agreement.
The Window Period begins 180 days after a Change in Control and lasts for thirty
(30) days.
(j) As used in this Agreement, the term "Change in Control" as
a capitalized term shall mean the occurrence of any one of the following events:
(i) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing thirty-five percent
(35%) or more, excluding in the calculation of Beneficial Ownership securities
acquired directly from the Company, of the combined voting power of the
Company's then outstanding voting securities;
(ii) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing fifty-one percent (51%)
or more of the combined voting power of the Company's then outstanding voting
securities;
(iii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on the Effective Time, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of the at least two-thirds
(2/3) of the directors then still in office who either were directors on the
Effective Time or whose appointment, election or nomination for election was
previously so approved or recommended;
(iv) there is a consummated merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving or parent equity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person,
directly or indirectly, acquired twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities (not
including in the securities beneficially owned by such person any securities
acquired directly from the Company or its Affiliates); or
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(v) the stock holders of the Company approve a plan of
complete liquidation of the Company or there is consummated an agreement for the
sale or disposition by the Company of all or substantially all of the Company's
assets (or any transaction having a similar effect), other than a sale or
disposition by the Company of all or substantially all of the Company's assets
to an entity, at least fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.
For purposes of this Section 6, the following terms shall have the following
meanings:
(i) "Affiliate" shall mean an affiliate of the Company, as
defined in Rule 12b-2 promulgated under Section 12 of the Securities Exchange
Act of 1934, as amended from time to time (the "Exchange Act");
(ii) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act; and
(iii) "Person" shall have the meaning set forth in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (1) the Company, (2) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, (3) an underwriter temporarily holding securities pursuant to an
offering of such securities or (4) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions as
their ownership of shares of Common Stock of the Company.
7. Indemnity.
(a) The Company agrees that if the Executive is made a party,
is threatened to be made a party or reasonably anticipates being made a party,
to any formal or informal action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the fact that he
is or was a director, officer, manager, trustee, representative, consultant or
employee of the Company or is or was serving at the request of the Company as a
director, officer, member, employee, manager, trustee, representative,
consultant or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged action in
an official capacity while serving as a director, officer, member, employee,
manager, trustee, representative, consultant or agent, the Executive shall be
promptly indemnified and held harmless by the Company to the fullest extent
permitted by law against all cost, expense, liability and loss (including,
without limitation, attorney's fees and other professional fees and charges,
judgments, fines, interest, expenses of investigation, ERISA excise taxes or
other liabilities or penalties and other amounts paid or to be paid in
settlement if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) reasonably incurred or suffered by
the Executive in connection therewith, or in connection with seeking to enforce
his rights under this Section 7 and such indemnification shall continue as to
the Executive even if he has ceased to be a officer, director, member, employee,
manager, trustee, representative, consultant or agent of the Company or other
entity and shall inure to the benefit of the Executive's heirs, executors and
administrators.
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(b) The Company shall not indemnify Executive pursuant to
Section 7(a):
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which
Executive is reimbursed pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's material breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to involve intentional misconduct, a knowing violation
of law, or grossly negligent conduct; or
(vi) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is
not lawful.
(c) If the Executive is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the cost,
expense, liability and loss reasonably incurred or suffered by the Executive in
the investigation, defense, appeal or settlement of any Proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
the Executive for the portion of the cost, expense, liability and loss to which
the Executive is entitled.
(d) The indemnification provided in this Agreement is in
addition to, and not in derogation of, any rights to indemnification or
advancement of expenses to which the Executive may otherwise be entitled under
the Certificate of Incorporation or Bylaws of the Company, any resolutions of
the Board of Directors, any indemnification contract or agreement.
(e) The Company shall advance all expenses incurred by the
Executive in connection with the investigation, defense, settlement or appeal of
any Proceeding (including amounts actually paid in settlement of any such
Proceeding). The Executive hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the Executive
is not entitled to be indemnified by the Company as authorized hereby. Any
advances made hereunder shall be paid by the Company to the Executive within
twenty (20) days following delivery of a written request therefor by the
Executive to the Company.
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(f) Neither the failure of the Company (including the Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any Proceeding concerning payment of amounts claimed by the
Executive under Section 7(a) that indemnification of the Executive is proper
because he has met the applicable standard of conduct, nor a determination by
the Company (including the Board, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.
(g) During the Executive's employment with the Company and
thereafter, the Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive on terms and
conditions no less favorable to him in any respect (including, but not limited
to, with respect to the period of coverage, scope, exclusions, amounts and
deductibles) than the coverage then being provided to any other present or
former director or senior executive of the Company.
(h) Executive agrees that Executive will reimburse the Company
for all customary and reasonable expenses paid by the Company in defending any
civil or criminal action, suit or proceeding against Executive in the event and
only to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the provisions
of Delaware law (or the laws of the Company's state of incorporation at the
time), federal securities laws, the Company's By-laws or this Agreement.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or
for the benefit of Executive (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 8) (the "Payments") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the Company
shall pay to Executive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by Executive of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in Executive's adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, the Executive shall be deemed to (i) pay federal income taxes
at the highest marginal rates of federal income taxation for the calendar year
in which the Gross-up Payment is to be made, and (ii) pay applicable state and
local income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and
local taxes. Notwithstanding the foregoing provisions of this Section 8(a), if
it shall be determined that Executive is entitled to a Gross-Up Payment, but
that the Payments would not be subject to the Excise Tax if the Payments were
reduced by an amount that is less than 5% of the portion of the Payments that
would be treated as "parachute payments" under Section 280G of the Code, then
the amounts payable to Executive under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to Executive without giving
rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be
made to Executive. The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing first the payments under Section 8, unless
an alternative method of reduction is elected by Executive. For purposes of
reducing the Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced.
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If the reduction of the amounts payable hereunder would not
result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable
under this Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of Section 8(a), all
determinations required to be made under this Section 8(b), including whether
and when a Gross-Up Payment is required, the amount of such Gross-Up Payment,
the reduction of the Payments to the Safe Harbor Cap and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from the Company or the Executive that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement requested by the Accounting Firm
in connection with the performance of the services hereunder. The Gross-up
Payment under this Section 8 with respect to any Payments shall be made no later
than thirty (30) days following such Payment. If the Accounting Firm determines
that no Excise Tax is payable by Executive, it shall furnish Executive with a
written opinion to such effect, and to the effect that failure to report the
Excise Tax, if any, on Executive's applicable federal income tax return will not
result in the imposition of a negligence or similar penalty. In the event the
Accounting Firm determines that the Payments shall be reduced to the Safe Harbor
Cap, it shall furnish Executive with a written opinion to such effect. The
Determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-up Payments
which will not have been made by the Company should have been made
("Underpayment") or Gross-up Payments are made by the Company which should not
have been made ("Overpayment"), consistent with the calculations required to be
made hereunder. In the event that the Executive thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the
benefit of Executive. In the event the amount of the Gross-up Payment exceeds
the amount necessary to reimburse the Executive for his Excise Tax, the
Accounting Firm shall determine the amount of the Overpayment that has been made
and any such Overpayment (together with interest at the rate provided in Section
1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent he
has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. Executive shall
cooperate, to the extent his expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
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9. Assignment. This Agreement is personal to Executive and Executive
may not assign or delegate any of his rights or obligations hereunder. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the respective parties hereto, their heirs, executors, administrators,
successors and assigns.
10. Waiver. Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in a written document signed by the other party, (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given, and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of that party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
11. Notices. Any and all notices required or permitted to be given
under this Agreement will be sufficient and deemed effective three (3) days
following deposit in the United States mail if furnished in writing and sent by
certified mail to Executive at:
Xxxxxxx Xxxxxxx
000 Xxxxxxxx Xxxxxxx
Xxxxxxx XX 00000
and to the Company at:
MIVA
0000 Xxxxxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xx. Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
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or such subsequent addresses as one party may designate in writing to the other
parties.
12. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Florida without regard to its
conflicts of laws principles.
13. Amendment. This Agreement may be amended in any and every respect
only by agreement in writing executed by both parties hereto.
14. Section Headings. Section headings contained in this Agreement are
for convenience only and shall not be considered in construing any provision
hereof.
15. Entire Agreement. With the exception of the Confidentiality,
Assignment and Noncompetition Agreement, of even date herewith, and any stock
option agreements or other equity compensation agreements between Executive and
the Company, this Agreement terminates, cancels and supersedes all previous
employment or other agreements relating to the employment of Executive with the
Company or any predecessor, written or oral, and this Agreement contains the
entire understanding of the parties with respect to the subject matter of this
Agreement. This Agreement was fully reviewed and negotiated on behalf of each
party and shall not be construed against the interest of either party as the
drafter of this Agreement. EXECUTIVE ACKNOWLEDGES THAT, BEFORE SIGNING THIS
AGREEMENT, HE HAS READ THE ENTIRE AGREEMENT AND HAS THIS DAY RECEIVED A COPY
HEREOF.
16. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement or parts thereof.
17. Survival. The last two sentences of Section 3(c), and Sections 6, 7
and 8 of this Agreement and this Section 17 shall survive any termination or
expiration of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
/s/ Xxxxxxx Xxxxxxx
-------------------------------
Xxxxxxx Xxxxxxx
MIVA, INC.
By: /s/ Xxxxx X. Xxxxxxx-Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx-Xxxxxxxxx
Its: Chief Executive Officer
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