1
EXHIBIT 10.9.2
THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO S.C. CODE SS. 15-48-10(1)
STATE OF SOUTH CAROLINA )
) EMPLOYMENT AGREEMENT
COUNTY OF GREENVILLE )
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
effective as of the 10th day of March, 2000 (the "Effective Date") by and
between Xxxxxx Xxxxxxx Xxxxxxx, an individual ("Employee"), and State
Communications, Inc., a South Carolina corporation headquartered in Greenville,
South Carolina (the "Company").
W I T N E S S E T H
WHEREAS, the Company desires to enter into an employment relationship
with Employee on certain terms and conditions as set forth herein; and
WHEREAS, Employee has agreed to accept such employment upon the terms
and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. POSITION. Subject to the terms and conditions of this Agreement, the
Company hereby employs the Employee and Employee hereby accepts such employment
as President and Chief Operating Officer of the Company.
2. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified below.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean:
(i) the acquisition, directly or indirectly in one transaction or a
series of related transactions, by any Person (other than (A) any employee plan
established by the Company, (B) the Company, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the Company), of
securities of the Company or Trivergent, representing an aggregate of 50% or
more of the combined voting power of the Company's or Trivergent's then
outstanding voting securities;
(ii) during any period of up to twenty-four consecutive months
individuals who, at the beginning of such period, constitute the Board cease for
any reason to constitute at least a majority thereof, provided that any person
who becomes a director subsequent to the beginning of such period and
--------------------
(1) UNLESS THE UNITED STATES ARBITRATION ACT APPLIES.
2
whose nomination for election is approved by at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved (other than a director (A) whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act, or (B) who was designated by a Person
who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) hereof) shall be deemed a director as of
the beginning of such period;
(iii) the stockholders of the Company or Trivergent in one transaction
or in a series of related transactions approve a sale of substantially all of
the assets of the Company or Trivergent, or merger or consolidation of the
Company or Trivergent with any other entity other than (A) a merger or
consolidation that would result in the voting securities of the Company or
Trivergent, as the case may be, outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of any Company, at least 51% of the combined voting power
of the voting securities of the Company or Trivergent, as the case may be, or
such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to implement
a recapitalization of the Company or Trivergent (or similar transaction) in
which no Person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company or Trivergent, as the case may be, representing 25% or
more of the combined voting power of the Company's or Trivergent's, as the case
may be, then outstanding voting securities; or (C) the complete liquidation of
the Company or Trivergent for the purposes of discontinuance of the Company's or
Trivergent's business; or
(iv) the occurrence of any other event or circumstance which is not
covered by (i) through (iii) above which the Board determines in good faith
affects control of the Company or Trivergent and, in order to implement the
purposes of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes of this
Agreement.
"Cause" shall mean: (a) conduct by the Employee in the performance of
the Employee's duties hereunder that amounts to fraud; or (b) conduct by the
Employee in the performance of the Employee's duties hereunder that amounts to
embezzlement; or (c) conviction of the Employee of any felony; or (d) a breach
by the Employee of any material provision of, or the willful failure or refusal
by the Employee to perform and discharge the Employee's material duties,
responsibilities and obligations under, this Agreement, as determined by the
Board in its reasonable judgment, which breach or willful failure or refusal has
a material adverse impact on the business or reputation of the Company or any of
its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act)
(such determination to be made by the Board in its reasonable judgment) or (e)
any act of moral turpitude or willful misconduct by the Employee which is
intended to result in personal enrichment of the Employee at the material
expense of the Company, or any of its affiliates, or which has a material
adverse impact on the business or reputation of the Company or any of its
affiliates (such determination to be made by the Board in its reasonable
judgment); or (f) conduct by the Employee in the performance of the Employee's
duties hereunder that amounts to intentional material damage to the property or
business of the Company; or (g) conduct by the Employee in the performance of
the Employee's duties hereunder that amounts to gross negligence; or (h) the
ineligibility of the Employee to perform his material duties hereunder because
of a ruling, directive or other action by any agency of the United States or any
state of the United States having regulatory authority over the Company.
Notwithstanding the foregoing, occurrence of any of the events described in
items (d), (g) or (h) above shall not constitute Cause (A) unless the Employee
receives from the Company notice of such event, which notice shall specify in
reasonable detail the nature of such event, the action to cure same, and the
Company's desire to exercise the Company's rights under Section 4.1(c) hereof,
no later than sixty (60) days after the earlier of the day on which the Company
actually became aware of or reasonably should have actually become aware of the
occurrence of such event, and (B) unless and until
2
3
the Employee fails to cure same within thirty (30) days after the Employee's
receipt from the Company of the aforesaid notice of such event, provided,
however, if the nature of such event is such that it cannot be cured within such
thirty (30) day period, the Employee shall have such additional time as may be
reasonably necessary to cure such event so long as the Employee commences to
cure such event promptly after the Employee's receipt from the Company of the
aforesaid notice of such event and diligently pursues the cure of such event
through completion, provided further, in no event shall such additional time to
cure such event exceed ninety (90) days after the Employee's receipt from the
Company of the aforesaid notice of such event. Further, notwithstanding the
foregoing, the Company shall not be obligated to give the Employee, and the
Employee shall not have, the opportunity to cure any event which has been the
subject matter of a prior notice under Section 4.1(c) hereof two (2) times
during any period of three hundred sixty-five (365) consecutive days.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"Common Stock" shall mean, the Company's common stock, $0.001 par value
per share, or any other security of the Company or any other entity which the
aforesaid common stock is converted into or exchanged for.
"Disability" or "Disabled" shall mean the Employee shall be unable, by
reason of any illness or physical or mental incapacity or disability (from any
cause or causes whatsoever), to perform the Employee's essential job functions
required by this Agreement, whether with or without reasonable accommodation by
the Company, in substantially the manner and to the extent required by this
Agreement immediately prior thereto, for a period of one hundred eighty (180)
consecutive days, and such Disability shall be deemed to have occurred on the
first day immediately after such period. In the event of any disagreement
between the Employee and the Company about whether the Employee has a
Disability, the question of such Disability shall be submitted to an impartial
and reputable physician selected by mutual agreement of the Employee and the
Company or, failing such agreement, selected by two physicians (one of which
shall be selected by the Company and the other by the Employee). The
determination of the question of such Disability by such determining physician
shall be final and binding on the Employee and the Company for purposes of this
Agreement. Each of the Company and the Employee shall pay one-half of the fees
and expenses of such determining physician.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Good Reason" shall mean: (a) any change in (i) the position or title
of the Employee from that of President and Chief Operating Officer of the
Company or its successor or (ii) the reporting relationships of the Employee to
the Board or the CEO (includes any change to whom the Employee is required to
report from that of the Board or the CEO but does not include any change in who
reports to the Employee); (b) any significant reduction in the Employee's
authority or services, duties or responsibilities, as described in this
Agreement and as in effect immediately prior to such reduction; (c) any
reduction in, or any failure of the Company to pay when due, the compensation
and all other monetary amounts payable to or for the benefit of the Employee
pursuant to Section 5.1, 5.2, 5.3, or 5.9 hereof, and then in effect; (d) the
taking of any action by the Company or any of its affiliates which materially
and adversely affects the Employee's participation in any of the benefits to be
provided to or for the benefit of the Employee pursuant to this Agreement,
including, without limitation, Sections 5.4, 5.8 and 5.10 hereof, and then in
effect, unless such action generally applies to all employees or members of
management, as the case may be, as a whole; or (e) any failure of the Company to
comply with any material obligation of the Company under this Agreement (other
than those described in items (a), (b), (c) or (d) above). Notwithstanding the
foregoing, occurrence of any of the events described in items (b) or (e) above
shall not constitute Good Reason (A) unless the Company receives from the
Employee notice of such event, which notice shall specify in reasonable detail
the nature of such event, the action to cure
3
4
same, and the Employee's desire to exercise the Employee's rights under Section
4.1(d) hereof, no later than sixty (60) days after the earlier of the day on
which the Employee actually became aware of or reasonably should have actually
become aware of the occurrence of such event, and (B) unless and until the
Company fails to cure same within thirty (30) days after the Company's receipt
from the Employee of the aforesaid notice of such event, provided, however, if
the nature of such event is such that it cannot be cured within such thirty (30)
day period, the Company shall have such additional time as may be reasonably
necessary to cure such event so long as the Company commences to cure such event
promptly after the Company's receipt from the Employee of the aforesaid notice
of such event and diligently pursues the cure of such event through completion,
provided further, in no event shall such additional time to cure such event
exceed ninety (90) days after the Company's receipt from the Employee of the
aforesaid notice of such event. Further, notwithstanding the foregoing, the
Employee shall not be obligated to give the Company, and the Company shall not
have, the opportunity to cure any event which has been the subject matter of a
prior notice under Section 4.1(d) hereof two (2) times during any period of
three hundred sixty-five (365) consecutive days.
"IPO" shall mean one or more underwritten public offerings of the
Common Stock, or any other stock or other securities of the Company or
Trivergent, or any parent entity of the Company or Trivergent registered under
the Securities Act with an aggregate price to the public of at least
$40,000,000.00. An IPO shall be deemed to occur upon the effectiveness of the
aforesaid public offering which causes the aforesaid aggregate price threshold
to be satisfied.
"Person" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or other entity.
"Pre-IPO Value" shall mean the aggregate value of all equity securities
of the Company, Trivergent, or any parent entity of the Company or Trivergent
immediately prior to the IPO, as determined in good faith by the lead
underwriters in connection with the IPO, or if none, the Company's financial
advisors, prior to an IPO and used to determine the offering price of Common
Stock or any other stock or other securities of the Company or Trivergent, or
any parent entity of the Company or Trivergent, in the IPO. If the IPO includes
more than one underwritten public offering, Pre-IPO Value shall be such value
determined in connection with the first public offering.
"Sale of the Company" means a merger or consolidation involving the
Company or Trivergent in which the Company or Trivergent, as the case may be, is
not the surviving entity or in which the Company or Trivergent, as the case may
be, survives as a subsidiary of another entity (excluding any merger or
consolidation of the Company or Trivergent, as the case may be, with any other
entity 50% or more of the equity of which is owned by the Company or Trivergent,
as the case may be, prior to such merger or consolidation), a sale of all or
substantially all of the Company's or Trivergent's assets, or a sale of a
majority of the Company's or Trivergent's outstanding voting securities,
provided that any of the foregoing transactions involves the Company or
Trivergent, as the case may be, and (i) any entity whose equity or voting
interests are listed on a national securities exchange or the NASDAQ National
Market System or actively traded in the over-the-counter market, or (ii) any
other entity as long as at least forty percent (40%) of the purchase
consideration is payable in the form of cash, wire transfer or other readily
available funds or in notes or other installment obligations, or any combination
of the foregoing.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series C Preferred Stock" shall mean the Company's Series C Preferred
Stock, or any other security of the Company or any other entity which the
aforesaid Series C Preferred Stock is converted into or exchanged for.
4
5
"Trivergent" shall mean Trivergent Communications, Inc., a South
Carolina corporation, and any successor thereto.
3. DUTIES. During the Term (as hereinafter defined), the Employee shall
have such duties and authority as may be assigned to the Employee from time to
time by the Board, provided that all such duties and authority shall be (a)
typical of someone in his position with a company such as the Company, (b)
executive in nature, and (c) reasonable in view of, and consistent with, the
Employee's education, training and previous business experience. Employee shall
report to the Board and to the Chief Executive Officer of the Company (the
"CEO"). Employee agrees that during the Term, he will devote his full business
time, attention and energies to the diligent performance of his duties
hereunder, except for minimal time spent during non-working hours on the
Employee's management of his passive investments and except for time spent
during non-working hours with respect to Cassitys', Inc. or any successor
thereto ("Cassitys'"). Except with respect to the aforesaid activities of the
Employee with respect to Cassitys' and the Employee's ownership interest in
Cassitys', Employee shall not, without the prior written consent of the Company,
at any time during the Term (i) accept employment with, or render services of a
business, professional or commercial nature to, any Person other than the
Company, (ii) engage in any venture which the Company may in good faith consider
to be competitive with or adverse to the business of the Company or any
subsidiary of the Company, whether alone, as a partner, or as an officer,
director, employee or shareholder or otherwise, except that the ownership of not
more than 5% of the stock or other equity interest of any publicly traded
corporation or other entity shall not be deemed a violation of this Section, or
(iii) engage in any venture which the Board may in good faith consider to
interfere materially with Employee's performance of his material duties
hereunder. Notwithstanding the foregoing, the Company acknowledges and agrees
that the Employee currently holds ownership interests and options in BellSouth
Corporation. The Company acknowledges and agrees that the Employee's current or
future ownership interests in BellSouth Corporation or any successor entity,
which may otherwise be prohibited by this Section 3, shall be deemed not to
constitute a breach of this Section 3 by the Employee.
4. TERM.
4.1 Term and Methods of Termination. The Employee's employment
with the Company pursuant to this Agreement (the "Term") shall commence as of
the Effective Date and shall continue thereafter until such employment hereunder
is terminated upon the first to occur of the following:
(a) the death of the Employee (the "Employee's
Death"). Termination pursuant to this Section 4.1(a) shall be effective as of
the end of the day on the date on which the Employee's Death occurs;
(b) the Disability of the Employee. Termination
pursuant to this Section 4.1(b) shall be effective as of the end of the day on
the date on which the Employee's Disability occurs;
(c) the Company giving notice to the Employee of such
termination for Cause. Termination pursuant to this Section 4.1(c) shall be
effective, in the case of any event described in items (d), (g) or (h) of the
definition of Cause above, as of the end of the day on the date on which the
Employee receives the second aforesaid notice from the Company with respect
thereto, or in the case of any event described in items (a), (b), (c), (e) or
(f) of the definition of Cause above, as of the end of the day on the date on
which the Employee receives the first aforesaid notice from the Company with
respect thereto;
(d) the Employee giving notice to the Company of such
termination for Good Reason. Termination pursuant to this Section 4.1(d) shall
be effective, in the case of any event described
5
6
in items (b) or (e) of the definition of Good Reason above, as of the end of the
day on the date on which the Company receives the second aforesaid notice from
the Employee with respect thereto, or in the case of any event described in
items (a), (c) or (d) of the definition of Good Reason above, as of the end of
the day on the date on which the Company receives the first aforesaid notice
from the Employee with respect thereto;
(e) during the period commencing one hundred eighty
(180) days and ending ninety (90) days immediately prior to the third
anniversary of the Effective Date, and each subsequent anniversary of the
Effective Date, the Company giving notice to the Employee of such termination
for any reason, or for no reason whatsoever (not to include termination for
Disability pursuant to Section 4.1(b) hereof or termination for Cause pursuant
to Section 4.1(c) hereof). Termination pursuant to this Section 4.1(e) shall be
effective as of the end of the day on the third anniversary of the Effective
Date or such subsequent anniversary of the Effective Date, as the case may be,
and until the effective date of such termination, the Employee shall be
obligated to continue to perform his duties and obligations hereunder at all
times in the manner and to the extent required under this Agreement; provided,
however, the Company reserves the right, exercisable by giving notice to the
Employee (within the Company's notice of termination or otherwise), to have the
Employee discontinue performance of his duties and obligations hereunder prior
to the effective date of such termination without acceleration of the effective
date of such termination;
(f) during the period commencing one hundred eighty
(180) days and ending ninety (90) days immediately prior to the third
anniversary of the Effective Date, and each subsequent anniversary of the
Effective Date, the Employee giving notice to the Company of such termination
for any reason, or for no reason whatsoever (not to include termination for
Disability pursuant to Section 4.1(b) hereof or termination for Good Reason
pursuant to Section 4.1(d) hereof). Termination pursuant to this Section 4.1(f)
shall be effective as of the end of the day on the third anniversary of the
Effective Date or such subsequent anniversary of the Effective Date, as the case
may be, and until the effective date of such termination, the Employee shall be
obligated to continue to perform his duties and obligations hereunder at all
times in the manner and to the extent required under this Agreement; provided,
however, the Company reserves the right, exercisable by giving notice to the
Employee, to have the Employee discontinue performance of his duties and
obligations hereunder prior to the effective date of such termination without
acceleration of the effective date of such termination;
Notwithstanding expiration of the Term or any provision of Section 4.3 hereof to
the contrary, the Company shall continue to have all rights available to the
Company under this Agreement, and the provisions of this Agreement shall survive
the termination of the Employee's employment under this Agreement to the extent
required to give full effect to the covenants and agreements contained herein.
4.2 Controlling Termination Event. Notwithstanding any
provision of this Section 4 to the contrary and subject to the remainder of this
Section, the first to occur of any event specified in Sections 4.1(a) through
(f) hereof shall control the character of the termination of the Employee's
employment hereunder and the Employee's rights, if any, to compensation therefor
and thereafter, and the occurrence of any subsequent event specified in Sections
4.1(a) through (f) hereof which could have resulted in the termination of the
Employee's employment hereunder shall not govern or in any way affect the
termination of the Employee's employment hereunder, other than in the case of
any event described in item (a), (b), (c), (e) or (f) of the definition of the
Cause above or in item (a), (c) or (d) of the definition of Good Reason above.
Any termination of the employment of the Employee by the Company pursuant to
Section 4.1(c) hereof which would constitute Good Reason (after expiration of
applicable notice and cure rights, if any) shall not be effective unless and
until the Employee fails to terminate the employment of the Employee within the
sixty (60) day period described in the definition of Good Reason.
6
7
4.3 Effect of Termination of Employment.
(a) Compensation and Benefits. From and after the
effective date of the termination of the Employee's employment hereunder, the
Company shall have the following obligations under this Agreement with respect
to the Employee and the Employee's employment hereunder:
(i) in the event of any termination of the
Employee's employment hereunder, the Company's obligation to pay to, or provide
to, as the case may be, the Employee all earned and accrued but unpaid
compensation and all other monetary amounts payable to or for the benefit of the
Employee pursuant to this Agreement, including, without limitation, Sections
5.1, 5.2, 5.3, 5.5, 5.6, 5.7 and 5.9 hereof, if any, and the benefits to be
provided to or for the benefit of the Employee pursuant to this Agreement,
including, without limitation, Sections 5.4, 5.8 and 5.10 hereof, in each case,
through the effective date of termination of the Employee's employment
hereunder, as established pursuant to Section 4.1 hereof;
(ii) in the event of termination of the
Employee's employment pursuant to Section 4.1(a) or (b) hereof, the Company's
obligation (A) to pay to the Employee the compensation and other monetary
amounts payable to or for the benefit of the Employee pursuant to Sections 5.2
and 5.3 hereof that the Employee would have otherwise earned or been paid if the
Employee's employment had continued during and through the period (the
"Death/Disability Severance Period") beginning on the effective date of
termination of the Employee's employment hereunder, as established pursuant to
Section 4.1(a) or (b) hereof, and ending on the first anniversary of such
termination, and (B) to use reasonable, good faith efforts to continue to
provide the Employee (on a cost responsibility basis substantially comparable to
that which was in effect immediately prior to such termination of the Employee's
employment hereunder), or if unable to do so, to pay to the Employee the cost to
the Company (on a cost responsibility basis substantially comparable to that
which was in effect immediately prior to such termination of the Employee's
employment hereunder) of, all medical, dental and other health insurance
benefits to be provided to or for the benefit of the Employee pursuant to
Section 5.4 hereof that would have otherwise been provided to the Employee if
the Employee's employment had continued during and through the Death/Disability
Severance Period, provided that the Company's obligation to continue to provide
the Employee with such medical, dental and other health insurance benefits shall
be conditioned upon the Employee continuing to pay to the Company that portion
of premiums associated with such insurance benefits which was the Employee's
responsibility immediately prior to such termination of the Employee's
employment hereunder;
(iii) in the event of termination of the
Employee's employment pursuant to Section 4.1(d) hereof prior to a Change in
Control, the Company's obligation (A) to pay to the Employee the compensation
and other monetary amounts payable to or for the benefit of the Employee
pursuant to Sections 5.2 and 5.3 hereof that the Employee would have otherwise
earned or been paid if the Employee's employment had continued during and
through the period (the "Good Reason Before Change in Control Severance Period")
beginning on the effective date of termination of the Employee's employment
hereunder, as established pursuant to Section 4.1(d) hereof, and ending on the
last to occur of the first anniversary of such termination and the second
anniversary of the Effective Date, and (B) to use reasonable, good faith efforts
to continue to provide the Employee (on a cost responsibility basis
substantially comparable to that which was in effect immediately prior to such
termination of the Employee's employment hereunder), or if unable to do so, to
pay to the Employee the cost to the Company (on a cost responsibility basis
substantially comparable to that which was in effect immediately prior to such
termination of the Employee's employment hereunder) of, all medical, dental and
other health insurance benefits to be provided to or for the benefit of the
Employee pursuant to Section 5.4 hereof that would have otherwise been provided
to the Employee if the Employee's employment had continued during and through
the Good Reason Before Change in Control Severance Period, provided that the
Company's obligation to continue to provide the Employee with such medical,
dental and other
7
8
health insurance benefits shall be conditioned upon the Employee continuing to
pay to the Company that portion of premiums associated with such insurance
benefits which was the Employee's responsibility immediately prior to such
termination of the Employee's employment hereunder;
(iv) in the event of termination of the
Employee's employment pursuant to Section 4.1(d) hereof after a Change in
Control, the Company's obligation (A) to pay to the Employee the compensation
and other monetary amounts payable to or for the benefit of the Employee
pursuant to Sections 5.2, 5.3, 5.5 and 5.9 hereof that the Employee would have
otherwise earned or been paid if the Employee's employment had continued during
and through the period (the "Good Reason After Change in Control Severance
Period") beginning on the effective date of termination of the Employee's
employment hereunder, as established pursuant to Section 4.1(d) hereof, and
ending on the last to occur of the first anniversary of such termination and the
third anniversary of the Effective Date, and (B) to use reasonable, good faith
efforts to continue to provide the Employee (on a cost responsibility basis
substantially comparable to that which was in effect immediately prior to such
termination of the Employee's employment hereunder), or if unable to do so, to
pay to the Employee the cost to the Company (on a cost responsibility basis
substantially comparable to that which was in effect immediately prior to such
termination of the Employee's employment hereunder) of, all medical, dental and
other health insurance benefits to be provided to or for the benefit of the
Employee pursuant to Section 5.4 hereof that would have otherwise been provided
to the Employee if the Employee's employment had continued during and through
the Good Reason After Change in Control Severance Period, provided that the
Company's obligation to continue to provide the Employee with such medical,
dental and other health insurance benefits shall be conditioned upon the
Employee continuing to pay to the Company that portion of premiums associated
with such insurance benefits which was the Employee's responsibility immediately
prior to such termination of the Employee's employment hereunder;
All of the monetary amounts, if any, payable by the Company to the Employee
pursuant to this Section 4.3(a) shall be (i) payable based upon the level of
compensation and other monetary amounts in effect immediately prior to the
termination of the Employee's employment hereunder, (ii) payable in accordance
with the applicable terms and conditions of this Agreement as if the Employee
were still employed by the Company (or in a lump sum amount if the Board in its
discretion so chooses at any time), and (iii) subject to any deductions or
offsets described in this Agreement. For purposes of the foregoing, the level of
bonus described in Section 5.3 hereof in effect immediately prior to such
termination of the Employee's employment hereunder shall (A) if such bonus was
based upon a formula which can still be consistently applied during and through
the Death/Disability Severance Period, Good Reason Before Change in Control
Severance Period or Good Reason After Change in Control Severance Period, as the
case may be, the amount determined based upon such formula, or (B) if such bonus
is not based upon a formula which can still be consistently applied during and
through the Death/Disability Severance Period, Good Reason Before Change in
Control Severance Period or Good Reason After Change in Control Severance
Period, as the case may be, the amount of bonus payable to the Employee for the
previous fiscal year of the Company. All of the medical, dental and other health
insurance benefits to be provided by the Company to the Employee pursuant to
this Section 4.3(a) shall be (i) provided based upon the Employee's position,
and such insurance benefits provided to the Employee, immediately prior to the
termination of the Employee's employment hereunder, and (ii) provided in
accordance with the applicable terms and conditions of this Agreement.
Notwithstanding the foregoing, in the event of the termination of the Employee's
employment pursuant to Section 4.1(a) hereof, the Company shall pay or provide,
as the case may be, the compensation and benefits described in Section 4.3(a)
hereof to the Employee's estate and the Employee's dependents, as the case may
be, and in the event of the Employee's subsequent death after any termination of
the Employee's employment hereunder pursuant to Section 4.1(b), (c), (d), (e) or
(f) hereof, the Company shall pay or provide, as the case may be, the
compensation and benefits described in Sections 4.3(a) hereof to the Employee's
estate and the Employee's dependents, as the case may be.
8
9
(b) Mitigation. The Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this Section 4.3
by seeking other employment or otherwise. Notwithstanding the foregoing, the
amount of any payment or benefit provided for in Section 4.3(a)(ii), (iii) or
(iv) hereof shall be reduced by any compensation earned by or benefit provided
to the Employee as the result of employment by another employer during the
Death/Disability Severance Period, Good Reason Before Change in Control
Severance Period, or Good Reason After Change in Control Severance Period, as
the case may be, provided that with respect to insurance benefits such benefits
must be comparable in scope of coverage and cost responsibility basis for the
Employee in order to qualify for offset. The Employee shall promptly notify the
Company of any such subsequent employment and provide the Company with
information reasonably required to make any such offset. Notwithstanding any
provision of this Agreement to the contrary, any breach or alleged breach by the
Employee of the Employee's obligations under Section 6 hereof after the
termination of the Employee's employment hereunder shall not expressly or
implicitly provide or bestow any right to or on the Company to discontinue or
delay in any way the payment or benefit obligations to the Employee pursuant to
this Agreement, and in any such situation or circumstance, the Company shall
rely exclusively upon the Company's rights to seek legal and equitable remedies
in a court of competent jurisdiction to restrain the Employee's failure or
refusal to perform or comply with the Employee's obligations under Section 6
hereof after the termination of the Employee's employment hereunder.
4.4 In addition to the foregoing, in the event of termination
of Employee's employment pursuant to Section 4.1(d) hereof:
4.4.1 all rights of Employee pursuant to awards of
options granted by the Company shall be deemed to have fully vested and be fully
exercisable and all rights of Employee pursuant to share grants and option
awards shall be released from all conditions and restrictions imposed upon such
grants and awards, which conditions and restrictions were initially imposed by
the Company, provided that the foregoing shall in no way affect or extinguish
the Note or the Pledge and the Employee's obligations thereunder.
4.4.2 the Employee shall be deemed to be credited
with service with the Company for the Good Reason Before Change in Control
Severance Period or Good Reason After Change in Control Severance Period, as the
case may be, for the purposes of the Company's benefit plans; and
4.4.3 the Employee shall be deemed to have retired
from the Company and shall be entitled as of the termination date, or at such
later time as he may elect, to commence receiving the total combined qualified
and non-qualified retirement benefit to which he is entitled hereunder, or his
total non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees, he is not entitled
to a qualified benefit.
4.4.4 If any provision of this Section 4.4 cannot, in
whole or in part, be implemented and carried out under the terms of the
applicable compensation, benefit, or other plan or arrangement of the Company
because the Employee has ceased to be an actual employee of the Company, because
the Employee has insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been terminated
or amended after the effective date of this Agreement, or because of any other
reason, the Company itself shall pay or otherwise provide the equivalent of such
rights, benefits and credits for such benefits to Employee, his dependents,
beneficiaries and estate.
5. COMPENSATION AND BENEFITS. In consideration of Employee's services
and covenants hereunder, Company shall pay to Employee the compensation and
benefits described below (which compensation shall be paid in accordance with
the normal compensation practices of the Company and
9
10
shall be subject to such deductions and withholdings as are required by law or
reasonable policies of the Company in effect from time to time, except as
otherwise provided in this Section 5):
5.1 Signing Bonus. The Company shall pay Employee a cash
signing bonus of $1,000,000 on the Effective Date of this Agreement.
5.2 Annual Salary. During the Term, the Company shall pay to
Employee a base salary at the initial rate of $240,000 per year in accordance
with the Company's regular payroll policy, or according to such other schedule
as Employee and the Company may agree to. The Board shall be entitled to review
Employee's base salary at any time and from time to time (but not less
frequently than on each anniversary of the Effective Date) and may increase the
rate thereof at any time and from time to time in the Board's sole discretion.
The Board shall not decrease, at any time, the rate of the Employee's base
salary then in effect.
5.3 Bonus. During the Term, in addition to the above salary,
the Company shall pay to Employee a cash bonus at the initial rate of
$100,000.00 per fiscal year subject to the performance standards with respect to
the Company included in APPENDIX A attached hereto; provided, however, that
Employee is hereby guaranteed to receive a minimum $100,000 bonus for the
Company's 2000 fiscal year. The Board shall be entitled to review the Employee's
cash bonus at any time and from time to time (but not less frequently than on
each anniversary of the Effective Date) and may increase or decrease (but not
for the Company's 2000 fiscal year) the rate thereof at any time and from time
to time in the Board's sole discretion.
5.4 Benefits. During the Term, Employee shall be entitled to
share in any employee benefits generally provided by the Company to its most
highly ranking employees and officers for so long as the Company provides such
benefits and to any other benefits given to Employee in the sole discretion of
the Board.
5.5 Discretionary Funds. During the Term, at the Employee's
discretion, the Company shall spend up to $50,000.00 per fiscal year for
purposes of the Employee's choosing; provided, however, that the CEO must give
his prior approval in writing for any such expenditure made to the Employee
himself, any family member of Employee (whether by blood, marriage or adoption
and not more remote than first cousin), or any entity 5% or more of the equity
securities of which are beneficially owned by the Employee and/or any family
member of the Employee, which approval may be withheld at the sole discretion of
the CEO.
5.6 Relocation Expenses. The Company shall pay directly to
third parties or reimburse Employee in accordance with the Company's then
current accounts payable process for all reasonable expenses incurred by
Employee in moving to or within thirty (30) miles of Greenville County, South
Carolina in connection with his employment with the Company, provided that
Employee provides the Company with written documentation as required under the
Company's policies and procedures to support payment or reimbursement. Such
expenses shall include travel costs for Employee and his immediate family to
Greenville County, the cost of shipping Employee's personal property to
Greenville County, the cost of storing such property for up to six months from
the Effective Date until Employee has purchased a residence in or near
Greenville County, real estate agent commissions and fees, mortgage application
fees, closing points and fees, loan origination fees and loan discount fees,
real estate closing, brokers' and attorneys' fees and costs (includes, without
limitation, title insurance, appraisal, recording fees/stamps, survey, radon
test, termite bond/inspection, other inspection) incurred in selling Employee's
current residence and purchasing a residence in or near Greenville County and
temporary living expenses for Employee and his immediate family for up to six
months from the Effective Date.
10
11
5.7 Business Expenses. As a condition of employment, Employee
is required to incur reasonable and necessary expenses for the promotion of the
business of the Company, including without limitation, expenses of
entertainment, travel, telephone costs and similar expenses. Provided that
Employee provides the Company with reasonable written documentation as required
under the Company's policies and procedures to support reimbursement, the
Company shall reimburse Employee for all such expenses reasonably incurred by
Employee in the performance of his duties under this Agreement in accordance
with the Company's then current expense reimbursement process.
5.8 Stock Options. On the Effective Date, Employee shall be
granted by the Company, pursuant to the Company's Employee Incentive Plan (a
copy of which has been furnished to the Employee), an option to purchase 750,000
shares of the Common Stock at an exercise price of $3.00 per share, which option
shall vest with respect to 20% of such shares on each of the first five
anniversaries of the Effective Date so long as Employee continues to be employed
by the Company (except as otherwise provided in Section 4.4.1 hereof). Such
option shall be granted pursuant to a grant letter with terms and conditions
typical of those contained in grant letters from the Company to its employees
under the Company's Employee Incentive Plan. The options granted pursuant to
this Section 5.8 shall be options intended to qualify as Incentive Stock Options
under Section 422 of the Code or any successor provision, provided that to the
extent such options do not meet such qualifications, such options shall be
non-qualified stock options.
5.9 Liquidity Bonus. If an IPO or a Sale of the Company occurs
while the Employee is still employed by the Company pursuant to the terms of
this Agreement (except as otherwise provided in Section 4(a)(iv)), Employee
shall be entitled to receive, and the Company shall pay to the Employee, a
"Liquidity Bonus" of cash in the amount of (a) $500,000 in the event that either
the Pre-IPO Value of the Company or the value of the Company based upon the
consideration payable in connection with such Sale of the Company, as the case
may be, is at least equal to $500,000,000 but less than $750,000,000, or (b)
$750,000 in the event that either the Pre-IPO Value of the Company or the value
of the Company based upon the consideration payable in connection with such Sale
of the Company, as the case may be, is at least equal to $750,000,000.
Notwithstanding the foregoing, if the Employee receives the Liquidity Bonus as
the result of an IPO, the Employee may elect to receive all or any portion of
the Liquidity Bonus in Common Stock in lieu of cash, in which case, the number
of shares of Common Stock he receives shall equal the dollar value of such
portion of the Liquidity Bonus divided by the average offering price of Common
Stock sold in the IPO. Any Common Stock acquired by Employee as part of the
Liquidity Bonus shall be restricted stock as defined in Rule 144 promulgated
under the Securities Act and the certificates representing such stock shall bear
legends substantially of the form of legend in Section 5.10.4 of this Agreement.
The Company shall pay or otherwise deliver the Liquidity Bonus to the Employee
no later than sixty (60) days after the occurrence of the event giving rise to
the Company's obligation to pay the Liquidity Bonus.
5.10 Stock Purchase. On the Effective Date, Employee shall
purchase 81,178 shares of the Common Stock for $4.25 per share and 212,940
shares of the Series C Preferred Stock for $4.25 per share (for a total of
$1,250,001.50) pursuant to the terms of this Subsection 5.10.
5.10.1 On the Effective Date, the Company shall issue
in Employee's name a certificate representing 176,470 shares of the Series C
Preferred Stock (the "Credit Shares"), and the Employee shall deliver to the
Company a promissory note in the form of EXHIBIT A attached hereto in an
aggregate principal amount of $749,997.50 (the "Note"). Employee's obligations
under the Note shall be secured by a pledge to the Company of the Credit Shares
as provided in a pledge agreement in the form of EXHIBIT B attached hereto (the
"Pledge").
5.10.2 Pursuant to the requirements of South Carolina
law, the Credit Shares shall be held in escrow by the Company. Any cash
distributions in respect of the Credit Shares shall be
11
12
applied against the principal amount of the Note (and any interest thereon). Any
non-cash distributions or other property received as an addition to, in
substitution of, or in exchange for any of the Credit Shares (whether as a
distribution in connection with any recapitalization, reorganization or
reclassification, a stock dividend or otherwise), shall be escrowed with the
Credit Shares. The Credit Shares and any escrowed non-cash distribution proceeds
or other property shall remain in escrow until the Note is paid in full, except
as otherwise provided in the Pledge.
5.10.3 On the Effective Date, the Company shall issue
to Employee a certificate representing 81,178 shares of the Common Stock and a
certificate representing 36,470 shares of the Series C Preferred Stock
(collectively the "Cash Shares"), and the Employee shall pay to the Company
$4.25 per share in cash (for a total of $500,004.00) in consideration for the
Cash Shares.
5.10.4 Each certificate evidencing the Common Stock
and the Series C Preferred Stock purchased by Employee pursuant to the terms of
this Subsection 5.10 shall bear a legend in substantially the following form:
The securities represented by this certificate were issued to an
affiliate, as defined in Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), of the issuer without
registration under the Securities Act or the securities laws of any
state in a transaction believed to be exempt from such registration.
The securities represented by this certificate may not be resold unless
such resale is registered under the Securities Act and applicable state
securities laws or is exempt from such registration.
5.11 Representations and Warranties of Employee. In connection
with the acquisition of Common Stock as contemplated in this Agreement, Employee
hereby makes the representations and warranties to the Company contained in
EXHIBIT C attached hereto.
6. CONFIDENTIALITY; NON-COMPETITION.
6.1 Covenant Term. Employee covenants and agrees that for so
long as he is employed by the Company hereunder and a period of two (2) years
thereafter (provided that if the Employee is eligible to receive compensation
and benefits from the Company upon termination of the Employee's employment
pursuant to Section 4.1(d) hereof, such post-employment period shall be the
shorter in duration of (i) two (2) years after such termination of employment,
and (ii) the Good Reason Before Change in Control Severance Period or Good
Reason After Change in Control Severance Period, as the case may be) (the
"Covenant Term"), he will not, directly or indirectly, engage in any activity
prohibited pursuant to the terms of this Section 6.
6.2 Non-Competition. Employee agrees that for the Covenant
Term, he will not, without the prior written consent of the Company, directly or
indirectly, (i) own, manage, operate, control or participate in, or be
associated with as a director, officer, shareholder, partner, joint venturer,
employee, consultant or otherwise, any business providing telecommunications
services including, but not limited to, local exchange or long distance
telecommunications services which competes, directly or indirectly, with the
Company within any metropolitan statistical service area in which the Company
provides such services on the date of termination of Employee's employment (the
"Prohibited Business"); (ii) own any equity security in any person or entity
engaged in any such Prohibited Business, other than as a passive investor
owning, directly or indirectly, not more than 5% of the equity securities of a
public corporation; (iii) solicit or attempt to solicit any employee of the
Company either to work for the Employee personally or on behalf of any other
person or entity whether or not engaged in a Prohibited Business; or (iv)
solicit or attempt to solicit, for the purpose of providing the services
identified in subpart (i) above, any customer of the Company with which the
Employee had material contact during the twelve-month period immediately prior
to the Employee's departure from the Company. Notwithstanding
12
13
the foregoing, the Company acknowledges and agrees that the Employee currently
holds ownership interests and options in BellSouth Corporation. The Company
acknowledges and agrees that the Employee's current or future ownership
interests in BellSouth Corporation or any successor entity which may otherwise
be prohibited by this Section 6.2, shall be deemed not to constitute a breach of
this Section 6.2 by the Employee.
6.3 Non-Disclosure of Confidential Information. As used in
this Agreement, the term "Confidential Information" shall mean any information
which (i) is not generally available to the public or within the Company's field
of industry; and (ii) pertains to or relates in any way to the Company or its
businesses, proprietary techniques, know-how, independent interpretations of
market information, strategic plans and organizational approaches, activities,
products or services including, without limitation, financial information,
analyses, intellectual property rights, employee compensation information,
reports, pricing methods or other trade secrets. Employee acknowledges that he
may come into possession of certain Confidential Information of the Company or
its affiliates, and agrees that all such Confidential Information is the sole
and exclusive property of the Company. Other than in connection with Employee's
employment with the Company, during the Covenant Term, Employee shall not
disclose any such Confidential Information, directly or indirectly, nor use it
in any way, either during the Covenant Term or at any time thereafter, except as
required by law or by any court or governmental agency or body. All files,
records, documents, pricing and other information, data and similar items in any
medium whatsoever relating to the business, assets or prospects of the Company
or its affiliates, whether prepared by Employee or otherwise coming into his
possession, shall remain the exclusive property of the Company and, other than
in connection with Employee's employment with the Company, shall not be copied
or removed from the premises of the Company without the Company's prior written
consent. The terms of this Section 6.3 are not intended to limit any
definitions, protections or remedies available to the Company under any local,
state or federal law applicable to trade secrets or confidential information.
6.4 Remedies. Employee acknowledges that any violation of this
Section 6 will cause irreparable harm to the Company and that damages are not an
adequate remedy. Employee therefore agrees that the Company shall be entitled to
injunctive relief enjoining, prohibiting and restraining Employee from the
continuance of any such violation, in addition to any monetary damages which
might occur by reason of a violation of this Section 6 or any other remedies at
law or in equity, including, without limitation, specific performance.
6.5 Independent Covenants. The covenants set forth in this
Section 6 are and shall be deemed and construed as separate and independent
covenants. Should any part or provision of such covenants be held invalid, void
or unenforceable by any court of competent jurisdiction, such invalidity or
unenforceability shall not render invalid, void or unenforceable any other part
or provision thereof. Specifically, and without limiting the generality of the
foregoing, if any portion of this Section 6 is found to be invalid by a court of
competent jurisdiction because its duration, the territory and/or the restricted
activities are invalid or unreasonable in scope, such duration, territory and/or
restricted activity, as the case may be, shall be redefined by consideration of
the reasonable concerns and needs of the Company such that the intent of the
Company, in consummating the transactions contemplated by the Agreement will not
be impaired and shall be enforceable to the fullest extent permissible under
applicable laws.
6.6 Developments.
6.6.1 If at any time or times during the Employee's
employment hereunder, he shall (either alone or with others) make, conceive,
create, discover or reduce to practice any invention, modification, discovery,
design, development, improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, secret or intellectual
property right whatsoever or any interest therein (whether or not patentable or
registrable under copyright, trademark or
13
14
similar statutes or subject to analogous protection) (the "Developments") that
(i) relates to the business of the Company or any customer of or supplier to the
Company or any of the products or services being developed or sold by the
Company or which may be used in relation therewith, (ii) results from
responsibilities undertaken by the Employee on behalf of the Company, or (iii)
results from the use of premises or personal property (whether tangible or
intangible) owned, leased or contracted for by the Company, such Developments
and the benefits thereof are and shall immediately become the sole and absolute
property of the Company and its assigns, and the Employee shall promptly
disclose to the Company (or any persons designated by it) each such Development
and, as may be necessary to ensure the Company's ownership of such Developments,
Employee hereby assigns any rights (including, but not limited to, any
copyrights and trademarks) he may have or acquire in the Developments and
benefits and/or rights resulting therefrom to the Company and its assigns
without further compensation and shall communicate, without cost or delay, and
without disclosing to others the same, all available information relating
thereto (with all necessary plans and models) to the Company.
6.6.2 Upon disclosure of each Development to the
Company, the Employee agrees to, during his employment hereunder and at any time
thereafter, at the request and cost of the Company, sign, execute, make and do
all such deeds, documents, acts and things as the Company and its duly
authorized agents may reasonably require:
(i) to apply for, obtain, register and vest in the name of the
Company alone (unless the Company otherwise directs) letters patent,
copyrights, trademarks or other analogous protection in any country
throughout the world and when so obtained or vested to renew and
restore the same; and
(ii) to defend any opposition or other administrative
proceedings in respect of such applications and any opposition
proceedings or petitions or applications for cancellation or revocation
of such letters patent, copyright or other analogous protection.
6.6.3 In the event the Company is unable, after
reasonable and good faith efforts, to secure Employee's signature on any letters
patent, copyright or trademark registration applications or other documents
regarding any legal protection relating to a Development, whether because of
Employee's physical or mental incapacity or for any other reason whatsoever,
Employee hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as his agent and attorney-in-fact, to act for and
in his behalf and stead to execute and file any such application or applications
or other documents and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent, copyright or trademark registrations
or other legal protection thereof with the same legal force and effect as if
executed by the Employee.
7. ASSIGNMENT. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Employee, and
agree that Employee may not assign any of his rights or delegate any of his
duties or obligations under this Agreement. The rights of Employee shall inure
to the benefit of his heirs and beneficiaries. The rights and obligations of
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company, provided that the Company may
not assign (by operations of law, change in control, or otherwise) any of its
rights or obligations hereunder without the prior written consent of the
Employee, except in connection with any merger or transfer of the Company or of
all or any substantial part of the business of the Company.
8. NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or seven days after mailing if mailed,
first class, certified or registered mail, postage prepaid:
14
15
To the Company: Chief Executive Officer
Trivergent Communications, Inc.
000 X. Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
With a copy to: Xxxxxxxx X. Xxxxxxx, III, Esq.
at the same address as above
To Employee: Xxxxxx Xxxxxxx Xxxxxxx
-----------------------------
-----------------------------
-----------------------------
With a copy to: C. Xxxxx Xxxxxxx, Esq.
Chorey, Taylor & Xxxx, P.C.
The Lenox Building, Suite 1700
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, XX 00000-0000
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
9. PROVISIONS SEVERABLE. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
10. DISPUTE RESOLUTION.
10.1 In the event of any dispute, claim, question or
disagreement arising from or relating to this Agreement, the Note or the Pledge
or the breach of any of the foregoing, the Company and the Employee shall use
their best efforts to settle such dispute, claim, question or disagreement. To
this effect, the Company and the Employee shall consult and negotiate with each
other in good faith and attempt to reach a just and equitable solution
satisfactory to both the Company and the Employee. If the Company and the
Employee do not reach such solution within a period of 15 days after initiation
of such consultation and negotiation, such dispute, claim, question or
disagreement shall be submitted to non-binding mediation administered by the
American Arbitration Association under its Employment Mediation Rules before
resorting to arbitration, litigation or some other dispute resolution process.
Such non-binding mediation shall be conducted in Greenville County, South
Carolina. Each of the Company and the Employee shall bear its own costs and
expenses (including attorneys fees) and an equal share of the mediators' and
administrative fees of mediation. If such dispute, claim, question or
disagreement is not resolved within 45 days after initiation of mediation, then,
upon notice by either the Company or the Employee to the other, such dispute,
claim, question or disagreement shall be finally settled by binding arbitration
administered by the American Arbitration Association in accordance with its
National Rules for the Resolution of Employment Disputes, and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall be conducted in Greenville County, South
Carolina. The arbitration shall be conducted by a single arbitrator selected in
accordance with applicable rules of the American Arbitration Association. The
parties agree that the arbitrator shall have no power or authority to make
awards or issue orders of any kind except as expressly permitted by this
Agreement, the Note or the Pledge, as the case may be, and in no event shall the
arbitrator have the
15
16
authority to make any award that provides for punitive or exemplary damages or
consequential damages. The arbitrator shall award to the prevailing party, if
any, as determined by the arbitrator, all of its costs and fees. "Costs and
fees" means all reasonable pre-award expenses of the arbitration, including the
arbitrator's fees, administrative fees, travel expenses, out-of-pocket expenses
such as copying and telephone, court costs, witness fees and attorneys' fees.
The award of the arbitrator shall be in writing, signed by the arbitrator and
accompanied by a reasoned opinion which includes a breakdown as to specific
claims. During the period of the aforesaid negotiation, non-binding mediation
and arbitration, the Company and the Employee shall continue to comply fully
with their respective obligations under this Agreement (for example, the
Employee will continue to perform the Employee's duties and responsibilities to
the Company and the Company will continue to pay to the Employee his salary and
to provide to the Employee his benefits described in this Agreement), the Note
and the Pledge, as the case may be.
Company's initials:___________ Employee's initials: ___________
10.2 Types of Claims. All legal claims brought by any party
against the other party related to this Agreement, the employment relationship,
terms and conditions of employment, and/or termination from employment, the
Note, and/or the Pledge, are subject to this dispute resolution procedure. These
include, by way of example and without limitation, any legal claims based on
alleged discrimination or retaliation on the basis of race, sex, religion,
national origin, age or disability, whether based on state or federal law;
workers' compensation retaliation; defamation; invasion of privacy; infliction
of emotional distress and/or breach of an express or implied contract. The above
terms notwithstanding, any legal claim brought by Employee or Company for or
relating to workers' compensation, unemployment compensation benefits,
misappropriation of Company's trade secrets, breach or violation of provisions
of any confidentiality agreements or non-compete agreements, and claims alleging
status or membership with regard to any employment benefit plan are not subject
to this dispute resolution procedure.
11. WAIVER. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition. No waiver shall be valid unless in writing signed by the
party sought to be bound. Time is of the essence with respect to performance
under this Agreement.
12. REPRESENTATIONS. Employee agrees that this Agreement constitutes
the legal, valid and binding obligation of Employee, enforceable in accordance
with its terms. Employee further represents and warrants to Company that he is
subject to no agreement or obligation (including, without limitation, any
non-competition or confidentiality agreement) or bound by any contract with any
Person, corporation, or other entity that would prohibit him from entering into
or delivering this Agreement or taking the position described herein or in any
way interfere with the performance of his duties and obligations to Company
under this Agreement. Employee agrees to indemnify and hold harmless the Company
and its officers, directors, employees, managers, members, shareholders and
agents from and against any (1) claim (and the expenses associated therewith,
including without limitation reasonable attorney's fees) by a third party under
a non-competition, confidentiality or similar agreement or (2) any loss arising
as a result of Employee's breach of any of Employee's representations or
warranties contained in this Agreement, including the exhibits and other
attachments hereto.
13. AMENDMENTS AND MODIFICATIONS. This Agreement may be amended or
modified only by a writing signed by all parties hereto. The parties hereby
agree that this Agreement contains the entire agreement and understanding by and
between the parties with respect to the subject matter hereof, and no
16
17
representations, promises, agreements, or understandings, written or oral,
relating thereto not contained herein shall be of any force or effect.
14. GOVERNING LAW. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina, without giving effect to South Carolina's rules of conflicts
law, and regardless of the place or places of its physical execution or
performance.
15. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
17. NO CONSTRUCTION AGAINST EITHER PARTY. In the event that there is
any dispute regarding the interpretation or construction of the provisions of
this Agreement, there shall be no presumption that any provision of this
Agreement is to be construed against either party hereto.
18. BOARD APPROVAL. The Company represents and warrants to the Employee
that this Agreement, the Note and the Pledge have been approved by the Board.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
---------------------------- -------------------------------------
Witness Xxxxxx Xxxxxxx Xxxxxxx
STATE COMMUNICATIONS, INC.
By:
---------------------------- ----------------------------------
Witness Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: Chief Executive Officer
-------------------------------
17
18
EXHIBIT A
PROMISSORY NOTE
$749,997.50 March 10, 2000
For value received, Xxxxxx Xxxxxxx Xxxxxxx ("Promisor") promises to pay
to the order of State Communications, Inc., a South Carolina corporation (the
"Company"), the aggregate principal sum of $749,997.50. This Note was issued
pursuant to and is subject to the terms of the Employment Agreement, dated as of
the date hereof, between the Company and Promisor (the "Employment Agreement").
Unless otherwise indicated herein, capitalized terms used in this Note have the
meaning set forth in the Employment Agreement.
Interest shall accrue on a daily basis on the outstanding principal
amount of this Note at a rate equal to the lesser of (i) 8.12% per annum,
compounded annually, computed on the basis of a 360 day year and the actual
number of days elapsed or (ii) the highest rate permitted by applicable law, and
shall be payable annually in arrears.
Payments of principal of, and accrued and unpaid interest under, this
Note shall be due and payable on the earlier of (i) the third anniversary of the
date hereof or (ii) sixty (60) days after the effective date of the termination
of Promisor's employment with the Company pursuant to the Employment Agreement
(the "Maturity Date"); provided however, that the Company may extend the
Maturity Date one or more times in its sole discretion by a period of one year
by providing written notice to the Promisor of such extension no later than 10
days prior to the then-existing Maturity Date.
Payments of principal of, and accrued and unpaid interest under, this
Note shall be due and payable upon Promisor's receipt of proceeds from the
transfer, from time to time, of any Pledged Shares (as defined in the Pledge
Agreement between Promisor and the Company of even date herewith) in the full
amount of such proceeds (net of costs of sale and any taxes attributable
thereto) or such lesser amount as is necessary to pay the full amount of
outstanding principal of and accrued interest under this Note and for Promisor
to otherwise fully and finally discharge its obligations under this Note.
Promisor may, at his option, pay all or any portion of the principal of, and
accrued and unpaid interest under, this Note at any time and from time to time
prior to the maturity hereof without penalty or premium. Promisor may, at his
option, pay all or any portion of amounts due under this Note by from time to
time surrendering to the Company a portion of the Pledged Shares having a Fair
Market Value (as defined below) equal to the amount of such payment. Any payment
hereunder shall be applied first to pay accrued and unpaid interest under this
Note and second to reduce the outstanding principal amount of this Note.
"Fair Market Value" means, with respect to the Pledged Shares, the
average of the closing prices of the sales of the Company's Series C Preferred
Stock, or any other security of the Company or any other entity which the
aforesaid Series C Preferred Stock is convertible into or exchanged for (the
"Stock") on all securities exchanges on which the Stock may at the time be
listed, or, if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any day the Stock is not so listed, the average of
the representative bid and asked prices quoted in the NASDAQ System as of 4:00
p.m., New York time, or, if on any day the Stock is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days
immediately prior to such day. If at any time the Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Fair Market
18
19
Value shall be the fair value of such shares determined in good faith by the
Board of Directors of the Company.
The amounts due under this Note are secured by a pledge of the Pledged
Shares. Any cash dividends declared and paid with respect to the Pledged Shares
shall be payable directly to the Company and shall be applied to reduce the
outstanding principal amount (and any interest thereon) of this Note and any
cash dividends paid to Promisor with respect to the Pledged Shares will be
promptly remitted to the Company and shall be applied to reduce the outstanding
principal amount (and any interest thereon) of this Note.
In the event Promisor fails to pay any amounts due hereunder when due,
Promisor shall pay to the holder hereof, in addition to such amounts due, all
costs of collection, including reasonable attorneys fees.
Promisor, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note (other than notice of default with respect to matters
other than the non-payment of interest and/or principal), and expressly agrees
that this Note, or any payment hereunder, may be extended from time to time and
that the holder hereof may accept security for this Note or release security for
this Note, all without in any way affecting the liability of Promisor hereunder.
The Company may not assign (by operation of law, change in control or
otherwise) any of its obligations or rights hereunder without the prior written
consent of the Promisor except in connection with any merger or transfer of all
or any substantial part of the business of the Company.
Any failure by the Company to exercise any right hereunder shall not be
construed as a waiver of its right to exercise the same or any other right
hereunder at any other time.
This Note and all rights hereunder shall be governed by the internal
laws, and not the laws of conflicts, of the State of South Carolina.
IN WITNESS WHEREOF, this Promissory Note has been executed as of the
date first written above.
STATE COMMUNICATIONS, INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: Chief Executive Officer
-------------------------------
-------------------------------------
Xxxxxx Xxxxxxx Xxxxxxx
19
20
EXHIBIT B
THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO S.C. CODE SS. 15-48-10(2)
STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of March 10, 2000, between Xxxxxx
Xxxxxxx Xxxxxxx ("Pledgor"), and State Communications, Inc., a South Carolina
corporation (the "Company").
The Company and Pledgor are parties to an Employment Agreement of even
date herewith, pursuant to which Pledgor acquired and purchased 176,470 shares
of the Company's Series C Preferred Stock (the "Pledged Shares"), for an
aggregate purchase price of $749,997.50. The Company has allowed Pledgor to
purchase the Pledged Shares by delivery to the Company of a promissory note of
even date herewith (the "Note") in the aggregate principal amount of
$749,997.50. This Pledge Agreement provides the terms and conditions upon which
the Note is secured by a pledge to the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Company to accept the Note as
payment for the Pledged Shares, Pledgor and the Company hereby agree as follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Note and full payment and performance of the obligations and liabilities of
Pledgor hereunder.
2. Delivery of Pledged Shares. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to the Company the certificate(s) representing
the Pledged Shares, together with duly executed forms of assignment sufficient
to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Pledge Agreement until such
time as there exists a default in the payment of principal or interest on the
Note or any other default under the Note or hereunder, Pledgor shall be entitled
to all voting rights with respect to the Pledged Shares. Upon the occurrence of
and during the continuance of any such default, Pledgor shall no longer be able
to vote the Pledged Shares. During the term of this Pledge Agreement, all cash
dividends paid in respect of the Pledged Shares shall be paid to the Company and
applied by the Company to the outstanding principal amount of the Note and any
interest thereon.
4. Stock Dividends; Distributions, etc. If, while this Pledge Agreement
is in effect, Pledgor becomes entitled to receive or receives any securities or
other property as an addition to, in substitution of, or in exchange for any of
the Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Pledgor shall accept such securities or other property on behalf of
and for the benefit of the Company as additional security for Pledgor's
obligations under the Note and shall promptly deliver such additional security
to the Company together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Shares hereunder.
--------------------
(2) UNLESS THE UNITED STATES ARBITRATION ACT APPLIES.
20
21
5. Default. If Pledgor defaults in the payment of the principal or
interest under the Note when it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Note or this Pledge
Agreement occurs, the Company may exercise any and all the rights, powers and
remedies of any owner of the Pledged Shares (including the right to vote the
shares and receive dividends and distributions with respect to such shares) and
shall have and may exercise without demand (other than notice of default with
respect to matters other than payment of interest and/or principal) any and all
the rights and remedies granted to a secured party upon default under the
Uniform Commercial Code of the State of South Carolina or otherwise available to
the Company under applicable law. Without limiting the foregoing, the Company is
authorized to sell, assign and deliver at its discretion, from time to time, all
or any part of the Pledged Shares at any private sale or public auction, on not
less than ten days written notice to Pledgor, at such price or prices and upon
such terms as the Company may deem advisable. Pledgor shall have no right to
redeem the Pledged Shares after any such sale or assignment. At any such sale or
auction, the Company may bid for, and become the purchaser of, the whole or any
part of the Pledged Shares offered for sale. In case of any such sale, after
deducting the costs, attorneys' fees and other expenses of sale and delivery,
the remaining proceeds of such sale shall be applied to the principal of and
accrued interest on the Note; provided that after payment in full of the
indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Shares remaining in the hands of the Company. Pledgor
shall be liable for any amount of the outstanding principal and accrued interest
on the Note for any deficiency if the remaining proceeds are insufficient to pay
the indebtedness under the Note in full, including the fees of any attorneys
employed by the Company to collect such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses (including
reasonable attorneys' fees) incurred in exercising any right, power or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor or
repaid from the proceeds of the sale of the Pledged Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon payment
in full of the indebtedness evidenced by the Note, the Company shall surrender
the Pledged Shares and any additional security to Pledgor together with all
forms of assignment.
8. No Other Liens; No Sales or Transfers. Pledgor hereby represents and
warrants that he has good and valid title to all of the Pledge Shares, free and
clear of all liens, security interests and other encumbrances (except as
contemplated herein and except as otherwise for the benefit of the Company), and
Pledgor hereby covenants that, until such time as all of the outstanding
principal of and interest on the Note has been repaid, Pledgor shall not (i)
create, incur, assume or suffer to exist any pledge, security interest,
encumbrance, lien or charge of any kind against the Pledged Shares or Pledgor's
rights as a holder thereof, other than pursuant to this Agreement, or (ii) sell
or otherwise transfer any Pledged Shares or any interest therein, provided that,
notwithstanding the foregoing, (a) the Pledgor shall be entitled to surrender
any portion of the Pledged Shares to the Company as payment on the Note, as
described in the Note, and (b) the Pledgor shall be entitled, from time to time,
to sell or otherwise transfer any portion of the Pledged Shares so long as the
Pledgor ensures that the proceeds from any such sale are delivered to the
Company as payment on the Note, as described in the Note.
9. Further Assurances. Pledgor agrees that at any time and from time to
time upon the written request of the Company, Pledgor shall execute and deliver
such further documents (including UCC financing statements) and do such further
acts and things as the Company may reasonably request in order to effect the
purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
21
22
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the parties hereunder shall together with the
rights and remedies of the parties hereunder, be binding upon and inure to the
benefit of the parties hereto and their respective heirs, beneficiaries,
successors and assigns, provided that no party hereto may assign (by operation
of law, change in control or otherwise) any of its rights or obligations
hereunder without the prior written consent of the other party hereto, except in
connection with any merger or transfer of the Company or of all or any
substantial part of the business of the Company. This Pledge Agreement shall be
governed by, and be construed to interpreted in accordance with, the laws of the
State of South Carolina.
13. No Construction Against Either Party. In the event that there is
any dispute regarding the interpretation or construction of the provisions of
this Pledge Agreement, there shall be no presumption that any provision of this
Pledge Agreement is to be construed against either party hereto.
14. Release of Pledged Shares. Upon each payment of any principal of
the Note, there shall be released from the terms of this Pledge Agreement the
number of shares of the Pledged Shares held by the Company pursuant to this
Pledge Agreement in excess of the number of shares of the Pledged Shares held by
the Company pursuant to this Pledge Agreement at that time equal to the
outstanding principal balance of the Note at that time divided by the Fair
Market Value (as defined in the Note). As such shares of the Pledged Shares are
released, the Company shall promptly surrender to the Pledgor, without recourse
or warranty, all certificates evidencing and stock powers in respect of such
released shares of the Pledged Shares.
IN WITNESS WHEREOF, this Pledge Agreement has been executed as
of the date first written above.
STATE COMMUNICATIONS, INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: Chief Executive Officer
-------------------------------
-------------------------------------
Xxxxxx Xxxxxxx Xxxxxxx
22
23
EXHIBIT C
Representations and Warranties of Employee
In Connection with Acquisition of Common Stock
and Series C Preferred Stock
In connection with the acquisition of Common Stock and Series C
Preferred Stock from the Company by the Employee contemplated in this Agreement,
the Employee hereby represents and warrants to the Company that:
(1) Common Stock and Series C Preferred Stock to be acquired by
Employee pursuant to this Agreement shall be acquired for the Employee's own
account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities laws, and
the Employee shall not dispose of any shares of Common Stock and Series C
Preferred Stock in contravention of the Securities Act, the Exchange Act or any
applicable state securities laws.
(2) Employee has had access to all material information about an
investment in the Common Stock and Series C Preferred Stock, is sophisticated in
financial matters and is able to evaluate the risks and benefits of an
investment in the Common Stock and Series C Preferred Stock.
(3) Employee is able to bear the economic risk of his investment in
the Common Stock and Series C Preferred Stock for an indefinite period of time.
Employee understands that no shares of Common Stock and Series C Preferred Stock
have been registered under the Securities Act or any applicable state securities
laws and, therefore, cannot be sold unless subsequently registered under the
Securities Act and any applicable state securities laws or an exemption from
such registration is available.
(4) Employee has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Common Stock and
Series C Preferred Stock to the Employee and has had full access to (A) such
other information concerning the Company and the offering of Common Stock and
Series C Preferred Stock to Employee hereunder as he or she has requested and
(B) such other information which Employee deemed necessary and desirable to make
an informed investment decision regarding the purchase of Common Stock and
Series C Preferred Stock hereunder.
(5) Employee is an "accredited investor" as defined under the
Securities Act and rules and regulations promulgated thereunder.
(6) These representations and warranties constitute the legal, valid
and binding obligation of Employee, enforceable in accordance with its terms,
and the execution, delivery and performance of this Agreement by Employee does
not and shall not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Employee is a party or any judgment, order or
decree to which Employee is subject.
23
