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Exhibit 10.23
TERMINATION BENEFITS AGREEMENT
TERMINATION BENEFITS AGREEMENT made this ____ day of December, 1998, by
and between OSAGE SYSTEMS GROUP, INC., a Delaware corporation (the "Company")
and XXXX X. XXXXXXX (the "Executive").
RECITALS
A. The Executive has served the Company, formerly known as Pacific Rim
Entertainment, Inc., as a key executive officer and has helped guide the Company
in its acquisition of Osage Computer Group through a merger with a wholly-owned
subsidiary of the Company, and its successful completion of other acquisitions.
B. The Executive is expected to continue to make a major contribution
to the profitability, growth and financial strength of the Company.
C. The Company considers the continued services of the Executive to be
in the best interest of the Company and its shareholders and desires to assure
the continued service of the Executive on behalf of the Company on an objective
and impartial basis and without distraction or conflict of interest in the event
of an attempt to obtain control of the Company.
D. The Executive is willing to remain in the employ of the Company upon
the understanding that the Company will provide income security upon the terms
and subject to the conditions contained herein if the Executive's employment is
terminated voluntarily for good reason following a Change in Control of the
Company or involuntarily by the Company without cause as provided in Section 5
of the Employment Agreement dated as of January ___, 1998 between the Executive
and the Company (as such agreement currently exists or may be amended, extended
or replaced subsequent to the date hereof, the "Employment Agreement," a copy of
which is attached hereto as Exhibit A).
NOW, THEREFORE, in consideration of the mutual promises herein
contained and intending to be legally bound hereby, the parties agree as
follows:
1. Simultaneously with a "Change in Control of the Company", as that
term is defined herein (a "Change in Control"), the term of the Employment
Agreement then in force between the Company and the Executive, without any
further action on the part of either party, shall be deemed to have been
extended for a term of three (3) years, commencing with the date of the Change
In Control, on the same terms and conditions as existed immediately prior to the
Change in Control (the "Extended Term").
2. During the Extended Term, the Executive may terminate his employment
at any time for "good reason". As used herein, the term "good reason" shall
mean:
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(i) A failure by the Company to comply with any material
provision of the Employment Agreement, which failure has not been cured within
ten (10) days after notice of noncompliance has been given by Executive to the
Company;
(ii) Without Executive's written consent, the assignment to
Executive of any duties inconsistent with Executive's duties, responsibilities
and status with the Company immediately prior to the Change in Control;
(iii) Any change in (a) Executive's reporting
responsibilities, title or office in effect immediately prior to the Change in
Control of the Company, or (b) a change in geographic location of where
Executive's position is based that would reasonably require a relocation of his
personal residence;
(iv) Any removal from or any failure to reelect Executive to
the highest ranking financial executive position in the Company except in
connection with a termination of employment pursuant to Section 5 of Executive's
Employment Agreement or voluntary resignation or refusal to stand for
re-election by Executive;
(v) Any reduction by the Company in Executive's annual salary
in effect immediately prior to a Change in Control or as the same may be
increased from time to time; or
(vi) Any material reduction in the benefits provided to
Executive under any bonus, benefit or compensation plan, life insurance plan,
health and accident plan or disability plan in which Executive is participating
at the time of a Change in Control of the Company.
3. For purposes of this Agreement, a "Change in Control" shall be
determined in the manner established at Paragraph 7 hereafter. A Change in
Control shall mean a Change in Control of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A, as in
effect on the date hereof, promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided that, without limitation, such a
Change in Control shall be deemed to have occurred if:
(a) Any "Person" or "group of Persons" (as such terms are
defined hereafter), except for Executive, any affiliate of Executive, or any
group of Persons of which Executive is a participant, any employee benefit plan
of the Company or any subsidiary of the Company, or any entity holding voting
securities of the Company for or pursuant to the terms of any such plan (a
"Benefit Plan" or the "Benefit Plans"), is or becomes the "beneficial owner" (as
such term is defined hereafter), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities;
(b) There occurs a contested proxy solicitation of the
Company's shareholders with respect to the election of directors that results in
the contesting party electing a majority of members of the Company's Board of
Directors;
(c) There occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company to another entity,
except to an entity controlled directly or indirectly by the Company, or a
merger, consolidation or other reorganization of the Company in
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which the Company is not the surviving entity, or a plan of liquidation or
dissolution of the Company other than pursuant to bankruptcy or insolvency laws
is adopted; or
(d) During any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the directors
(inclusive of Executive) then still in office who were directors at the
beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred for purposes of this Agreement: (i) if a "Person" acquires or
becomes the beneficial owner of securities representing 20% or more of the
combined voting power of the Company's then outstanding securities pursuant to a
private placement transaction or underwritten public offering of the Company's
Common Stock where such issuance of securities by the Company is approved by a
vote of at least two-thirds of the directors inclusive of the Executive; (ii) if
a transaction identified in subparagraph 3(c) above occurs and is approved by a
vote of at least two-thirds of the directors inclusive of the Executive; (iii)
in the event of a sale, exchange, transfer or other disposition of substantially
all of the assets of the Company to, or a merger, consolidation or other
reorganization involving the Company and, the Executive, alone or with other
officers of the Company, or any entity in which the Executive (alone or with
other officers) has, directly or indirectly, at least a 25% equity or ownership
interest; or (iv) in a transaction which includes the Executive as a principal
and control person and is otherwise commonly referred to as a "management
leveraged buy-out". For the purposes of subparagraph 3(a), a "Person" shall not
be deemed the beneficial owner of securities representing 20% or more of the
combined voting power of the Company's then outstanding securities if that
"Person" is an underwriter who has acquired shares for resale in connection with
an underwritten public offering of such shares.
Subparagraph 3(a) above to the contrary notwithstanding, a Change in
Control shall not be deemed to have occurred if a Person (i) is, on the date
hereof, the beneficial owner 20% or more of the combined voting power of the
Company's then outstanding securities, or (ii) becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities solely as
the result of an acquisition by the Company or any subsidiary of the Company of
voting securities of the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such person to 20% or more of the combined voting power of the Company's then
outstanding securities, provided, however, that if a Person currently is or
becomes the beneficial owner of 20% or more of the combined voting power of the
Company's then outstanding securities by reason of shares (y) beneficially owned
on the date hereof, or (z) purchased by the Company or any subsidiary of the
Company and shall thereafter become the beneficial owner, directly or
indirectly, of any additional voting securities of the Company, then a Change in
Control shall be deemed to have occurred with respect to such Person under
subparagraph 3(a) above. Notwithstanding the foregoing, in no event shall a
Change of Control be deemed to occur under subparagraph 3(a) above with respect
to the Benefit Plans.
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For the purposes of this paragraph 3, the terms "Person,"
"group of Persons", "beneficial owner" and "beneficial ownership" shall have the
meanings ascribed thereto under Sections 13(d) and 14(d) and Rule 13d
promulgated under the Securities Exchange Act.
4. Any termination of Executive's employment by the Executive shall be
communicated by written notice of termination to the Company. For purposes of
this Agreement, a "notice of termination" shall mean a dated notice which shall
(i) set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment; and (ii) specify a
date of termination, which shall be not less than thirty nor more than ninety
(90) days after such notice of termination.
5. If during the Extended Term following a Change in Control, Executive
terminates his Employment for good reason as described in subparagraphs (i) to
(vi) of paragraph 2 hereof, or if Executive is terminated by the Company other
than pursuant to Section 5 of Executive's Employment Agreement, then, in lieu of
any further salary payments to Executive for periods subsequent to the date of
termination:
(a) The Company shall pay as a liquidated amount to Executive
within thirty (30) days of such termination, a lump sum cash payment which is
equal to the remainder of any further salary and ascertainable bonus payments
that would have become due to Executive during the remainder of the Extended
Term; calculating the amount of such salary based upon the Executive's current
gross salary (for federal income tax purposes) and ascertainable bonus based
upon the bonus that was received by Executive during the Company's most recently
completed fiscal year;
(b) All options held by Executive, to the extent not vested
pursuant to the terms of any plan or agreement governing such option, shall
become fully vested and exerciseable;
(c) The Company shall continue to pay or make available to
Executive for a period of two (2) years after the date of termination, all
Company benefits including all health, disability and life insurance plans
provided by or through the Company, including those provided in the Employment
Agreement;
(d) If Executive is terminated by the Company other than as
provided in Section 5 of Executive's Employment Agreement, the "Negative
Covenant" provision of Section 11 of the Employment Agreement (including
remedies provided in such Section 11) shall be null and void and unenforceable
and inapplicable as to the Executive; and
(e) The Company, within sixty (60) days of Executive's date of
termination, shall (i) pay to Executive an additional amount sufficient to
satisfy all of Executive's current or prospective liability to any taxing
authority for excise taxes, penalties or any other taxes assessed in excess of
normal income taxes imposed on salaries, incurred by reason of all benefits
provided to Executive under this Agreement and (ii) cause the Company's
independent auditors to determine, within sixty (60) days, the amount to be paid
to Executive pursuant to subparagraph
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5(a) above and this subparagraph 5(e), providing a copy to Executive of the
auditors' detailed determination.
6. The Executive shall not be required to mitigate the amount of any
payment provided for under this Agreement by asking for other employment and
none of these payments may be reduced by any future salary that Executive may
earn.
7. A Change in Control shall be determined within the reasonable
discretion of the Executive who shall within 90 days of such determination
provide written notice (the "Notice") to the Company identifying the Change in
Control, and, if possible, providing reference to the Item or Items constituting
the Change in Control identified in subparagraphs 3(a)-3(c) above. The Company
shall have 15 days in which to respond in writing. This response shall indicate
whether or not the Company adopts or disputes the conclusions set forth within
the Notice, and if the Company disputes the Notice, the Company's response shall
indicate with specificity the basis and grounds for such objection. In the
absence of a timely response, the Company shall be deemed to have adopted the
conclusions set forth within the Notice. The conclusions of the Executive set
forth within the Notice shall be deemed conclusive evidence of a Change in
Control. The Company shall bear the burden of proof of establishing that a
Change in Control has not occurred.
8. The Executive is aware that upon Notice of the occurrence of a
Change in Control, the Board of Directors or a shareholder of the Company may
then cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the Company
to institute, or may institute litigation seeking to have this Agreement
declared unenforceable, or may take or attempt to take other action to deny
Executive the benefits intended under this Agreement. In these circumstances,
the purpose of this Agreement could be frustrated. It is the intent of the
Company that Executive not be required to incur the expenses associated with the
enforcement of any rights under this Agreement by litigation or other legal
action, nor be bound to negotiate any settlement of any rights hereunder,
because the cost and expense of such legal action or settlement would
substantially detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if following a Notice relative to a Change in Control it
should appear to Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or to
recover from Executive the benefits intended to be provided to Executive, then
the Company irrevocably authorizes Executive to retain counsel of Executive's
choice, at the expense of the Company as provided in this paragraph 8, to
represent Executive in connection with the initiation or defense of any
litigation or other legal action, whether such action is by or against the
Company or any director, officer, shareholder, or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to Executive entering into an attorney-client relationship
with such counsel, and in that connection the Company and Executive agree that a
confidential relationship shall exist between Executive and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Executive
as hereinabove provided shall be paid in advance or reimbursed to Executive, at
the election of the Executive, by the Company
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on a regular, periodic basis upon presentation by Executive of a statement or
statements or customary retainer letter prepared by such counsel in accordance
with its customary practices, up to a maximum aggregate amount of $200,000. Any
legal expenses incurred by the Company by reason of any dispute between the
parties as to enforceability of or the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be the sole
responsibility of the Company, and the Company shall not take any action to seek
reimbursement from Executive for such expense.
9. This Agreement is the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior or contemporaneous
negotiations or understandings relating hereto. This Agreement may be altered or
amended only by a writing signed by the parties hereto.
10. This Agreement shall be construed in accordance with the laws of
Arizona and shall be binding upon and inure to the benefit of the parties
hereto, their heirs, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this amendment the
day and year first above written.
OSAGE SYSTEMS GROUP, INC.
BY: /s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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EXHIBIT A
EMPLOYMENT AGREEMENT
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