EXHIBIT 10.41
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 31st day of July 2002, but
is effective for all purposes as of the Commencement Date (as hereinafter
defined), by and between FullNet Communications, Inc. (the "Company"), an
Oklahoma corporation, and Xxxxx X. Xxxxxxx ("Xxxxxxx"), an individual.
WITNESSETH:
WHEREAS, the Company and Xxxxxxx desire to enter into a long-term
employment agreement on the terms and conditions hereinafter provided;
NOW, THEREFORE, for and in consideration of the conditions herein below
to be performed on the part of the respective parties hereto, and in
consideration of the mutuality thereof, the parties hereto agree as follows:
1. Term of Employment. The Company hereby agrees to employ Xxxxxxx as
Chief Financial Officer of the Company, and Xxxxxxx hereby accepts such
employment and agrees to serve the Company as its Chief Financial Officer. The
term of employment under this Agreement shall commence on January 1, 2002 (the
"Commencement Date), and shall continue through December 31, 2004; provided,
however, the term of this agreement shall automatically be extended for
additional one-year terms, unless either party give notice of termination to the
other on or before June 30 in the year of termination, commencing June 30, 2004
("Period of Employment").
2. Duties. Substantially all of the duties and responsibilities of
Xxxxxxx, subject to such travel as the duties of Xxxxxxx hereunder may
reasonably require, shall be performed by Xxxxxxx at and from the corporate
offices of the Company in Oklahoma City, Oklahoma.
2.1 Time and Best Efforts. During the term of employment hereunder,
Xxxxxxx shall be a full-time employee and shall devote his time,
attention, skill, energy and best efforts as a full-time employee to
the duties assigned to him from time to time as Chief Financial Officer
by the Board of Directors of the Company, which duties shall be of the
general character referred to in Section 2.2, and shall, but without
obligation hereunder, serve the Company in the other executive officer
positions to which he may be elected or appointed by the Board of
Directors of the Company, subject to acceptance by Xxxxxxx of such
other executive officer position or positions. Notwithstanding the
foregoing, Xxxxxxx may (i) engage in other business pursuits or other
endeavors which do not conflict with his ability to perform his duties
on a best efforts basis to the business interests of the Company and
(ii) become a director of other corporations and engage in charitable,
civic and other similar pursuits; provided, however, that such other
business pursuits or other endeavors do not interfere with his devoting
his best efforts to his duties to the Company or violate the duty of
loyalty and care which Xxxxxxx has to the Company by reason of this
Agreement or in his capacity as an executive officer of the Company.
2.2 Supervision. As an employee and Chief Financial Officer of the
Company (and other executive officer positions held by Xxxxxxx),
Xxxxxxx shall be responsible for overseeing and managing the financial
activities of the Company which shall be subject to the overall
supervision and instructions of the Board of Directors of the Company.
EMPLOYMENT AGREEMENT PAGE 1
3. Compensation and Other Benefits. During the Period of Employment,
the Company shall pay or provide to Xxxxxxx, and Xxxxxxx shall be entitled to
receive or have maintained for his benefit, for his services such compensation
as the Board of Directors shall fix from time to time, but not less than the
following amounts and benefits:
3.1 Regular Compensation. The salary paid by the Company to Xxxxxxx
under this Section 3.1 shall be not less than $5,417 per month, such
monthly salary shall be subject to not less than a five percent (5%)
increase, on each January 1 during the Period of Employment, based upon
the monthly compensation paid Xxxxxxx during the month of December
immediately preceding the applicable January 1. Payment of such salary
shall be made in installments in accordance with the Company's
compensation payments to its other employees. Salary paid in accordance
with this Section 3.1 shall be considered Xxxxxxx'x "regular
compensation."
3.2 Bonus Compensation. In addition to regular compensation, Xxxxxxx
shall be eligible for annual bonuses that are not guaranteed and are to
be determined by the Company's Board of Directors.
3.3 Grant of Stock Options. From time to time the Company may grant
stock options to its executive officers as determined by the Board of
Directors (or the Compensation Committee and/or Stock Option Committee
established by the Board of Directors). To the extent that stock
options are granted by the Board of Directors (or the Compensation
Committee and/or Stock Option Committee established by the Board of
Directors) to its executive officers, Xxxxxxx shall be deemed to be a
member of the group to which stock options are granted, and his stock
option grants shall be determined in the same manner as are the stock
option grants of other executives in the group. In no event shall this
Agreement have any effect upon the stock options granted to Xxxxxxx
prior to the date of execution of this Agreement.
3.4 Entertainment, Travel and Similar Expense Reimbursement. Xxxxxxx is
hereby authorized to incur reasonable expenses for the promotion of the
Company's business, including entertainment, travel, lodging, meals,
and similar expenses, and he shall be reimbursed therefore, by the
Company upon his presentation of itemized accounts of such
expenditures.
3.5 Health, Dental, and Disability Insurance Arrangements and Programs.
The Company shall provide to Xxxxxxx (including coverage of the
dependents of Xxxxxxx) health, medical, dental, and disability
insurance benefits comparable to those provided to the executive
officers of the Company either as a group or individually.
3.6 Vacation and Leave; Holidays. Xxxxxxx shall be entitled to (i)
vacation leave with pay (at his regular compensation rate at the time
such vacation leave is taken) during each calendar year of the Period
of Employment, and (ii) reasonable periods of sick leave with pay (at
his regular compensation rate at the time such sick leave is taken)
commensurate with his position, in accordance with Company policy as
established by the Board of Directors. Any annual vacation leave not
taken by Xxxxxxx during a calendar year shall accumulate, and, at the
option of Xxxxxxx, he may elect to receive his vacation compensation
(at his regular compensation rate at the time of such election) in lieu
of taking vacation leave. Xxxxxxx shall be entitled to all paid
holidays observed by the Company.
3.7 Automobile and Cellular Phone. At Xxxxxxx'x sole option, the
Company shall (i) pay to Xxxxxxx an automobile allowance of five
hundred dollars ($500) per month, payable on the first day of each
month, or (ii) the use of a Company owned or leased automobile, the
make and model to be selected and determined in Xxxxxxx'x sole
discretion and pay all costs and expenses of
EMPLOYMENT AGREEMENT PAGE 2
operation, including without limitation insurance (in such amounts as
mutually agreed upon by Xxxxxxx and the Company), gasoline, repairs,
maintenance. Furthermore, and the Company shall provide to Xxxxxxx, at
the sole cost and expense of the Company, a cellular phone to assist
Xxxxxxx in the performance of his duties and responsibilities as an
executive officer and employee of the Company.
3.8 Life Insurance. The Company shall provide to Xxxxxxx and maintain
term insurance, at the Company's sole cost and expense, covering the
life of Xxxxxxx in the face amount of $250,000 (the "Life Insurance
Policy"), the proceeds of which shall be payable to such beneficiary
that Xxxxxxx shall designate or, in the event of failure to designate a
named beneficiary, shall be payable to the estate of Xxxxxxx. Upon
expiration of the Period of Employment, the Company shall assign and
transfer to Xxxxxxx, without any payment therefore by Xxxxxxx, the Life
Insurance Policy in the event ownership thereof is not maintained in
the name of Xxxxxxx.
3.9 No Limitation on Other Obligations of Company. No regular
compensation or bonus compensation payment or the providing of any
other compensation benefits to Xxxxxxx pursuant to this Agreement shall
in any way limit or reduce any other obligation of the Company to
Xxxxxxx as an employee of the Company. Xxxxxxx shall be entitled to
participate in and receive benefits under any employee benefit plan or
arrangement made available by the Company (both as of the effective
date of this Agreement as well as in the future) to its employees or to
any executive officer of the Company.
3.10 Employment Termination. In the event of (i) a termination (as
defined below) of Xxxxxxx'x employment with the Company prior to the
end of the Period of Employment, or (ii) termination of Xxxxxxx'x
employment at the end of the Period of Employment, the Company shall
pay or provide the following:
3.10.1 Lump Sum Payment of Regular Compensation and Bonus
Compensation. The Company shall pay to Xxxxxxx (i) in a lump
sum an amount equal to the regular compensation payments for
the remainder of the Period of Employment at the salary rate
of regular compensation as provided in Section 3.1 to which
Xxxxxxx would have been entitled if Xxxxxxx had remained in
the employ of the Company for the remainder of the Period of
Employment, (ii) the automobile allowance, in such amount and
payable in accordance with and as provided by Section 3.7
during the remainder of the Period of Employment, and (iii)
payment of the insurance premiums on the policies of insurance
required to be maintained by the Company in accordance with
and as provided by Sections 3.8 and 4.1 during the remained of
the Period of Employment. The lump sum payment pursuant to (i)
of this Section 3.10.1 shall be paid to Xxxxxxx on or before
the date of termination of Xxxxxxx'x employment pursuant to
Section 3.10.
3.10.2 Incentive Compensation and Stock Options. The Company
shall provide Xxxxxxx with the following (or the value
thereof):
(i) incentive compensation (including, but not
limited to, the right to receive and exercise stock
options and stock appreciation rights and to receive
restricted stock and grants thereof and similar
incentive compensation benefits) to which Xxxxxxx
would have been entitled under all incentive
compensation plans maintained by the Company if
Xxxxxxx had remained in the employ of the Company for
the remainder of the Period of Employment; and
EMPLOYMENT AGREEMENT PAGE 3
(ii) the employee benefits (including, but not
limited to, coverage under medical, dental,
disability and life insurance arrangements or
programs) to which Xxxxxxx would have been entitled
under all employee benefit plans, programs and
arrangements maintained by the Company in the event
Xxxxxxx had remained employed by the Company for the
remainder of the Period of Employment.
3.10.3 Release of Personal Liability for the Company's
Liabilities. The Company shall obtain the complete release of
Xxxxxxx from all personal liability for any and all of the
Company's debts, including but not limited to leases and
promissory notes, and provide Xxxxxxx with acceptable proof
(as determined in Xxxxxxx'x sole discretion) of said release
no later than ten business days prior to the last day of
Xxxxxxx'x employment by the Company.
3.10.4 Lump Sum Payment of Other Amounts Due Xxxxxxx. The
Company shall pay to Xxxxxxx in a lump sum an amount equal to
the sum of (i) all accrued but unpaid compensation that has
been previously deferred due to the Company's financial
difficulties, (ii) all amounts advanced and/or loaned by
Xxxxxxx to the Company, and (iii) any and all other amounts
due Xxxxxxx. The Company shall pay the lump sum payment
pursuant to this Section 3.10.4 to Xxxxxxx on or before the
last day of Xxxxxxx'x employment.
3.11 Termination and Cause Defined. The term "termination" shall mean
termination by the Company, upon 60 days' prior written notice to
Xxxxxxx, of the employment of Xxxxxxx with the Company for any reason
other than cause (as defined below), or resignation of Xxxxxxx upon the
occurrence of either (i) a significant change in the nature or scope of
Xxxxxxx'x authorities or duties from those described in Section 2, a
reduction in his compensation or breach by the Company of any other
provision of this Agreement, (ii) a reasonable determination by Xxxxxxx
that, as a result of a change in circumstances regarding his duties, he
is unable to exercise his authorities, powers, functions or duties
attached to his executive officer position or positions with the
Company as contemplated in Section 2, or (iii) a change in control
within the meaning of Section 3.12. The term "cause" means gross
misconduct materially injurious to the Company or willful and material
breach of this Agreement by Xxxxxxx that results in material injury to
the Company.
3.12 Change of Control Defined. For purposes of this Agreement, each of
the following specified events shall be deemed a "change of control":
(i) any third person, including a "group" as defined in Sections
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended, becomes the beneficial owner of shares of the Company or of
proxies or other rights pertaining to the Company which carry 25
percent or more of the total number of votes for the election of the
Board of Directors of the Company or with respect to a merger,
consolidation or sale; (ii) as result of, or in connection with, any
cash tender offer, merger, or other business combination of the
foregoing, the persons who were directors of the Company immediately
prior to such event cease to constitute a majority of the Board of
Directors of the Company; (iii) the approval of an agreement providing
either for a transaction or series of transactions by which the Company
will cease to be an independent publicly-owned company or for a sale,
lease or other disposition of all or substantially all of the assets of
the Company; (iv) the determination by Xxxxxxx, in his sole discretion,
that a Change of Control has occurred; or following any public offering
of securities of the Company during any period of 24 consecutive months
the persons who were members of the Company's Board of Directors at the
commencement of the period cease for any reason to constitute a
majority of the Company's Board of Directors.
EMPLOYMENT AGREEMENT PAGE 4
4. Disability or Death.
4.1 Disability. The Company shall provide and maintain, at its sole
cost and expense, a policy of disability insurance covering the
sickness, disability or incapacity of Xxxxxxx (the "Disability
Policy"), the terms, extent of coverage (including the nature of
disabilities cover thereby) and the issuer thereof shall be within the
sole discretion of Xxxxxxx. In no event shall the Disability Policy
provide for a monthly disability payment to Xxxxxxx of less than $3,334
per month in the event of his disability within the meaning of the
Disability Policy. During any period from the date of the commencement
of period that Xxxxxxx'x is absent from work due to sickness,
disability or incapacity and until commencement of his receipt of
payments of the monthly disability benefits under the Disability
Policy, Xxxxxxx shall continue to be entitled to receive and the
Company shall pay and provide his regular compensation, bonus
compensation and the other compensation and benefits, in accordance
with and as provided in Sections 3.1 through 3.8 during the remaining
Period of Employment. The Company hereby agrees and acknowledges that
the Company undertakes and assumes the risk of all such disability,
incapacity or inability of Xxxxxxx during the Period of Employment
(except to the extent such risk is insured against pursuant to the
Disability Policy) to perform the services contemplated by Section 2 by
reason of sickness, disability, incapacity or other inability. Upon
expiration of the Period of Employment, the Company shall assign and
transfer to Xxxxxxx, without any payment therefore by Xxxxxxx, the
Disability Policy in the event ownership thereof is not maintained in
the name of Xxxxxxx.
4.2 Death. In the event Xxxxxxx shall die during the period Xxxxxxx is
employed by the Company pursuant to this Agreement, this Agreement
shall terminate effective on the last day of the month following the
date of death, and the Company shall pay to the wife of Xxxxxxx, or if
unmarried at the time of his death, to the estate of Xxxxxxx, the
regular compensation and bonus compensation payable to Xxxxxxx pursuant
to Sections 3.1 and 3.2 and for a period of three (3) months following
the effective date of such employment termination pursuant to this
Section 4.2, payable on the dates provided for such compensation
payment there under.
4.3 Accrued Compensation; Benefits; Reimbursement. In the event of
termination of this Agreement pursuant to Section 4.1 and/or Section
4.2 of this Agreement, Xxxxxxx (or his wife or if unmarried on the date
of his death his estate) shall be entitled to receive accrued and
unpaid expense reimbursements, automobile allowance and any unpaid
bonus amounts awarded to Xxxxxxx prior to such termination and stock
option grants awarded to Xxxxxxx prior to such termination exercisable
in accordance with the terms of such stock option grants, as well as
the benefits set forth Sections 3.10.3 and 3.10.4.
5. Termination for Cause. In the event the Board of Directors of the
Company determines in good faith that Xxxxxxx is guilty of willful misconduct or
gross negligence materially injurious to the Company in the performance of the
services contemplated by this Agreement, the Company shall have the right, by
resolution unanimously adopted by all members (other than Xxxxxxx) of the Board
of Directors of the Company, to terminate this Agreement at the end of any month
by giving not less than 60 days' prior written notice to Xxxxxxx of its election
to so terminate this Agreement, and all obligations hereunder shall thereupon
terminate thereafter, except for those obligations set forth in Sections 3.10.3
and 3.10.4.
6. Non-Competition. During the period Xxxxxxx is employed by the
Company pursuant to this Agreement, Xxxxxxx may engage in any other employment
or pursuit of other endeavors which does not conflict with his ability to
perform his duties to the business interests of the Company, provided that such
other employment or pursuit of other endeavors does not violate the duty of
loyalty and care which
EMPLOYMENT AGREEMENT PAGE 5
Xxxxxxx has to the Company by reason of this Agreement or in his capacity as an
executive officer of the Company.
7. Confidentiality. During the period that Xxxxxxx is employed by the
Company, and for a period of one year thereafter, Xxxxxxx will not divulge to
anyone, other than the Company or persons designated by the Company in writing,
any confidential material information directly or indirectly useful in any
aspect of the business of the Company or any of its subsidiaries or affiliates,
as conducted from time to time, as to which Xxxxxxx is now, or at any time
during employment shall become, informed and which is not then generally known
to the public or recognized as standard practice.
8. Certain Provisions to Survive Termination; Etc. Notwithstanding any
termination of his employment under this Agreement, Xxxxxxx, in consideration of
his employment hereunder to the date of such termination, shall remain bound by
the provisions of Section 7, and consequently, in addition to all other remedies
that may be available to it, the Company shall be entitled to injunctive relief
for any actual or threatened violation of such Sections.
9. Non-Assignability. Neither party hereto shall have the right to
assign this Agreement or any rights or obligations hereunder without the written
consent of the other party.
10. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in the
City of Oklahoma City in accordance with the laws of the State of Oklahoma by
three arbitrators, one of whom shall be appointed by the Company, one by Xxxxxxx
and the third by the two arbitrators appointed by the Company and Xxxxxxx. If
the arbitrators appointed by the Company and Xxxxxxx cannot agree on the
appointment of a third arbitrator, then the third arbitrator shall be appointed
by the Chief Judge of the United States District Court of the Western District
of Oklahoma. The arbitration shall be conducted in accordance with the rules of
the American Arbitration Association, except with respect to the selection of
arbitrators which shall be as provided in this Section 10. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In the event that is shall be necessary or desirable for
Xxxxxxx to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of his rights under this
Agreement, he shall be entitled to recover from the Company reasonable
attorneys' fees and costs and expenses incurred by him in connection with the
enforcement of said rights, regardless of the final outcome.
11. Notice. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given forty-eight (48)
hours after depositing in the United States mail, certified mail, postage
prepaid, addressed to the party to receive such notice at the address set forth
herein below or such other address as either party may give to the other in
writing pursuant to written notice pursuant to this Section:
If to Xxxxxxx: Xx. Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
If to the Company: FullNet Communications, Inc.
000 Xxxxxx X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
12. General. The terms and provisions herein contained (i) may be
amended or modified only by a written instrument executed by the parties hereto,
and (ii) shall be construed and enforced in accordance
EMPLOYMENT AGREEMENT PAGE 6
with the laws in effect in the State of Oklahoma without regard to its conflicts
of law provisions. Failure by a party hereto to require performance of any
provision of this Agreement shall not affect, impair or waive such party's right
to require full performance at any time thereafter.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the 31st day of July, 2002.
"Company" FULLNET COMMUNICATIONS, INC.
By:
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Xxxxxxx X. Xxxxxxxx, Chief Executive Officer
"Xxxxxxx"
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Xxxxx X. Xxxxxxx
EMPLOYMENT AGREEMENT PAGE 7
