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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 24th day of May 1999, by and between Xxxxxxx
X. Xxxxxxxx, an individual currently residing at 000 Xxxxxxx Xxxxxxxx,
Xxxxxxxxxxxx, XX 00000 ("EXECUTIVE"), AmeriVision Communications, Inc., an
Oklahoma corporation maintaining business offices at 0000 Xxxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, and each successor in interest
(collectively the "COMPANY"), and Xxxxx Xxxxxx ("STOCKHOLDER").
BACKGROUND INFORMATION
The Company wishes to continue to obtain the services of Executive as
an executive of the Company and to create over time a shareholding in the
Company by Executive for the mutual benefit of Executive and the Company.
Stockholder supports the engagement of Executive and wishes to support his
continued service as set forth below. Executive is willing to serve as an
executive of the Company on the terms and conditions set forth below.
OPERATIVE PROVISIONS
1. Employment and Term.
The Company hereby employs the Executive and the latter hereby accepts
employment by the Company commencing as of May 24, 1999 ("the COMMENCEMENT
DATE") and continuing to the fifth anniversary date thereof (the "INITIAL
TERM"), which employment shall thereafter be automatically extended for
unlimited successive one-year periods (each a "SUCCESSOR TERM") unless it is
terminated during the pendency of any such Term, whether Initial or Successor,
by the occurrence of one of the events described in Section 8, hereof, or by one
party furnishing the other with written notice, at least six months prior to the
expiration of such Term, of an intent to terminate this Agreement upon the
expiration of such Term. If the Company, prior to, on or subsequent to the
Commencement Date, effects a merger with and into another entity such that it
then has no continuing legal existence, the Stockholder shall, in connection
with the consummation of such transaction, ensure to the extent possible that
the surviving entity assumes the obligations described hereunder. To the extent
that such an assumption is undertaken, references herein to the Company shall
also be deemed to refer to the party assuming its obligations hereunder.
2. Duties.
During the Term of this Agreement, whether Initial or Successor, the
Executive shall render to the Company services as its President and Chief
Executive Officer and shall perform such duties normally associated with that
position and commensurate with those performed by such officers of similarly
sized and functioning entities and as may be reasonably designated by and
subject to the supervision of the Company's Board of Directors, and he shall
serve in such additional capacities appropriate to his responsibilities and
skills as shall be designated by the Company, through action of its Board of
Directors. Specifically, Executive shall be responsible for all operations and
management of the Company (including any merged or otherwise legally
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affiliated entity) as well as finance, legal, strategy, and acquisitions and
shall report to the Board of Directors.
3. Base Compensation.
For the services to be rendered by the Executive under this Agreement
the Company shall pay him, while he is rendering such services and performing
his duties hereunder, and the Executive shall accept as full payment for such
service, a base compensation starting on the Commencement Date of not less than
$450,000 per year, payable in substantially equal installments coinciding with
the Company's normal employment compensation payment cycle or pursuant to such
other arrangements as the parties may agree upon (the "BASE COMPENSATION"). Such
Base Compensation shall be reviewed as of each anniversary of February 1, 1999
and may then be increased by action of the Company's Board of Directors; but
under no condition may the Executive's Base Compensation be decreased below the
amounts hereinabove set forth, or any higher amount then being paid to him,
regardless of any change in or diminution of the Executive's duties owed to the
Company. In any event, as of October 1, 1999, Executive's compensation shall be
adjusted to $600,000 per year. At such time, Company shall also pay Executive a
bonus in the amount of $100,000. Each year, effective on the anniversary of
February 1, 1999, Executive's compensation shall increase at the annual C.P.I.
rate of increase (up to 5%) in lieu of any Board action as described herein to
further increase Executive's salary for the ensuing year.
4. Stock Bonus.
On or promptly after May 24, 1999, the Executive shall receive from the
Company one or more certificates, registered in his name, representing one-half
percent (1/2%) of the shares of the Company's common stock that are issued and
outstanding as of the close of business on the date preceding the Commencement
Date; determined on a fully diluted basis inclusive of shares reserved for
issuance upon (a) the complete exercise of all then outstanding option, warrant
or rights grants (inclusive of the shares to be made the subject of the
Executive's option grants herein described) and employee stock incentive plans,
(b) the conversion of then outstanding preferred shares or convertible debt
instruments into shares of the Company's common stock, or (c) the consummation
of any then-authorized stock split or stock dividend provided that if at the
time of such intended issuance the Company constitutes a subsidiary of another
corporation or its corporate existence has been terminated as a result of its
merger into or consolidation with another corporation, then Executive shall
receive certificate(s) representing an identical ownership interest in the
ultimate parent of the Company or of the survivor of any such merger or
consolidation, or, if no such parent shall then exist, then in the survivor of
the merger or consolidation. The value of each such share as of the date of
issuance or date of vesting, as applicable, shall be determined by the issuer's
board of directors. The shares shall vest 25 percent on July 1, 1999 and 25
percent on the anniversary thereof for each year of service to the Company by
Executive after July 1, 1999 up to three years of service. In addition, the
Company shall pay at the time of each such vesting a cash bonus to Executive
equal to an amount such that after the payment by Executive of all federal,
state and local income taxes, self-employment taxes, or other taxes (including
any interest or penalties, arising from the actions or inactions of
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the Company, imposed with respect thereto) ("INCOME TAXES") imposed on the
receipt of the stock being vested and on such bonus, Executive retains an amount
of the bonus equal to the Income Taxes imposed on him by the vesting of the
stock and by the bonus payments.
5. Fringe Benefits; Reimbursement of Expenses; Stock Option Grants.
During his period of employment hereunder, the Executive shall be
entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in the medical, dental and group insurance,
pension and other retirement benefits and disability and other fringe benefit
plans and vacation as the Company may make generally available to all of its
most senior executive employees from time to time; subject, however, as to such
plans, to such budgetary constraints or other limitation as may be imposed by
the Board of Directors of the Company from time to time; and (b) reimbursement
for all normal and reasonable expenses necessarily incurred by him in the
performance of his obligations hereunder, subject in each case to such
reasonable substantiation requirements as may be imposed by the Company.
The Executive is hereby granted a non-qualified option (the "FIRST
OPTION") to acquire from the Company authorized but unissued shares of its
common stock in a quantity equal to three percent (3%) of the Company's then
issued and outstanding common stock, to be determined on a fully diluted basis
inclusive of shares reserved for issuance upon (a) the complete exercise of all
then outstanding option, warrant or rights grants (inclusive of the shares to be
made the subject of Executive's option grant herein described) and employee
stock incentive plans, (b) the conversion of then outstanding preferred shares
or convertible debt instruments into shares of the Company's common stock, or
(c) the consummation of any then-authorized stock split or stock dividend
provided that if at the time of such intended issuance the Company constitutes a
subsidiary of another corporation or its corporate existence has been terminated
as a result of its merger into or consolidation with another corporation, then
Executive shall receive certificate(s) representing an identical ownership
interest in the ultimate parent of the Company or of the survivor of any such
merger or consolidation, or, if no such parent shall then exist, then in the
survivor of the merger or consolidation. The exercise price of each share
subject of the First Option grant shall in consideration of Executive's prior
agreement with the Company be the fair value at February 1, 1998 as determined
by the Company's Board of Directors, and assuming the Executive is then an
employee of the Company or has previously terminated such employment under the
"Good Reason" provisions of Section 8e below, the date upon which exercise of
incremental portions of the First Option may commence shall be determined in the
following manner:
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The following percentage shall be exercisable
of the First Option shares commencing
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25% on July 1, 1999
25% July 1, 2000
25% July 1, 2001
25% July 1, 2002
and each exercise right shall continue in force for a period of five years
following its commencement, irrespective of the Executive's subsequent
employment status with the Company. Further, on the date of any sale of all or
substantially all of the Company's assets or any merger or consolidation
transaction as the result of which the Company is not the surviving entity
(other than any merger effected for the principal purpose of reincorporation in
another jurisdiction or for another purpose not resulting in at least a 30%
change in the ultimate beneficial ownership of the Company), the Executive (or,
in the event of his legal incapacity, his legal representative(s)) shall also be
entitled to exercise the First Option as to all shares then otherwise ineligible
for exercise, and within the six-month period following his death, the
Executive's representative(s) or Beneficiary(ies) shall be entitled to exercise
the First Option as to one-half of all shares which would otherwise be
ineligible for acquisition as of the date of his death. Shares made the subject
of the First Option grant as to which no exercise right shall have commenced on
the date of the Executive's termination of employment for other than death or
Good Reason, shall be returned to the status of authorized but unreserved shares
and shall no longer be available for acquisition.
Three years after the Commencement Date, the Company shall grant the
Executive if the Executive is still employed by the Company, an option ("SECOND
OPTION") to acquire from the Company authorized but unissued shares of its
common stock in a quantity equal to two percent (2%) of the then issued and
outstanding common stock of the Company, determined at that time on a fully
diluted basis as described herein. The exercise price of each share to be made
the subject of such grant shall be twenty-five percent higher than the exercise
price of the First Option. The Executive's right to exercise fifty percent of
the options granted in this Second Option shall vest 48 months after the
Commencement Date and fifty percent 60 months after the Commencement Date and
such right once vested shall continue for five years following the Initial Term
irrespective of the Executive's subsequent employment status with the Company.
Unless otherwise stated, this Second Option shall have the same provisions,
terms, and conditions as the First Option including those for death and Good
Reason Termination.
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The Executive's right to maintain an additional business office at a
location of his choice shall apply throughout the Term of this Agreement. The
Company shall pay all reasonable commuting expenses of the Executive in
maintaining this arrangement, as well as the reasonable commuting costs incurred
by the Executive's wife in making four round-trip visits during each calendar
year. Company will fund the costs of this separate business office.
6. Proprietary Interests.
During or after the expiration of his term of employment with the
Company, the Executive shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Company, any proprietary or confidential information of
the Company received by the Executive by virtue of such employment, without
first being in receipt of the Company's written consent to do so and in
compliance with the terms of any other confidentiality or non-competition
agreement which the Executive may hereafter execute with the Company; provided
that nothing contained herein shall restrict the Executive's use or disclosure
of such information known to the public (other than that which he may have
disclosed in breach of this Agreement), or as required by law (so long as
Executive gives the Company prior notice of such required disclosure). Company
acknowledges that Executive has outside legal matters for which Executive is
responsible. Executive pledges that such duties will not interfere with
Company's interests.
7. Remedies for Breach of Obligations.
a. Injunctive Relief. The parties agree that the services of the
Executive are of a personal, specific, unique and extraordinary character and
cannot be readily replaced by the Company. They further agree that in the course
of performing his services, the Executive will have access to various types of
proprietary information of the Company, which, if released to others or used by
the Executive other than for the benefit of the Company, in either case without
the Company's consent, could cause the Company to suffer irreparable and
continuing injury. Therefore, the confidentiality obligations of the Executive
established under Section 6 hereof shall be enforceable by the Company both at
law and in equity, by injunction, specific performance, damages or other remedy;
and the right of the Company to obtain any such remedy shall be cumulative and
not alternative and shall not be exhausted by any one or more uses thereof.
b. Arbitration. In the event of any dispute between the parties under
or relating to this Agreement or relating to the Executive's employment by the
Company, such dispute shall be submitted to and settled by arbitration in
Oklahoma County, Oklahoma, in accordance with the rules and regulations of the
American Arbitration Association then in effect. The arbitrator(s) shall have
the right and authority to determine how their award or decision as to each
issue and matter in dispute may be implemented or enforced. Any decision or
award shall be final and conclusive on the parties; there shall be no appeal
therefrom other than for claimed bias, fraud or misconduct by the arbitrator(s);
judgment upon any award or decision may be entered in any court of competent
jurisdiction in the State of Oklahoma or elsewhere; and the parties hereto
consent to the application by any party in interest to any court of competent
jurisdiction for
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confirmation or enforcement of such award. The party against whom a decision is
made shall pay the fees of the American Arbitration Association. Notwithstanding
the foregoing, the Company, at its sole option shall be entitled to enforce its
rights, as contemplated by Section 7a hereof, to injunctive and other equitable
relief in the event of a breach of Section 6 hereof or of any material term of a
confidentiality or non-competition agreement to which the Company and the
Executive shall then be parties, either by arbitration pursuant to this Section
7b, or directly in any court of competent jurisdiction.
8. Termination of Employment.
a. Death. The Executive's employment hereunder shall terminate in the
event of the Executive's death. Except for (i) any salary and benefits accrued,
vested and unpaid as of the date of any such termination, (ii) any benefits to
which the Executive or his heirs or personal representatives may be entitled
under and in accordance with the terms of any employee benefit plan, policy or
program maintained by the Company, and (iii) the limited right to exercise the
Option described in Section 5 above, the Company shall be under no further
obligation hereunder to the Executive or to his heirs or personal
representatives, and the Executive or his heirs or personal representatives no
longer shall be entitled to receive any payments or any other rights or benefits
under this Agreement.
b. Disability. The Company may terminate the Executive's employment
hereunder for "DISABILITY," if an independent physician mutually selected by the
Executive (or his legal representative) and the Board of Directors or its
designee (or, upon an inability of such parties to effect the selection within a
period of ten days, by the independent certified public accounting firm then
serving the Company) shall have determined that the Executive has been
substantially unable to render to the Company services of the character
contemplated by Section 2 of this Agreement, by reason of a physical or mental
illness or other condition, for more than 60 consecutive days or for shorter
periods aggregating more than 120 days in any period of 12 consecutive months
(excluding in each case days on which the Executive shall be on vacation). In
the event of such Disability, the Executive shall be entitled to receive any
salary and benefits accrued, vested and unpaid as of the date of any such
termination and any benefits to which the Executive may be entitled under and in
accordance with the terms of any employee benefit plan, policy or program
maintained by the Company; and upon the Executive's receipt of such salary and
benefits the Company shall be under no further obligation hereunder to the
Executive and the Executive no longer shall be entitled to receive any payments
or any other rights or benefits under this Agreement.
c. Termination by the Company for Cause. The Company may terminate the
Executive's employment hereunder for "CAUSE." For purposes of this Agreement,
"Cause" shall mean any of the following:
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i. The Executive's repeated willful misconduct or gross
negligence;
ii. The Executive's repeated conscious disregard of his
obligations hereunder or of any other written duties
reasonably assigned to him by the Board of Directors;
iii. The Executive's repeated conscious violation of any
provision of the Company's by-laws or of its other
stated policies, standards or regulations;
iv. The Executive's commission of any act involving
fraud; or
v. A determination that the Executive has demonstrated a
dependence upon any addictive substance, including
alcohol, controlled substances, narcotics or
barbiturates;
provided, however, that if the Board of Directors of the Company desires to
terminate the Executive for any of the reasons set forth in: (1) clause (i),
(ii) or (iii) of this Section 8c, the Company, within the 60-day period
immediately following each alleged commission of a proscribed act or omission,
shall have furnished to the Executive a written description of the allegedly
proscribed act or omission and a statement advising him that the Company views
such conduct as being of the type which could lead to a termination of the
Executive for Cause; (2) clause (ii) or (iii) of this Section 8c, the Board must
be able to demonstrate that the Executive has been furnished with a copy of the
written duty, by-law provision, policy, standard or regulation, the violation of
which the Executive is being accused, at a time prior to the alleged commission
of the violation: or (3) clause (iv) or (v) of this Section 8c, the Board shall
first be required to obtain an opinion from Company counsel to the effect that
there is an adequate basis upon which either such determination may be made.
Except for any salary and benefits accrued, vested and unpaid as of the date of
any such termination, the Company shall be under no further obligation hereunder
to the Executive and the Executive no longer shall be entitled to receive any
payments or any other rights or benefits, under this Agreement.
d. Termination by the Company Other Than for Cause. The Company may
terminate the Executive's employment hereunder upon the expiration of the
Initial Term or any Successor Term, provided that notice of termination is
furnished as set forth in Section 1, and subject to the right of the Executive,
within such notification period, to effect his own Good Reason termination as
described in subsection 8e below. In the event of either such termination, the
Executive shall be entitled to receive any salary and benefits accrued, vested
and unpaid as of the date of any such termination and any benefits to which the
Executive may be entitled under and in accordance with the terms of any employee
benefit plan, policy or program maintained by the Company, as well as, in the
event that the Executive shall have timely effected a Good Reason termination,
those benefits authorized under the provisions of subsection 8e; and following
his receipt of such salary and benefits the Company shall be under no further
obligation hereunder to the Executive and the Executive no longer shall be
entitled to receive any payments or any other rights or benefits under this
Agreement.
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e. Termination by the Executive for Good Reason. Notwithstanding
anything herein to the contrary, the Executive shall be entitled to terminate
his employment hereunder for "Good Reason" without breach of this Agreement. For
purposes of this Agreement, "GOOD REASON" shall exist upon the occurrence of any
of the following events or matters, in each case without the Company first being
in receipt of the Executive's written consent thereto, and the period of time
within which the Executive shall be required to exercise a Good Reason
termination of service shall be 30 days, measured from the date upon which he is
notified by the Company of such occurrence, or, with respect to the matter
identified in clause (iii) below, from the date upon which the Executive
notifies the Company of his belief that a material breach has occurred, and,
with respect to the matter identified in clause (vi) below, from the later of
the dates upon which the Executive's or the Company's physician statement is
furnished:
i. A directed change in the Executive's place of
employment in violation of Section 5 above;
ii. A material adverse change in, or a substantial
elimination of, the duties and responsibilities of
the Executive;
iii. A material breach by the Company of its obligations
hereunder;
iv. A change in control of the Company;
v. Receipt by the Executive of the Company's notice that
it intends to terminate him other than for Cause
either at the end of a particular Term of employment,
whether Initial or Successor; or
vi. Impairment of the Executive's health to an extent
that makes his continued performance of duties under
this Agreement hazardous to his physical or mental
health, provided that the Executive shall have
furnished the Company with a written statement from a
qualified physician to that effect, and, provided
further, that, at the Company's request, made within
ten days after its being furnished with a copy of
such statement, the Executive shall submit to an
examination by a physician selected by the Company
and such physician shall have concurred in writing
with the conclusion of the Executive's physician.
For purposes of clause (iv) above, a "CHANGE IN CONTROL OF THE COMPANY" shall
mean (a) the acquisition, directly or indirectly, after the date hereof, by any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as in effect on the date hereof), of voting power over
voting shares of the Company that would entitle the holder(s) thereof to cast at
least 25% of the votes that all shareholders would be entitled to cast in the
election of directors of the Company, provided that such term shall not be
deemed to apply to an acquisition by one or more institutional underwriters
directly from the Company in accordance with the conditions of a registration
statement theretofore filed with and declared effective by the United States
Securities and Exchange Commission; or (b) the failure, at any time within the
Term of this Agreement (inclusive of both Initial and Successor), of the
individuals who at the Commencement Date shall constitute the Company's Board of
Directors to constitute at least a
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majority of such membership, unless the election of each director who is not a
director at the Commencement Date shall have been approved in advance by
directors representing at least 75% of the directors then in office who are
directors at the Commencement Date.
In the event of a Good Reason termination by the Executive within the
Initial or any Successor Term, the Executive shall be entitled to continue to
receive from the Company the Executive's current annual Base Compensation
through the Initial Term or Successor Term as applicable, and in addition
Executive shall receive the Executive's current annual Base Compensation payable
over the succeeding 12-month period from the effective date of termination.
Under either circumstance, the Executive shall also be entitled to continue to
receive full vesting of all Stock Bonus and Stock Option Grants as provided in
Sections 4 and 5. In addition, the Company shall pay at the time of each such
vesting a cash bonus to the Executive as described above in Section 4. Except
for such termination compensation following any such termination, and except for
any salary and benefits accrued, vested and unpaid as of the date of any such
termination, the Executive no longer shall be entitled to receive any payments
or any other rights or benefits under this Agreement, and the Company shall have
no further obligation hereunder to the Executive following any such termination.
f. Termination by the Executive for Other Than Good Reason. The
Executive may terminate his employment hereunder upon the expiration of the
Initial Term or any Successor Term, provided that notice of termination is
provided as set forth in Section 1. In the event of such termination, the
Executive shall be entitled to receive any salary and benefits accrued, vested
and unpaid as of the date of any such termination and any benefits to which the
Executive may be entitled under and in accordance with the terms of any employee
benefit plan, policy or program maintained by the Company; and following his
receipt of such salary and benefits to the Company shall be under no further
obligation hereunder to the Executive and the Executive no longer shall be
entitled to receive any payments or any other rights or benefits under this
Agreement.
g. Life and Disability Insurance Coverage. If termination of employment
is due to any reason other than death, the Executive shall have the right,
subject to receiving approval of the Company (which shall not be unreasonably
withheld), to purchase any policy of insurance on his life or insuring against
his disability which is owned by the Company, the exercise of which right shall
be made by notice furnished to the Company within 30 days subsequent to the date
of termination. The purchase price of each policy of life insurance shall be the
sum of its interpolated terminal reserve value (computed as of the closing date)
and the proportional part of the gross premium last paid before the closing date
which covers any period extending beyond that date; or if the policy to be
purchased shall not have been in force for a period sufficient to generate an
interpolated terminal reserve value, the price shall be an amount equal to all
net premiums paid as of the closing date. The purchase price of each disability
income policy shall be the sum of its cash value and the proportional part of
the gross premium last paid before the closing date which covers any period
extending beyond that date. The purchase of any insurance policy by the
Executive shall be closed as promptly as may be practicable after the giving of
notice, in no event to exceed 30 days therefrom.
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h. Termination Plan. The provisions of subsections 8a-g, inclusive,
shall be eliminated and be of no further legal effect immediately following the
adoption by the Company's Board of Directors of a resolution, voluntarily joined
in by the Executive, either in his capacity as a member thereof or, if he is
then not such a member, individually, approving a termination of employment plan
applicable to the Executive and all other elected officers of the Company.
9. Excise Taxes.
Notwithstanding anything herein to the contrary, in the event any
payments to the Executive hereunder are determined by the Company to be subject
to the tax imposed by Section 4999 of the Code or any similar federal or state
excise tax, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the "EXCISE TAX"), the
Company shall pay to the Executive at the time of his termination an additional
cash amount (the "GROSS-UP PAYMENT") such that after the payment by Executive of
all federal, state or local income taxes, Excise Taxes or other taxes (including
any interest or penalties imposed with respect thereto) imposed upon the receipt
of the Gross Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax, imposed on the severance payments provided herein.
For purposes of determining whether any payments to the Executive
hereunder will be subject to the Excise Tax and the amount of such Excise Tax:
a. any other payments or benefits received or to be received by the
Executive in connection with a Change in Control or the termination of
employment (whether pursuant to the terms of this Agreement or of any other
plan, arrangement or agreement with the Company) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to the Executive, other payments
or benefits (in whole or in part) do not constitute parachute payments under
Section 280G of the Code, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code;
b. the amount of the severance payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (i) the total amount
of the severance payments or (ii) the amount of excess parachute payments within
the meaning of Sections 280G(b)(1 ) and (4) (after applying clause (a), above);
and
c. the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
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If the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder at the time of termination or employment, the
Executive shall repay to the Company, at the time the reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction. If the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of termination of employment, the Company shall
make an additional Gross-Up Payment to the Executive in respect of such excess
at the time the amount of such excess is finally determined.
10. Reduction in Payments.
a. For purposes of this Section 10, (i) "PAYMENT" shall mean any
payment or distribution in the nature of compensation to or for the benefit of
the Executive, whether paid or payable pursuant to this Agreement or otherwise,
(ii) "AGREEMENT PAYMENT" shall mean a Payment paid or payable pursuant to this
Agreement (disregarding this Section 10), (iii) "NET AFTER TAX RECEIPT" shall
mean the Present Value of a Payment net of all taxes imposed on the Executive
with respect thereto under Sections 1 and 4999 of the Internal Revenue Code of
1986, as amended (the "CODE"), determined by applying the highest marginal rate
under Section 1 of the Code which applied to the Executive's taxable income for
the immediately preceding taxable year, (iv) "PRESENT VALUE" shall mean such
value determined in accordance with Section 280G(d)(4) of the Code, and (v)
"SAFE HARBOR" shall mean $1.00 less than three times the Executive's "base
amount" within the meaning of that term in Section 280G of the Code.
b. Anything in this Agreement to the contrary notwithstanding, in the
event such accounting firm that may be agreed upon by the Company and the
Executive (the "ACCOUNTING FIRM") shall determine that receipt of all Payments
would subject the Executive to tax under Section 4999 of the Code, it shall
determine whether the receipt of the Safe Harbor would result in greater Net
After Tax Receipts to the Executive than receipt of all the Agreement Payments.
If such firm determines that the receipt of the Safe Harbor would so result, the
aggregate Payments shall be reduced to the Safe Harbor as provided below.
If the Accounting Firm determines that aggregate Payments should be
reduced to the Safe Harbor, the Company shall promptly give the Executive notice
to that effect and a copy of the detailed calculation thereof, and the Executive
may elect, in his sole discretion, which and how much of the Agreement Payments
or any other Payments shall be eliminated or reduced (as long as after such
election the Present Value of the aggregate Payments equals the Safe Harbor),
and shall advise the Company in writing of his election within ten days of his
receipt of notice. If no such election is made by the Executive within such
ten-day period, the Company may elect which of the Agreement Payments shall be
eliminated or reduced (as long as after such election the Present Value of the
aggregate Payments equals the Safe Harbor) and shall notify the Executive
promptly of such election. All determinations made by the Accounting Firm under
this Section 10 shall be binding upon the Company and the Executive and shall be
made within 60 days of a termination of employment of the Executive. As promptly
as practicable following such determination, the Company shall pay or distribute
for the benefit of the Executive such Agreement Payments as are then due to the
Executive under this Agreement and shall promptly pay to or distribute for the
benefit of the Executive in the future such Agreement Payments as
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become due to the Executive under this Agreement. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. If the Accounting Firm
determines that no tax is payable by the Executive pursuant to Section 4999 of
the Code, it shall furnish the Executive with a written opinion that failure to
report such tax on the Executive's applicable federal income or excise tax
return would not result in the imposition of a negligence or similar penalty.
c. While it is the intention of the Company and the Executive to reduce
the amounts payable or distributable to the Executive hereunder only if the
aggregate Net After Tax Receipts to the Executive would thereby be increased, as
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the Company to or
for the benefit of Executive pursuant to this Agreement which should not have
been so paid or distributed ("OVERPAYMENT") or that additional amounts which
will have not been paid or distributed by the Company to or for the benefit of
the Executive pursuant to this Agreement could have been so paid or distributed
("UNDERPAYMENT"), in each case, consistent with the calculation hereunder. In
the event that the Accounting Firm, based upon the assertion of a deficiency by
the Internal Revenue Service against either the Company or the Executive which
the Accounting Firm believes has a high probability of success, determines that
an Overpayment has been made, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be payable by the Executive
to the Company if and to the extent such deemed loan and payment would not
either (i) reduce the amount on which the Executive is subject to tax under
Section 1 and Section 4999 of the Code or (ii) generate a refund of such taxes.
In the event that the Accounting Firm determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive together with interest at the applicable federal
rate provided for in Section 7872(f)(2) of the Code.
11. Indebtedness of Executive.
If, during the course of his employment, the Executive becomes indebted
to the Company for any reason, the Company shall, if it so elects, have the
right to set-off and to collect any sums due it from the Executive out of any
amounts which it may owe to the Executive for unpaid compensation. In the event
that this Agreement terminates for any reason, all sums owed by the Executive to
the Company shall become immediately due and payable.
12. Miscellaneous Provisions.
a. Notice: All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be considered
properly given to the recipient party if furnished by hand delivery; by sending
a copy thereof by first class or express mail, postage prepaid, or by courier
service (with charges prepaid), in each case to the address indicated above or
to such other address as the recipient shall have provided in accordance with
the terms hereof; or by sending a copy thereof by whatever telecopier service
the recipient shall have designated below (or by subsequent notice provided in
accordance with the terms hereof). If the notice is sent by mail or courier
service, it shall be deemed to have been given to the
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recipient when deposited in the United States mail or courier service for
delivery to that party; or if by telecopier, when the sending party is in
receipt of documentary evidence that the transmission has been successfully
completed. Whenever the furnishing of notice is required, the same may be waived
by the party entitled to receive such notice.
b. Assignability: The Company may assign this Agreement to, and only
to, an entity owned more than 50% by the Company (directly or indirectly), and
which acquires all or substantially all of the Company's business, and upon such
assignment this Agreement shall inure to the benefit of and be binding upon such
entity. Neither this Agreement nor any right or interest hereunder shall be
assignable by Executive but shall inure to the benefit of and be binding upon
him, his Beneficiaries and legal representatives.
c. Nontransferability of Options: The First Option and the Second
Option are not transferable by the Executive otherwise than by will or the laws
of descent and distribution. During Executive's lifetime, only Executive may
exercise the First Option and the Second Option. This Option may not be
transferred, assigned, pledged, hypothecated, or otherwise disposed by the
Executive during his lifetime, whether by operation of law or otherwise, and is
not subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation, or other disposition of this Option contrary
to the provisions hereof, and the levy of an attachment or similar process upon
the First Option and the Second Option, shall be null and void and without
effect. The Company shall have the right to terminate the First Option and the
Second Option in the event of such attempted transfer, assignment, pledge,
hypothecation, or other disposition, or levy of attachment or similar process,
by notice to that effect to the Executive, provided, however, that termination
of the First Option and the Second Option hereunder shall not prejudice any
rights or remedies which the Company may have under this Agreement or otherwise.
d. Restrictions on the Transferability of Shares: The shares of common
stock of the Company received under Section 4 above are not transferable other
than after they have vested in accordance with such Section or by will or the
laws of descent and distribution, or as set forth in this Section 12. Any
attempted transfer, assignment, pledge, hypothecation, or other disposition of
any such shares contrary to the provisions hereof shall be null and void and
without effect. The certificate(s) evidencing such shares described in Section 4
shall bear a legend indicating that the transferability of the shares is
governed by this Agreement.
e. Entire Agreement: This Agreement, and any other document referenced
herein, constitute the entire understanding of the parties hereto with respect
to the subject matter hereof, and no amendment, modification or alteration of
the terms hereof shall be binding unless the same be in writing, dated
subsequently to the date hereof and duly approved and executed by each of the
parties hereto. This Agreement supersedes in its entirety the Employment
Agreement dated January 27, 1998 between the Executive and the Company.
Furthermore, Xxxxx Xxxxxx pledges that if any document, contract or agreement
executed by Xxxxx Xxxxxx conflicts as to the duties stated in such document,
contract, or agreement with the duties as outlined in Section 2 of this
Agreement, the terms of this Agreement as to duties shall prevail over any
conflicting document, contract, or agreement.
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f. Enforceability: If any term or condition of this Agreement shall be
invalid or unenforceable to any extent or in any application, then the remainder
of this Agreement, and such term or condition except to such extent or in such
application, shall not be affected thereby and each and every term and condition
of this Agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
g. Governing Law: This Agreement shall be deemed to have been made in
and shall be construed and interpreted in accordance with the laws of the State
of Oklahoma without giving effect to principles of conflicts of laws.
h. Counterparts: This Agreement may be executed by any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
i. Binding Effect: Each of the provisions and agreements herein
contained shall be binding upon and inure to the benefit of the personal
representatives, devisees, heirs, successors, transferees and assigns of the
respective parties hereto.
j. Legal Fees and Costs: If a legal action is initiated by any party to
this Agreement against another, arising out of or relating to the alleged
performance or non-performance or any right or obligation established hereunder,
or any dispute concerning the same, any and all fees, costs and expenses
reasonably incurred by each successful party or his or its legal counsel in
investigating, preparing for, prosecuting, defending against, or providing
evidence, producing documents or taking any other action in respect of, such
action shall be the joint and several obligation of and shall be paid or
reimbursed by the unsuccessful party(ies).
k. Beneficiary: As used herein, the term "Beneficiary" shall mean the
person or persons (who may be designated contingently or successively and who
may be an entity other than an individual, including an estate or trust)
designated in writing to receive the expiration of Agreement or death benefits
described in Section 8 above. Each Beneficiary designation shall be effective
only when filed with the secretary of the Company during the Executive's
lifetime. Each Beneficiary designation filed with the Secretary will cancel all
designations previously so filed. If the Executive fails to properly designate a
Beneficiary or if the Beneficiary predeceases the Executive or dies before
complete distribution of the benefit has been made, the Company shall distribute
the benefit (or balance thereof) to the Executive's probate estate.
l. Adjustments: In the event of any change in the common stock of the
Company by reason of a stock dividend, forward or reverse stock split,
recapitalization, corporate merger or combination, exchange of shares with
another corporation, or a substantially similar event which dilutes the value of
or otherwise adversely affects such stock or the ability of Executive to
exercise his option rights, granted under Section 5 above, in accordance with
the terms of this Agreement (each a "CORPORATE FINANCE TRANSACTION"), the number
of shares made the subject of Executive's options and the price at which each
share is subject to purchase by Executive shall be adjusted appropriately to
ensure that the shares will be subject to acquisition by Executive at a price
and upon terms commensurate to those herein set forth. Moreover, the Company
shall be required to notify Executive promptly following its approval of a
Corporate Finance Transaction,
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and to provide Executive with the right to effect an exercise of the options
within whatever period of time then precedes the scheduled consummation of such
Transaction.
m. Board of Directors: Xxxxx Xxxxxx agrees individually and pledges
that he will vote in favor of and use his best efforts to ensure that as of the
Commencement Date the Board of Directors of the Company and any controlled or
affiliated entities will be Xxxxx Xxxxxx, Xxx X. Xxxxxxx, Xxxx X. Telling, Xxxx
Xxxxxxx and Executive. For so long as Executive continues to be employed
pursuant to this Employment Agreement, Xxxxx Xxxxxx agrees to vote his shares of
the Company stock in favor of election of Executive as a director of the Company
and any controlled or affiliated entities.
IN WITNESS WHEREOF, the parties have executed this Agreement.
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxxxx, Stockholder
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxx
AmeriVision Communications, Inc.
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxxxx, Chairman of the Board
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