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EXHIBIT 10.2
AMERILINK CORPORATION
Executive Employment Agreement
This Executive Employment Agreement ("Agreement") is made in Columbus, Ohio
effective as of ______________, 1994, by and between AMERILINK CORPORATION,
an Ohio corporation (the "Company"), and XXXXX X. XXXXXXX, an individual
residing in Columbus, Ohio (the "Executive"), who hereby agree as
hereinafter provided.
Section 1. Definitions. As used herein, the following terms shall have the
meanings set forth below.
"Aggregate Operating Income" shall have the meaning set forth in Section
5(b).
"Agreement" shall have the meaning set forth in the introductory paragraph
hereof.
"Base Compensation" shall have the meaning set forth in Section 5(a).
"Board of Directors" means the incumbent directors of the Company as of the
point in time reference thereto is made in this Agreement.
"Cause" shall have the meaning set forth in Section 11(b).
"COLA Adjustment" means a cost of living adjustment, which shall correspond
to the percent rise in prices for the preceding year as measured by the
Consumer Price Index for all Urban Consumers (CPI-UC), All City Average,
All Items (base year 1982-1984 = 100) published by the United States
Department of Labor, Bureau of Labor Statistics (the "Index"). The COLA
Adjustment shall be determined by multiplying the amount or figure to be
adjusted by a fraction, the numerator of which is the Index published for
the month in which occurs the date of adjustment and the denominator of
which is the Index published for the same month of the preceding year.
"Company" shall have the meaning set forth in the introductory paragraph of
this Agreement, and shall include Subsidiaries where appropriate.
"Competitive Business" shall have the meaning set forth in Section 10(a).
"Confidential Information" shall have the meaning set forth in Section
10(c).
"Covered Options" shall have the meaning set forth in Section 7.
"Disability" of the Executive means that, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties on a full-time basis for six consecutive months, or
for an aggregate of nine months in any consecutive 12-month period, and a
physician selected by the Executive is of the opinion that (a) he is
suffering from "total disability" as defined in the Company's disability
insurance program or policy and (b) he will qualify for Social Security
Disability Payments and (c) within 30 days after written notice thereof is
given by the Company to the Executive (which notice may be given at any
time after the end of such six or 12-month periods) the Executive shall not
have returned to the performance of his duties on a full-time basis. (If
the Executive is prevented from performing his duties because of
Disability, upon request by the Company the Executive shall submit to an
examination by a physician selected by the Company, at the Company's
expense, and the Executive shall also authorize his personal physician to
disclose to the selected physician all of the Executive's medical records.)
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"Employment Commencement Date" means the date on which the IPO is
consummated.
"Employment Period" means that period commencing on the Employment
Commencement Date and ending on the Employment Termination Date.
"Employment Termination Date" means the date the Employment Period
terminates as provided in Section 11.
"Executive" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"Fiscal Year" means the fiscal year of the Company.
"Incentive Bonus Compensation" shall have the meaning set forth in Section
5(b).
"Insured Stock Options Value" shall have the meaning set forth in Section
7.
"IPO" means the initial public offering of common shares of the Company.
"Net Income" shall mean the net income of the Company for any Fiscal Year
as reflected in its annual financial statements prepared in accordance with
generally accepted accounting principles and audited by Ernst & Young or
such other accounting firm of national reputation as may be selected by the
Company from time to time.
"Notice of Termination" shall have the meaning set forth in Section
11(a)(1).
"Qualifying Excess Income" shall have the meaning set forth in Section
5(b).
"Required Life Insurance Coverage Amount" shall have the meaning set forth
in Section 7.
"Restricted Period" shall have the meaning set forth in Section 10(a).
"Scheduled Employment Termination Date" means the later of (a) the day
immediately preceding the fifth anniversary of the Employment Commencement
Date or (b) such date as is specified by either the Company or the
Executive in a Notice of Termination delivered for the purpose of fixing
the Scheduled Employment Termination Date, provided the date so specified
shall be at least three (3) years after the date such Notice of Termination
is so delivered.
"Shareholders" shall have the meaning provided in the Shareholders
Agreement dated as of the date hereof among the Company, Xxxxx X. Xxxxxxx,
E. Xxx Xxxxxx and Xxxxxx X. Xxxxxxxx.
"Subsidiaries" means wholly owned subsidiaries of the Company.
Section 2. Employment and Term. The Company hereby employs the Executive,
and the Executive hereby accepts such employment by the Company, for the
purposes and upon the terms and conditions contained in this Agreement. The
term of such employment shall be for the Employment Period.
Section 3. Employment Capacity and Duties. The Executive shall be employed
throughout the Employment Period as the Chairman of the Board of Directors,
President and Chief Executive Officer of the Company. The Executive shall
have the duties and responsibilities incumbent with the positions of
Chairman of the Board of Directors, President and Chief Executive Officer
of the Company. Accordingly, and not by way of limitation, as Chairman of
the Board of Directors, President and Chief Executive Officer of the
Company, the Executive shall preside over all meetings of the shareholders
of the Company and of the Board of Directors, superintend and manage the
business of the Company and coordinate and supervise the work of its other
officers and employ, direct, fix the compensation of, discipline and
discharge its personnel, employ agents, professional advisors and
consultants and perform all functions of a general manager of the
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Company's business. The Company agrees that it will not, without the
Executive's written consent, relocate its principal executive offices to a
location outside Columbus, Ohio or require the Executive to be based
anywhere other than the Company's principal executive offices, except for
required travel on the Company's business to an extent substantially
consistent with present travel obligations.
Section 4. Executive Performance Covenants. The Executive accepts the
employment described in Section 3 and agrees to devote his full working
time and efforts (except for absences due to illness and appropriate
vacations) to the business and affairs of the Company and the performance
of the aforesaid duties and responsibilities. However, nothing in this
Agreement shall preclude the Executive from devoting a reasonable amount of
his time and efforts to civic, community, charitable, professional and
trade association affairs and matters. Section 5. Compensation. The Company
shall pay to the Executive, for his services hereunder, the compensation
hereinafter provided in this Section 5. Such compensation shall be paid to
the Executive at the times and in the manner as provided below.
(a) Base Compensation. The Executive shall be paid "Base Compensation"
for each Fiscal Year at an annual rate of $342,500 in 26 bi-weekly equal
installments. The Base Compensation (i) may be increased (but may not be
decreased) at any time or from time to time by action of the Board of
Directors or any committee thereof, and (ii) shall be increased by the COLA
Adjustment annually as of the beginning of each Fiscal Year, commencing
with the Fiscal Year beginning in 1995. The Base Compensation shall be
pro-rated for any Fiscal Year hereunder which is less than a full Fiscal
Year.
(b) Incentive Bonus Compensation. The Executive shall be paid
"Incentive Bonus Compensation" for each Fiscal Year in an amount equal to
5% of the Qualifying Excess Income (as hereinafter defined), if any, for
such Fiscal Year. The first $50,000 of any Incentive Bonus Compensation
otherwise earned (the "Current Portion") for any Fiscal Year shall be
payable to the Executive by the Company within 10 days after the issuance
of the Company's audited financial statements for the Fiscal Year involved.
The amount of any Incentive Bonus Compensation in excess of $50,000 for any
Fiscal Year (the "Deferred Portion") shall be deferred and (except as
provided in Section 11) shall be payable to the Executive only (i) if and
when the Aggregate Operating Income (as hereinafter defined) of the Company
is at least $2,118,000 (adjusted by the COLA Adjustment annually as of the
beginning of each Fiscal Year commencing with the Fiscal Year which begins
in 1995) in the succeeding Fiscal Year, or (ii) if, prior to the end of the
third succeeding Fiscal Year, the Executive's employment by the Company is
terminated for any reason other than termination by the Company under
Section 11(b) or termination by the Executive other than under Section
11(e)(1)(A). As used herein, "Qualifying Excess Income" for any Fiscal Year
shall mean the amount, if any, by which the Aggregate Operating Income for
the Fiscal Year, up to a maximum Aggregate Operating Income amount of
$3,706,500, exceeds $1,588,500 (with both numbers being adjusted annually
by the COLA Adjustment as of the beginning of each Fiscal Year commencing
with the Fiscal Year which begins in 1995). The "Aggregate Operating
Income" for any Fiscal Year shall be equal to the Net Income of the Company
for the Fiscal Year, calculated before taking into account (i) deductions
for any item of compensation, fees or bonuses paid or payable by the
Company or any of the Subsidiaries to any of the Shareholders, whether as
officer, director, consultant, agent, contractor or otherwise, (ii)
deductions for non-cash compensation expense associated with the exercise
of stock options or the granting of other rights or interests in securities
of the Company, so-called phantom stock interests and similar incentive
compensation arrangements, by any or all executive officers of the Company
(including, but not limited to, Xx. Xxxxxxx), (iii) deductions for interest
expense and any taxes on income and (iv) any other items properly
reportable on the audited financial statements of the Company below the
"income from operations" line, such as interest income and expense and
other types of investment income, loss or expense (provided, however, that
gain or loss from the sale or other disposition of depreciable assets used
by the Company in the ordinary course of its trade or business shall be
taken into account).
Section 6. Reimbursement of Expenses. The Company shall reimburse the
Executive for his reasonable expenses incurred in providing services to the
Company, including expenses for travel, entertainment and similar items, in
accordance with the Company's reimbursement policies as determined from
time to time by the Board of Directors. The Company shall also reimburse
the Executive for his reasonable expenses incurred for continuing legal
education and other reasonable expenses of maintaining his membership in
good standing in the Ohio Bar. If there is a dispute as to the eligibility
of an
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expense for reimbursement in accordance with the Company's reimbursement
policies, then such expense shall be determined to be reimbursable if
approved by a majority of the Board of Directors.
Section 7. Employee Benefits, Vacations. During the Employment Period, the
Executive shall receive the benefits and enjoy the perquisites described
below:
(a) Benefit Plans. The Company shall continue in effect any perquisite,
benefit or compensation plan (in addition to the compensation provided for
in Section 5) including its profit sharing plan and 401(k) plan, medical
insurance plan, life insurance plan, health and accident plan and
disability plan in which the Executive is currently participating, or to
maintain plans providing substantially similar benefits (collectively
referred to as the "Benefit Plans"); provided, however, that the Company
may make modifications in the Benefit Plans so long as such modifications
(i) are generally applicable to all salaried employees of the Company and
(ii) do not discriminate against the Executive or other highly-compensated
employees of the Company.
(b) Vacations. The Executive shall be entitled in each Fiscal Year to a
vacation of four weeks (20 working days), during which time his
compensation shall be paid in full, and such holidays and other nonworking
days as are consistent with the policies of the Company for executives
generally.
Section 8. Stock Options.
(a) 1987 and 1991 Options. The Company shall provide to the Executive,
pursuant to the Stock Options Addendum attached hereto, stock options (the
"1987 and 1991 Stock Options") to acquire common shares of the Company
("Common Shares").
(b) Participation in 1994 Stock Incentive Plan. Executive shall be
granted the right to purchase 50,000 Common Shares at 125% of the public
offering price for such Common Shares in the IPO, subject to vesting 20%
per year over 5 years, the options to expire 10 years after the date of
grant. The options shall be granted under and shall be subject to the terms
and conditions of the Company's 1994 Stock Incentive Plan and the
provisions of such Plan shall control in the event of the termination of
Executive's employment.
(c) Registration of Option Shares on Form S-8. The Company shall as
soon as reasonably practicable following the closing of the IPO file a
registration statement on Form S-8 with the Securities and Exchange
Commission for the purpose of registering the Common Shares underlying the
1987 and 1991 Options and the 1994 Stock Incentive Plan.
Section 9. Company Life Insurance; Medical Examinations. At any time during
the Employment Period, the Company may, in its discretion, apply for and
procure as owner and for its own benefit, insurance on the life of the
Executive, in such amounts and in such form or forms as the Company may
determine. The Executive shall have no right to any interest in any such
policy or policies, but he shall, at the request of the Company, submit to
such medical examinations, supply such information and execute such
applications, instruments and other documents as reasonably may be required
by the insurance company or companies to whom the Company has applied for
such insurance.
If requested by the Company, the Executive shall submit to at least one
medical examination during each Fiscal Year at such reasonable time and
place and by a physician or physicians determined and selected by the
Company. All the costs and expenses of said medical examination, including
transportation of the Executive to the place of examination and return,
shall be paid by the Company.
The Executive shall be entitled to a copy of all reports and other
information provided to the Company in connection with any examination
referred to in this Section 9. Any failure to pass any such medical
examination or to meet any health criteria or medical standard shall not of
itself be cause for termination of the Employment Period by the Company.
Section 10.Certain Company Protection Provisions. The below provisions
apply for the protection of the Company.
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(a) Noncompetition. During the Restricted Period (as hereinafter defined),
the Executive shall not directly or indirectly compete with the Company by
owning, managing, controlling or participating in the ownership, management
or control of, or be employed or engaged by or otherwise affiliated or
associated with, any Competitive Business in any location in which the
Company is doing business as of the Employment Termination Date. As used
herein, the term "Restricted Period" means the Employment Period and a
period of [three] years thereafter. As used herein, a "Competitive
Business" is any other corporation, partnership, proprietorship, firm,
association or other business entity which is engaged in any business from
which the Company derives five percent or more of its consolidated revenues
during the 12 months preceding the Employment Termination Date or in which
the Company has invested five percent or more of its total assets as of the
time in question, provided, however, that ownership of not more than five
percent of the stock of any publicly traded company shall not be deemed a
violation of this provision.
(b) Non-Interference. During the Restricted Period, the Executive shall not
induce or solicit any employee of the Company or any person doing business
with the Company to terminate his or her employment or business
relationship with the Company or otherwise interfere with any such
relationship.
(c) Confidentiality. The Executive agrees and acknowledges that, by reason
of the nature of his duties as an officer and employee, he will have or may
have access to and become informed of confidential and secret information
which is a competitive asset of the Company ("Confidential Information"),
including without limitation any lists of customers or subscribers,
financial statistics, research data or any other statistics and plans
contained in profit plans, capital plans, critical issue plans, strategic
plans or marketing or operation plans or other trade secrets of the Company
and any of the foregoing which belong to any person or company but to which
the Executive has had access by reason of his employment relationship with
the Company. The Executive agrees faithfully to keep in strict confidence,
and not, either directly or indirectly, to make known, divulge, reveal,
furnish, make available or use (except for use in the regular course of his
employment duties) any such Confidential Information. The Executive
acknowledges that all manuals, instruction books, price lists, information
and records and other information and aids relating to the Company's
business, and any and all other documents containing Confidential
Information furnished to the Executive by the Company or otherwise acquired
or developed by the Executive, shall at all times be the property of the
Company. Upon termination of the Employment Period, the Executive shall
return to the Company any such property or documents which are in his
possession, custody or control, but his obligation of confidentiality shall
survive such termination of the Employment Period until and unless any such
Confidential Information shall have become, through no fault of the
Executive, generally known to the trade. The obligations of the Executive
under this subSection are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which the Executive
may have to the Company under general legal or equitable principles.
(d) Remedies. It is expressly agreed by the Executive and the Company that
these provisions are reasonable for purposes of preserving for the Company
its business, goodwill and proprietary information. It is also agreed that
if any provision is found by a court having jurisdiction to be unreasonable
because of scope, area or time, then that provision shall be amended to
correspond in scope, area and time to that considered reasonable by a court
and as amended shall be enforced and the remaining provisions shall remain
effective. In the event of any breach of these provisions by the Executive,
the parties recognize and acknowledge that a remedy at law will be
inadequate and the Company may suffer irreparable injury. The Executive
acknowledges that the services to be rendered by him are of a character
giving them peculiar value, the loss of which cannot be adequately
compensated for in damages; accordingly, the Executive consents to
injunctive and other appropriate equitable relief upon the institution of
proceedings therefor by the Company in order to protect the Company's
rights. Such relief shall be in addition to any other relief to which the
Company may be entitled at law or in equity.
Section 11.Termination of Employment.
(a) Notice of Termination; Employment Termination Date.
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(1) Any termination of the Executive's employment by the Company or the
Executive shall be communicated by written Notice of Termination to the
other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination under the provision so indicated. Furthermore, either the
Executive or the Company may give a Notice of Termination to the other
party for the purpose of terminating this Agreement, as such, without
terminating the Executive's employment with the Company, which Notice of
Termination shall have the effect of terminating this Agreement on the
Scheduled Employment Termination Date as in effect on the date of giving
such Notice of Termination.
(2) "Employment Termination Date" shall mean the date on which the
Employment Period and the Executive's right and obligation to perform
employment services for the Company shall terminate effective upon the
first to occur of the following, it being understood that in no event may
the Employment Period be terminated other than as the result of one of the
following events:
(A) If the Executive's employment is terminated for Disability, the date
which is thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period);
(B) If the Executive's employment is terminated by the Executive for Good
Reason or otherwise by voluntary action of the Executive (see Section
11(e)), the date specified in the Notice of Termination, which date (except
with the written consent of the Company to the contrary) shall not be more
than sixty (60) days after the date that the Notice of Termination is
given;
(C) The death of the Executive;
(D) The Scheduled Employment Termination Date;
(E) If the Executive's employment is terminated by the Company for Cause
(see Section 11(b)(1)), the date on which a Notice of Termination is given;
provided that if within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Employment
Termination Date shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected); and
(F) If the Executive's employment is terminated by the Company other than
for Cause, Disability or death of the Executive, the date specified in the
Notice of Termination which date (except with the written consent of the
Executive to the contrary) shall not be more than 60 days after the date
that the Notice of Termination is given.
(b) Termination for Cause.
(1) The Company may terminate the Executive's employment and the
Employment Period for Cause. For the purposes of this Agreement, the
Company shall have "Cause" to terminate employment hereunder only (A) if
termination shall have been the result of an act or acts of misconduct
materially injurious to the Company, monetarily or otherwise, or (B) upon
the willful and continued failure by the Executive substantially to perform
his duties with the Company (other than any such failure resulting from
incapacity due to mental or physical illness) after a demand in writing for
substantial performance is delivered by the Board, which demand
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed his duties, and such failure
results in demonstrably material injury to the Company. The Executive's
employment shall in no event be considered to have been terminated by the
Company for Cause if such termination took place as the result of (i) bad
judgment or negligence, or (ii) any act or omission without intent of
gaining therefrom directly or indirectly a profit to which the Executive
was not legally entitled, or (iii) any act or omission believed in good
faith to have been in or not opposed to the interest of the Company, or
(iv) any act or omission in respect of which a determination is made that
the Executive met the applicable standard of
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conduct prescribed for indemnification or reimbursement or payment of
expenses under the Code of Regulations of the Company or the laws of the
State of Ohio, in each case as in effect at the time of such act or
omission. The Executive shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board of Directors at a
meeting of the Board of Directors called and held for the purpose (after
not less than 30 days written notice to the Executive and an opportunity
for him, together with his counsel, to be heard before the Board of
Directors, such notice of meeting to indicate the specific termination
provision of this Agreement relied upon and specify in reasonable detail
the facts and circumstances claimed to provide a basis for termination
under the provision so indicated), finding that in the good faith opinion
of the Board of Directors the Executive was guilty of conduct set forth
above in clauses (A) or (B) of the second sentence of this paragraph and
specifying the particulars thereof in detail.
(2) If the Executive's employment shall be terminated for Cause, the
Company shall pay the Executive (A) within 10 days of such termination, his
unpaid Base Compensation through the Employment Termination Date at the
rate in effect at the time Notice of Termination is given plus (B) within
10 days after issuance of the Company's audited financial statements for
the Fiscal Year in which the Employment Termination Date occurs, the
Deferred Portion of any Incentive Bonus Compensation payable with respect
to any previous Fiscal Year (without regard to the termination of
Executive's employment), plus a pro-rata share of the Current Portion of
any Incentive Bonus Compensation computed with respect to the Fiscal Year
in which occurs the Employment Termination Date as if such termination had
not occurred, plus (C) within 10 days following the issuance of the
Company's audited financial statements for its Fiscal Year following the
Fiscal Year in which the Employment Termination Date occurs, if the
Deferred Portion of any Incentive Bonus Compensation would otherwise have
been payable to Executive had his employment not been terminated, a
pro-rata share of the Deferred Portion so payable.
(c) Termination for Disability. The Company may terminate the Executive's
employment because of the Disability of the Executive and thereafter shall
pay to the Executive (or his successors) (1) his unpaid Base Compensation
through the sixth full month following the Employment Termination Date at
his then effective Base Compensation rate, plus (2) the Deferred Portion of
any Incentive Bonus Compensation accrued and deferred with respect to any
previous Fiscal Year, the full amount of which shall become immediately
payable without regard to the deferral provisions of Section 5(b), plus (3)
an amount equal to a pro-rata share of any Incentive Bonus Compensation
calculated through the sixth full month following the Employment
Termination Date as though all of such six month period were part of the
Fiscal Year in which occurred the Employment Termination Date, (but
otherwise as though such termination had not occurred) and assuming for
purposes of calculating the amounts due, the largest amount of Incentive
Bonus Compensation accrued for any of the two most recently completed
Fiscal Years. No portion of such Incentive Bonus Compensation shall be
deferred pursuant to the provisions of clause (i) of Section 5(b). In
addition, the Executive shall be entitled to the amounts and benefits
specified in Paragraphs (2) and (3) of Section 11(f) of this Agreement.
(d) Termination Upon Executive's Death. In the event of the Executive's
death, the Company shall pay to the Executive's estate (1) any unpaid
amount of Base Compensation through the date of death at the then effective
Base Compensation rate plus (2) the Deferred Portion of any Incentive Bonus
Compensation accrued and deferred with respect to any previous Fiscal Year,
the full amount of which shall become immediately payable without regard to
the deferral provisions of Section 5(b), plus (3) an amount equal to the
pro-rata share of any Incentive Bonus Compensation calculated with respect
to the Fiscal Year in which the death occurs and assuming for purposes of
calculating the amounts due, the largest amount of Incentive Bonus
Compensation accrued for any of the two most recently completed Fiscal
Years. No portion of such Incentive Bonus Compensation shall be deferred
pursuant to the provisions of clause (i) of Section 5(b). All previously
granted stock options, rights, warrants and awards shall fully vest on the
death of the Executive, except that the provisions of the Company's Stock
Incentive Plan and any other Benefit Plan shall control the benefits and
awards covered thereby.
(e) Termination of Employment by the Executive.
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(1) The Executive may terminate his employment for Good Reason and
receive the payments and benefits specified in Section 11(f) in the same
manner as if the Company had terminated his employment. For purposes of
this Agreement, "Good Reason" will exist if any one or more of the
following occur:
(A) Failure by the Company to honor any of its obligations under this
Agreement, including, without limitation, its obligations under Section 3
(Employment Capacity and Duties), Section 4 (Executive Performance
Covenants), Section 5 (Compensation), Section 6 (Reimbursement of
Expenses), Section 7 (Employee Benefits, Vacations, Life Insurance),
Section 8 (Stock Options), Section 12 (Indemnification) and Section 13
(Successors and Assigns); or
(B) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 11(a) above and, for purposes of
this Agreement, no such purported termination shall be effective.
(C) If there is a Change in Control of the Company (as defined below)
and the employment of the Executive is concurrently or subsequently
terminated (i) by the Company without Cause, (ii) by service of a Notice of
Termination or (iii) by the resignation of the Employee because he has
reasonably determined in good faith that his titles, authorities,
responsibilities, salary, bonus opportunities or benefits have been
materially diminished, or that a material adverse change in his working
conditions has occurred or the Company has breached this Agreement. For the
purpose of this Agreement, a Change in Control of the Company has occurred
when: (x) any person (defined for the purposes of this Section 11 to mean
any person within the meaning of Section 13(d) of the Securities Exchange
Act of 1934 (the "Exchange Act")), other than the Company, or an employee
benefit plan established by the Board of Directors of the Company,
acquires, directly or indirectly, the beneficial ownership (determined
under Rule 13 d-3 of the regulations promulgated by the Securities and
Exchange Commission under Section 13(d) of the Exchange Act) of securities
issued by the Company having 20% or more of the voting power of all of the
voting securities issued by the Company in the election of directors at the
next meeting of the holders of voting securities to be held for such
purpose; or (y) a majority of the directors elected at any meeting of the
holders of voting securities of the Company are persons who were not
nominated for such election by the Board of Directors of the Company or a
duly constituted committee of the Board of Directors of the Company having
authority in such matters; or (z) the Company merges or consolidates with
or transfers substantially all of its assets to another person.
(2) The Executive shall have the right voluntarily to terminate his
employment other than for Good Reason prior to the Scheduled Employment
Termination Date, and if the Executive shall so terminate his employment,
he shall be entitled only to payment of the amounts which would be payable
under Section 11(b)(2) had he been terminated for Cause.
(f) Compensation Upon Certain Termination.
(1) If the Company shall terminate the Executive's employment other
than pursuant to Section 11(b), (c) or (d), or if the Executive shall
terminate his employment for Good Reason pursuant to Section 11(e)(1) (but
not a termination voluntarily by the Executive other than for Good Reason
under Section 11(e)(2)), then the Company shall pay to the Executive the
following amounts:
(A) (1) His unpaid Base Compensation through the Employment Termination
Date at his then effective Base Compensation rate, plus (2) the Deferred
Portion of any Incentive Bonus Compensation accrued and deferred with
respect to any previous Fiscal Year, the full amount of which shall become
immediately payable without regard to the deferral provisions of Section
5(b), plus (3) an amount equal to a pro-rata share of the amount of any
Incentive Bonus Compensation payable to him with respect to the Fiscal Year
in which occurs the Employment Termination Date (assuming for purposes of
calculating Incentive Bonus Compensation, the largest amount thereof
accrued for any of the two most recently completed Fiscal Years) and no
part thereof shall be subject to the deferral provisions of clause (i) of
Section 5(b).
(B) In addition, the Company shall pay to the Executive promptly in a
single lump sum in cash an amount equal to the product of (i) three,
multiplied by (ii) 100% of the aggregate total amount which would have been
payable to
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Executive under Section 5 for the entire Fiscal Year in which occurs the
Employment Termination Date as if his employment had not been terminated
(and without deduction or offset for any amounts actually paid for such
Fiscal Year on account of Base Compensation or Incentive Bonus
Compensation, under Section 5, this Section 11 or otherwise), and assuming
for purposes of calculating (x) the Base Compensation, 100% of the amount
thereof at the annual rate payable for such Fiscal Year pursuant to Section
5(a) and (y) the Incentive Bonus Compensation, the largest amount thereof
accrued for any of the two most recently completed Fiscal Years. For
purposes of the foregoing calculation, no part of the Incentive Bonus
Compensation shall be subject to the deferral provisions of clause (i) of
Section 5(b).
(C) The Company shall also pay all legal fees and expenses incurred as
a result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination, in seeking to
obtain or enforce any right or benefit provided by this Agreement, or in
interpreting this Agreement). The Company agrees, in the event the
Executive desires to relocate within one year after the Date of
Termination, to pay for (or reimburse) all reasonable moving expenses
incurred relating to a change of principal residence in connection with
such relocation and to indemnify the Executive in connection with any loss
he may sustain in the sale of his primary residence.
(D) The Executive shall be under no obligation to seek other employment
and there shall be no offset against any amounts due the Executive under
this Agreement on account of any remuneration attributable to any
subsequent employment that the Executive may obtain (any amounts due under
this Section 11(f) are in the nature of severance payments, or liquidated
damages, or both, and are not in the nature of a penalty).
(2) Unless the Executive is terminated for Cause, the Company shall
maintain in full force and effect, for the Executive's continued benefit
through the Scheduled Employment Termination Date, all active and retired
Benefit Plans and other benefit programs or arrangements in which he was
entitled to participate immediately prior to the Scheduled Employment
Terminate Date (except as specified in Section 7(a) of this Agreement),
provided that continued participation is possible under the general terms
and provisions of such plans and programs. In the event that participation
in any such plan or program is barred, the Company shall arrange to provide
him with benefits substantially similar to those which he is entitled to
receive under such plans and programs.
(3) Unless the Executive is terminated for Cause, the Company shall
allow the Executive at Company expense, to continue to utilize the services
of Ernst & Young, Xxxxxx X. Xxxxx & Co., and/or another accountant or
attorney of his choice for assistance in enforcing this Agreement and
preparation of his tax returns for the year following termination of
employment.
(g) Compensation Upon Disability. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive his full Base
Compensation at the rate then in effect and his full Incentive Bonus
Compensation calculated according to the provisions of Section 5(b); all
until this Agreement is terminated pursuant to Section 11(c) hereof.
Thereafter, his benefits shall be determined in accordance with the
Company's Benefit Plans.
Section 12. Certain Tax Matters
(a) Optional Right of Partial Disclaimer
It is recognized that under certain circumstances:
(1) Payments or benefits provided to the Executive under this Agreement
and/or under the attached Stock Option Addendum or the Company's 1994 Stock
Incentive Plan Agreements might give rise to an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, or
any successor provision thereof.
(2) It might be beneficial to the Executive to disclaim some portion of
the payment or benefit in order to avoid such "excess parachute payment"
and thereby avoid the imposition of an excise tax resulting therefrom.
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(3) Under such circumstances it would not be to the disadvantage of the
Company to permit the Executive to disclaim any such payment or benefit in
order to avoid the "excess parachute payment" and the excise tax resulting
therefrom.
Accordingly, the Executive may, at the Executive's option, exercisable
at any time or from time to time, disclaim any entitlement to any portion
of the payment or benefits arising under this Agreement and/or under the
attached Stock Option Addendum or the Company's 1994 Incentive Stock Plan
which would constitute "excess parachute payments," and it shall be the
Executive's choice as to which payments or benefits shall be so
surrendered, if and to the extent that the Executive exercises such option,
so as to avoid "excess parachute payments."
(b) Additional Payments
(1) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined (as hereafter provided) that any payment or
distribution to or for the Executive's benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement (including without limitation the attached Stock
Option Addendum or the 1994 Stock Incentive Plan or other similar
agreement), or similar right (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986 (or any
successor provision thereto), or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by
the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) Subject to the provisions of Section 12(b) (5), all determinations
required to be made under this Section Section 12(b), including whether an
Excise Tax is payable by the Executive, the amount of such Excise Tax,
whether a Gross-Up Payment is required, and the amount of such Gross-Up
Payment, shall be made by Xxxxxx Xxxxx C.P.A. or a nationally-recognized
legal or accounting firm (the "Firm") selected by the Executive in the
Executive's sole discretion. The Executive agrees to direct the Firm to
submit its determination and detailed supporting calculations to both the
Executive and the Company as promptly as practicable. If the Firm
determines that any Excise Tax is payable by the Executive and that a
Gross-Up Payment is required, the Company shall pay the Executive the
required Gross-Up Payment within ten business days after receipt of such
determination and calculations. If the Firm determines that no Excise Tax
is payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that the Executive has
substantial authority not to report any Excise Tax on the Executive's
federal income tax return. Any determination by the Firm as to the amount
of the Gross-Up Payment shall be binding upon the Executive and the
Company. As a result of the uncertainty in the application of Section 4999
of the Internal Revenue Code of 1986 (or any successor provision thereto)
at the time of the initial determination by the Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made (an "Underpayment"). In the event that the
Company exhausts its remedies pursuant to Section 12(b)(5) hereof and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive may direct the Firm to determine the amount of the Underpayment
(if any) that has occurred and to submit its determination and detailed
supporting calculations to both the Executive and the Company as promptly
as possible. Any such Underpayment shall be promptly paid by the Company to
the Executive, or for the Executive's benefit, within ten business days
after receipt of such determination and calculations.
(3) The Executive and the Company shall each provide the Firm access to
and copies of any books, records and documents in the possession of the
Company or the Executive, as the case may be, reasonably requested by the
Firm, and otherwise cooperate with the Firm in connection with the
preparation and issuance of the determination contemplated by Section
12(b)(2) hereof.
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(4) The fees and expenses of the Firm for its services in connection
with the determinations and calculations contemplated by Section 12(b)(2)
hereof shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive
the full amount of such fees and expenses within ten business days after
receipt from the Executive of a statement therefor and reasonable evidence
of the Executive's payment thereof.
(5) The Executive agrees to notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be
given as promptly as practicable but no later than 10 business days after
the Executive actually receives notice of such claim. The Executive agrees
to further apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid (in each case, to the extent known
by the Executive). The Executive agrees not to pay such claim prior to the
earlier of (a) the expiration of the 30-calendar-day period following the
date on which the Executive gives such notice to the Company and (b) the
date that any payment with respect to such claim is due. If the Company
notifies the Executive in writing at least five business days prior to the
expiration of such period that it desires to contest such claim, the
Executive agrees to:
(a) provide the Company with any written records or documents in the
Executive's possession relating to such claim reasonably requested by the
Company;
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such
claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order effectively to
contest such claim; and
(d) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, from and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this Section 12(b)(5), the Company shall control
all proceedings taken in connection with the contest of any claim
contemplated by this Section 12(b)(5) and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at the Executive's own
cost and expense) and may, at its option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay the tax claimed and xxx for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and provided further,
however, that any extension of the statute of limitations relating to
payment of taxes for the Executive's taxable year with respect to which the
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 12(b)(5) hereof, the Executive receives any
refund with respect to such claim, the Executive agrees (subject to the
Company's complying with the requirements of Section 12(b)(5) hereof) to
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If,
after the Executive's receipt of an amount advanced by the Company pursuant
to Section 12(b)(5) hereof, a determination is made that the Executive is
not entitled to any
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refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior
to the expiration of 30 calendar days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid pursuant to this Section 12(b).
Section 13. Indemnification. As an employee, officer and director of the
Company, the Executive shall be indemnified against all liabilities,
damages, fines, costs and expenses by the Company in accordance with the
indemnification provisions of the Company's Code of Regulations as in
effect on the date hereof, and otherwise to the fullest extent to which
employees, officers and directors of a corporation organized under the laws
of Ohio may be indemnified pursuant to Section 1701.13(E), Ohio Revised
Code, as the same may be amended from time to time (or any subsequent
statute of similar tenor and effect), subject to the terms and conditions
of such statute.
Section 14. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
in Columbus, Ohio in accordance with the rules of the American Arbitration
Association then in effect; provided that all arbitration expenses shall be
borne by the Company. Notwithstanding the pendency of any dispute or
controversy concerning termination or the effects thereof, the Company will
continue to pay the Executive his full compensation in effect immediately
before any Notice of Termination giving rise to the dispute was given
(including, but not limited to, Base Salary and incentive pay) and continue
him as a participant in all compensation, benefit and insurance plans in
which he was then participating, until the dispute is finally resolved.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to
seek specific performance of his right to be paid until the Employment
Termination Date during the pendency of any dispute or controversy arising
under or in connection with this Agreement.
Section 15. Successors and Assigns. Except as hereinafter expressly
provided, the agreements, covenants, terms and provisions of this Agreement
shall bind the respective heirs, executors, administrators, successors and
assigns of the parties. Specifically, and not by way of limitation of the
foregoing, the Executive shall be bound by the terms and conditions of this
Agreement to any successor assignee of the Company's rights and obligations
hereunder as a result of any merger, consolidation or sale or lease of all
or substantially all of the Company's business and assets. If any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company fails, concurrently with the effectiveness of any such succession,
to agree in writing in form and substance reasonably satisfactory to the
Executive expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no such succession had taken place, then the Executive shall
have the right, effected by notice to such successor not later than 90 days
after the effectiveness of such succession, to terminate the Employment
Period under Section 11(e) as though such failure was an uncured breach by
the Company of a material covenant or agreement of the Company contained in
this Agreement.
If the Executive should die while any amounts are payable to him hereunder,
or if by reason of his death payments are to be made to him hereunder, then
this Agreement shall inure to the benefit of and be enforceable by the
Executive's executors, administrators, heirs, distributees, devisees and
legatees and all amounts payable hereunder shall then be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee or
other designee or, if there is no such designee, to his estate.
This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement
or any rights or obligations hereunder, except as hereinbefore provided in
this Section 15. Without limiting the foregoing, the Executive's right to
receive payments hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than a
transfer by his will or by the laws of descent or distribution, and in the
event of any attempted assignment or transfer contrary to this paragraph
the Company shall have no liability to pay to the purported assignee or
transferee any amount so attempted to be assigned or transferred.
As used in this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in the
first paragraph of this Section 15 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
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Section 16. Notices. Any notice or other communication required or desired
to be given hereunder shall be in writing and shall be deemed sufficiently
given when personally delivered or when mailed by first class certified
mail, return receipt requested and postage prepaid, addressed to the
parties at their respective addresses set forth under their respective
signatures below or such other person or addresses as shall be given by
notice of any party.
Section 17. Waiver; Remedies Cumulative. No waiver of any right or option
hereunder by any party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for
its exercise, or of any legal remedy. No waiver by any party of any breach
of this Agreement or of any agreement or covenant contained herein shall be
held to constitute a waiver of any other breach or a continuation of the
same breach. All remedies provided by this Agreement are in addition to all
other remedies by it or the law provided.
Section 18. Governing Law; Severability. This Agreement is made and is
expected to be performed in Ohio, and the various terms, provisions,
covenants and agreements, and the performance thereof, shall be construed,
interpreted and enforced under and with reference to the laws of the State
of Ohio. It is the intention of the Company and the Executive to comply
fully with all laws and matters of public policy relating to employment
agreements and restrictive covenants, and this Agreement shall be construed
consistently with such laws and public policy to the extent possible. If
and to the extent any one or more covenants, agreements, terms and
provisions of this Agreement or any portion or portions thereof shall be
held invalid or unenforceable by a court of competent jurisdiction, then
such covenants, agreements, terms and provisions (or portions thereof)
shall be deemed separable from the remaining covenants, agreements, terms
and provisions of this Agreement and such holding shall in no way affect
the validity or enforceability of any of the other covenants, agreements,
terms and provisions hereof.
Section 19. Miscellaneous. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter
hereof. This Agreement may not be modified, changed or amended except in a
writing signed by each of the parties hereto. This Agreement may be signed
in multiple counterparts, each of which shall be deemed an original hereof.
The captions of the several Sections and subSections of this Agreement are
not a part of the context hereof, are inserted only for convenience in
locating such Sections and subSections and shall be ignored in construing
this Agreement.
Section 20. Agreement Void. This Agreement shall be void and of no force
and effect if, and only if, the Company does not close on the IPO on or
before December 31, 1994.
[SIGNATURES FOLLOW ON NEXT PAGE]
IN WITNESS WHEREOF, the Company and the Executive have executed multiple
counterparts of this Agreement.
Company: Executive:
AMERILINK CORPORATION
0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
By:
Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board Address: 00 Xxxxx Xxxxxx Xxxx
of Directors, President Xxxxxxxx, Xxxx 00000
and Chief Executive Officer
and by:
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Name: Xxxxxx Xxxxxxxx
Title: Secretary
[STOCK OPTION ADDENDUM FOLLOWS ON NEXT PAGE]
STOCK OPTION ADDENDUM
to
Executive Employment Agreement
between
AmeriLink Corporation
and
Xxxxx X. Xxxxxxx ("Executive")
Performance-Based Option
As of ______________, 1994
Subject to all of the terms and conditions contained herein, the
undersigned AMERILINK CORPORATION, an Ohio corporation (the "Company"),
hereby grants to XXXXX X. XXXXXXX (the "Executive") the following options
to purchase shares (the "Executive Option Shares") of the Company's common
stock, without par value ("Common Shares") as follows:
Recitals:
A. Pursuant to Stock Purchase and Close Corporation Agreement dated January
15, 1987, among AmeriLink Corp., an Ohio corporation (the "Operating
Company") and its shareholders, E. Xxx Xxxxxx ("Xxxxxx"), Xxxxxx X.
Xxxxxxxx ("Xxxxxxxx") and the Executive, Xxxxxx and Xxxxxxxx granted to the
Executive (together with Xxxxxx and Xxxxxxxx, the "Shareholders") the
option to purchase up to five percent (5%) of the common stock of the
Operating Company, up to two and one-half percent (2-1/2%) each from Xxxxxx
and Xxxxxxxx, upon the terms and conditions therein stated (such options
being herein called the "1987 Options");
B. Under a certain "Second Amendment to Stock Purchase and Close
Corporation Agreement" dated November 30, 1991 among the Operating Company
and the Shareholders, Xxxxxx and Xxxxxxxx granted to the Executive the
option to purchase up to an additional eight and one-third percent (8-1/3%)
of the common stock of the Operating Company, up to four and one-sixth
percent (4-1/6%) each, from Xxxxxx and Xxxxxxxx, upon the terms and
conditions therein stated (such options being herein called the "1991
Options"); and
C. The Shareholders are parties to a certain Recapitalization Agreement and
Plan of Merger, pursuant to which, among other things, the Shareholders
will contribute all of their Common Stock in the Operating Company to
AmeriLink Holdings Corporation, an Ohio corporation ("AHC") and receive in
exchange, common shares of AHC in proportion to their respective equities
in AHC, and AHC has, in turn, assumed the obligation of Xxxxxx and Xxxxxxxx
to perform their obligations pursuant to the 1987 Options and the 1991
Options and has agreed to issue and sell to Executive, upon his exercise of
such options, a proportionate equivalent number of common shares of AHC
upon his exercise of such options and payment of the purchase price thereof
in accordance with the terms and conditions thereof, and to cause the
successors and assigns of AHC to be bound by and agree to perform such
duties and obligations of Xxxxxxxx and Xxxxxx under the 1987 Options and
1991 Options; and
D. Pursuant to the Recapitalization Agreement, AHC is about to or has
merged with and into the Company and pursuant thereto, among other things,
the Company has agreed to assume and perform the obligations of AHC with
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respect to the performance of the 1987 Options and the 1991 Options and the
performance of the obligations of Xxxxxx and Xxxxxxxx thereunder; and
E. The Company and Executive are entering into this Stock Option Addendum
for the purpose of amending (but only in the respects hereinafter
reflected) and restating the 1987 Options and the 1991 Options.
Restated Option Agreement
Performance-Based Option
The Company and Executive hereby agree as follows:
Subject to all of the terms and conditions contained herein, the Company
hereby grants to Executive the following performance-based options to
purchase Common Shares:
1. 1987 Options. The Company hereby grants to Executive the right and
option to purchase from the Company 135,000 Common Shares (the "1987
Option") upon the following terms and conditions:
(a) Term of 1987 Option. The 1987 Option shall be effective throughout
the Employment Period and must be exercised on or before the Employment
Termination Date, subject, however to the provisions of Section 5 below.
(b) Purchase Price. The purchase price for the 1987 Option shall be
$4.00 per Common Share (the "1987 Exercise Price").
(c) Options Non-transferable. Executive's option rights with respect to
the 1987 Option are non-transferable and are personal to Executive and may
be exercised only by Executive and by no one else.
2. 1991 Options. In addition to the 1987 Option, the Company grants to
Executive the right and option to purchase from the Company 225,000 Common
Shares (the "1991 Option") upon the following terms and conditions:
(a) Term of 1991 Option. The 1991 Option shall remain effective
throughout the Employment Period and for a period of 180 days following the
Employment Termination Date.
(b) Purchase Price. The purchase price for the 1991 Option shall be
$6.35 per Common Share.
(c) Time of Exercise. Except as set forth herein, there are no
conditions to the exercise or the exercisability by the Executive of 1991
Options.
3. Securities Act. etc. In the absence of an effective Registration
Statement under the Securities Act of 1933, as from time to time in effect
(the "Act"), relating thereto, the Company shall not be required to
register a transfer of shares delivered or deliverable upon exercise of the
1987 and the 1991 Option ("Delivered Shares") on its books unless the
Company shall have been provided with an opinion of counsel satisfactory to
it prior to such transfer that registration under the Act is not required
in connection with the transaction resulting in such transfer. Each
certificate evidencing Delivered Shares or issued upon any transfer of
Delivered Shares shall bear an appropriate restrictive legend, except that
such certificate shall not bear such a restrictive legend if the opinion of
counsel referred to above is to the further effect that such legend is not
required in order to establish compliance with the provisions of the Act.
Nothing in this paragraph 3 shall modify or otherwise effect the provisions
applicable to the Delivered Shares of, or the obligations of the Executive
pursuant to, paragraph 4 hereof or the Shareholders Agreement referred to
therein.
4. Shareholders Agreement. By acceptance of the 1987 and 1991 Options,
Executive agrees that all shares issued upon the exercise hereof shall
become "Shares" for purposes of the Shareholders Agreement dated [as of the
date hereof] among the Company and the Shareholders (as defined therein).
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5. Termination, Exercise, etc.
(a) The 1987 and 1991 Options shall expire and terminate, to the extent
not previously exercised, as to all 1987 and 1991 Option Shares, whether or
not they have become exercisable on the termination of the Executive's
employment by the Company; provided, however that: (i) in the event the
employment of the Executive by the Company shall be terminated by reason of
the Executive's death, the [1987 and] 1991 Options shall, to the extent
exercisable, at the date of the Executive's death, be exercisable by the
Executive's estate or any trust established solely for the benefit of one
or more of the Executive's heirs (such estate and each such trust being
referred to herein, collectively, as the "Estate") during the period
beginning on the date of the Executive's death and ending on the one
hundred eightieth (180th) day thereafter; (ii) in the event the employment
of the Executive by the Company shall be terminated other than by reason of
the Executive's death, the [1987 and] 1991 Options shall, to the extent
exercisable at the date of such termination, be exercisable by the
Executive during the period beginning on the date of such termination and
ending on the ninetieth (90th) day thereafter; and (iii) no termination of
the [1987 and] 1991 Options shall modify or otherwise affect the provisions
applicable to the Delivered Shares of, or the obligations of the Executive
pursuant to, the Shareholders Agreement referred to in Section 4 hereof.
(b) Subject to the preceding paragraph 5(a) and the other provisions of
this Addendum, the [1987 and] 1991 Options may, to the extent exercisable
but not previously exercised, be exercised at any time and from time to
time, in whole or in part, by written notice delivered to the Company
signed by the Executive or the Estate thereof. Such notice shall state the
number of [1987 and] 1991 Option Shares in respect to which the [1987 and]
1991 Options are being exercised, shall contain the acknowledgement and
agreement of the Executive or the Estate thereof that the Delivered Shares
are subject to the Shareholders Agreement as Shares thereunder and shall
also contain such representations and warranties of the Executive or the
Estate thereof as the Company may then deem necessary or desirable in order
to comply with federal or state securities laws or as may otherwise be
reasonably requested by the Company; and shall be accompanied either (i) by
payment in full (in cash, by personal check or by any other method
acceptable to the Company) of the full Exercise Price in respect thereof or
(ii) delivery to the Company of that number of Common Shares owned by the
Executive and having a fair market value (determined reasonably and in good
faith by the Board of Directors and, if reasonably possible, prior to such
exercise) equal to the full Exercise Price in respect thereof. In addition,
the Company shall have the right to require that the Executive or the
Estate thereof, when exercising the 1987 and 1991 Options in whole or in
part, remit to the Company an amount sufficient to satisfy any federal,
state or local withholding tax requirements (or make other arrangements
satisfactory to the Company with regard to such taxes prior to the delivery
of any Delivered Shares pursuant to such exercise, including without
limitation by withholding Delivered Shares otherwise deliverable upon such
exercise, and, if requested by the Executive or such Estate, the Company
shall so withhold at least a number of Delivered Shares requested to be so
withheld by the Executive at the time of such exercise. As soon as
practicable after such notice and payment shall have been received, the
Company shall deliver a certificate or certificates representing the number
of Delivered Shares with respect to which the Performance-Based Option was
exercised, registered in the name of the person or persons exercising the
Performance-Based Option.
(c) All Delivered Shares that shall be purchased upon the exercise of
the 1987 and 1991 Options as provided herein shall be fully paid and
non-assessable.
6. Certain Conditions. In the event the Company (i) pays a dividend or
makes a distribution on its Common Stock in shares of Common Stock, (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares, (iii) combines its outstanding shares of Common Stock into a
smaller number of shares, (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock, (v) issues by
reclassification of its Common Stock any shares of its capital stock, or
(vi) consummates any merger, reorganization or consolidation pursuant to
which any securities or other consideration is issued to the holders of
outstanding shares of capital stock of the Company (each an "Adjustment
Event"), then, upon the exercise of the 1987 and 1991 Options in whole or
in part on or after the record date for determining the holders of record
of outstanding shares to which such Adjustment Event shall apply, the
Executive shall be entitled to receive such securities of the Company or
other consideration as the Executive would have
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17
held immediately after the consummation of such Adjustment Event had the
Delivered Shares issuable upon such exercise been held by the Executive on
such record date.
7. Hardship Withdrawal. Notwithstanding any other provision hereof, the
Optionee shall not be entitled to exercise this option during the period of
twelve months immediately following the date upon which the Optionee
receives a "hardship withdrawal" from a retirement plan sponsored by the
Company which then qualifies under Section 401(k) of the Internal Revenue
Code of 1986, as amended, and during such twelve month period all rights of
the Optionee to exercise this option shall be suspended.
8. Miscellaneous. Except as specifically otherwise provided in Section 6
hereof as to exercise by the Executive's Estate, the 1987 and 1991 Options
may not be assigned or transferred, in whole or in part, whether by
operation of law, upon death or otherwise, by the Executive without the
written consent of the Company which the Company may withhold in its sole
and absolute discretion, with or without any reason. Neither the 1987
Option nor the 1991 Option are intended to constitute an "incentive stock
option" as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended, and shall not be treated as incentive stock options. The
1987 and 1991 Options shall be governed by and construed in accordance with
the laws of the State of Ohio.
AMERILINK CORPORATION
By
Name:
Title:
AMERILINK CORPORATION
AMENDMENT NO. 1 TO
EXECUTIVE EMPLOYMENT AGREEMENT
This AMENDMENT NO. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT (the"Amendment") is
made in Columbus, Ohio effective as of ______________, 1997, by and between
AMERILINK CORPORATION, an Ohio corporation (the "Company"), and XXXXX X.
XXXXXXX, an individual residing in New Albany, Ohio (the "Executive"), who,
for and in consideration of the mutual promises hereinafter made and other
good and valuable consideration, each of them intending to be bound hereby,
agree that that certain Executive Employment Agreement dated as of August
19, 1994 between the Company and the Executive, including the Stock Option
Addendum of even date therewith (together, the "Agreement") shall be and
hereby is modified and amended as hereinafter provided:
SECTION 1. DEFINITIONS. As used herein, capitalized terms shall have the
meanings set forth in the Agreement unless expressly otherwise defined
herein.
SECTION 2. COMPENSATION. Section 5(b) of the Agreement is hereby amended
and restated in its entirety as follows:
(b) Incentive Bonus Compensation. The Executive shall be paid
"Incentive Bonus Compensation" for each Fiscal Year in an amount equal to
5% of the Qualifying Excess Income (as hereinafter defined), if any, for
such Fiscal Year. The Incentive Bonus Compensation earned for any Fiscal
Year shall be payable to the Executive by the Company within 10 days after
the issuance of the Company's audited financial statements for the Fiscal
Year involved. As used herein, the "Qualifying Excess Income" for any
Fiscal Year shall mean the amount, if any, by which the Aggregate Operating
Income for the Fiscal Year, up to a maximum Aggregate Operating Income
amount of $3,706,500, exceeds $1,588,500 (with both numbers being adjusted
annually by the COLA Adjustment as of the beginning of each Fiscal Year
commencing with the Fiscal Year which begins in 1995). The "Aggregate
Operating Income" for any Fiscal Year
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shall be equal to the Net Income of the Company for the Fiscal Year,
calculated before taking into account (i) deductions for any item of
compensation, fees or bonuses paid or payable by the Company or any of the
Subsidiaries to any of the Shareholders, whether as officer, director,
consultant, agent, contractor or otherwise, (ii) deductions for non-cash
compensation expense associated with the exercise of stock options or the
granting of other rights or interests in securities of the Company,
so-called phantom stock interests and similar incentive compensation
arrangements, by any or all executive officers of the Company (including,
but not limited to, Xx. Xxxxxxx), (iii) deductions for interest expense and
any taxes on income and (iv) any other items properly reportable on the
audited financial statements of the Company below the "income from
operations" line, such as interest income and expense and other types of
investment income, loss or expense (provided, however, that gain or loss
from the sale or other disposition of depreciable assets used by the
Company in the ordinary course of its trade or business shall be taken into
account).
SECTION 3. TERMINATION OF EMPLOYMENT.
(a) Section 11(b)(2) of the Agreement is hereby amended and restated in
its entirety as follows:
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive (A) within 10 days of such
termination, his unpaid Base Compensation through the Employment
Termination Date at the rate in effect at the time Notice of Termination is
given plus (B) within 10 days of such termination, the amount of any unpaid
Incentive Bonus Compensation earned with respect to any previous Fiscal
Year (without regard to the termination of Executive's employment or of the
time of delivery of the Company's annual audited financial statements),
plus (C) within 10 days following the issuance of the Company's audited
financial statements for its Fiscal Year in which the Employment
Termination Date occurs, a pro-rata share of any Incentive Bonus
Compensation with respect to the Fiscal Year in which the Employment
Termination Date occurs, which would otherwise have been payable to
Executive had his employment not been so terminated.
(b) Section 11(c) of the Agreement is hereby amended and restated in
its entirety as follows:
(c) Termination for Disability. The Company may terminate the
Executive's employment because of the Disability of the Executive and
thereafter shall pay to the Executive (or his successors) (1) his unpaid
Base Compensation through the sixth full month following the Employment
Termination Date at his then effective Base Compensation rate, plus (2) the
amount of any Incentive Bonus Compensation with respect to any previous
Fiscal Year, which shall become immediately payable without regard to the
time of delivery of the company's annual audited financial statements, plus
(3) an amount equal to a pro-rata share of any Incentive Bonus Compensation
calculated through the sixth full month following the Employment
Termination Date as though all of such six-month period were part of the
Fiscal Year in which occurred the Employment Termination Date (but
otherwise as though such termination had not occurred), and which shall be
immediately payable assuming for purposes of calculating the amounts due,
the largest amount of Incentive Bonus Compensation accrued for any of the
two most recently completed Fiscal Years. In addition, the Executive shall
be entitled to the amounts and benefits specified in Paragraphs (2) and (3)
of Section 11(f) of this Agreement.
(c) Section 11(d) shall be and hereby is amended and restated in its
entirety as follows:
(d) Upon Executive's Death. In the event of the Executive's
death, the Company shall pay to the Executive's estate (1) any unpaid
amount of Base Compensation through the date of death at the then effective
Base Compensation rate plus (2) the amount of any Incentive Bonus
Compensation earned and unpaid with respect to any previous Fiscal Year,
which shall become immediately payable without regard to the time of
delivery of the Company's annual audited financial statements, plus (3) an
amount equal to the pro-rata share of any Incentive Bonus Compensation
calculated with respect to the Fiscal Year in which the death occurs, and
which shall be immediately payable assuming for purposes of calculating the
amounts due, the largest amount of Incentive Bonus Compensation accrued for
any of the two most recently completed Fiscal Years (but otherwise as
though such Termination had not occurred). All previously granted stock
options, rights, warrants and awards shall fully vest on the death of the
Executive, except that the
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provisions of the Company's Stock Incentive Plan and any other Benefit Plan
shall control the benefits and awards covered thereby.
(d) Clauses (A) and (B) of Paragraph (1) of Section 11(f) (Compensation
Upon Certain Termination), shall be and hereby are amended and restated in
their entirety as follows:
(A) (i) His unpaid Base Compensation through the Employment
Termination Date at his then effective Base Compensation rate, plus (ii)
the amount of any Incentive Bonus Compensation earned and unpaid with
respect to any previous Fiscal Year, which shall become immediately payable
without regard to the time of delivery of the Company's annual audited
financial statements, plus (iii) an amount equal to a pro-rata share of the
amount of any Incentive Bonus Compensation calculated with respect to the
Fiscal Year in which occurs the Employment Termination Date, and which
shall be immediately due and payable assuming for purposes of calculating
the amounts due, the largest amount thereof accrued for any of the two most
recently completed Fiscal Years.
(B) In addition, the Company shall pay to the Executive promptly in a single
lump sum in cash an amount equal to the product of (i) three, multiplied by
(ii) 100% of the aggregate total amount which would have been payable to
Executive under Section 5 of this Agreement for the entire Fiscal Year in
which occurs the Employment Termination Date as if his employment had not
been terminated (and without deduction or offset for any amounts actually
paid for such Fiscal Year on account of Base Compensation or Incentive
Bonus Compensation, under Section 5, this Section 11 or otherwise), and
assuming for purposes of calculating (x) the Base Compensation, 100% of the
amount thereof at the annual rate payable for such Fiscal Year pursuant to
Section 5(a) above and (y) the Incentive Bonus Compensation, the largest
amount thereof accrued for any of the two most recently completed Fiscal
Years.
AMERILINK CORPORATION
Amendment No. 2 To
Executive Employment Agreement
This AMENDMENT NO. 2 TO EXECUTIVE EMPLOYMENT AGREEMENT (the "Amendment") is
made in Columbus, Ohio effective as of August 4, 1998, by and between
AMERILINK CORPORATION, an Ohio corporation (the "Company"), and XXXXX X.
XXXXXXX, an individual residing in New Albany, Ohio (the "Executive"), who,
for and in consideration of the mutual promises hereinafter made and other
good and valuable consideration, each of them intending to be bound hereby,
agree that that certain Executive Employment Agreement dated as of August
19, 1994 between the Company and the Executive, as amended by Amendment No.
1 to Executive Employment Agreement dated on or about April 29, 1997
(together, the "Agreement") shall be and hereby is modified and amended as
hereinafter provided:
Section 1. Definitions. As used herein, capitalized terms shall have the
meanings set forth in the Agreement except as expressly otherwise defined
herein. As used in the Agreement, the following terms shall have the
following meanings, and any prior or different definition of any of the
following terms shall be and hereby is amended and restated as set forth
below:
"Common Shares" means the common shares, without par value, of the Company.
"Compensation Committee" means the Compensation Committee of the Board of
Directors, as constituted from time to time.
"Extended Employment Period" means the period of time commencing on the first
day of the Fiscal Year which began March 31, 1998 and ending on the
Employment Termination Date.
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"IBT" means, for each Fiscal Year, the dollar amount of the consolidated net
income before income taxes of the Company and its subsidiaries determined
in accordance with generally accepted accounting principles, consistently
applied in accordance with past practice. The amount of IBT reflected on
the Company's annual financial statements prepared in accordance with
generally accepted accounting principles and audited by Ernst & Young, LLP
or such other accounting firm of national reputation as may be selected as
the Company's auditor from time to time, shall be conclusively binding on
the Company and the Executive for purposes of this Agreement.
"Incentive Bonus Compensation" means the amounts payable to the Executive
pursuant to paragraphs (b), (c), (d) and (e) of Section 5 of the Agreement.
"Restricted Stock" means awards of Common Shares granted as "restricted stock
awards" pursuant to Section 10 of the Company's 1994 Stock Incentive Plan
as the same shall be extended and amended from time to time with the
approval of the Executive (which shall be deemed evidenced by his approval
thereof by his vote in favor thereof as a Director of the Company or his
signature thereof on behalf of the Company in his capacity as President of
the Company), or pursuant to equivalent provisions of a subsequent stock
incentive plan adopted hereafter by the Company with the approval of the
Executive (evidenced as indicated above).
"Scheduled Employment Termination Date" means March 31, 2008.
"Target Adjustment Amount" means, for the first Fiscal Year of the Extended
Employment Period, an amount of Target IBT equal to $30,000,000, and for
each subsequent Fiscal Year of the Extended Employment Period, an amount of
Target IBT equal to 110% of the Target Adjustment Amount applicable to the
previous Fiscal Year.
"Target IBT" means, for each Fiscal Year, the forecasted amount of IBT to be
earned by the Company pursuant to a budgetary forecast or financial plan
which shall be prepared annually by the Executive in consultation with
senior executives of the Company and approved by resolution of the Board of
Directors annually prior to the beginning of such Fiscal Year (or such
later date as shall be approved by the Board of Directors) in order to
establish levels of Incentive Bonus Compensation with respect to such
Fiscal Year in accordance with Section 5(b) of the Agreement.
"Target Range" means, for each Fiscal Year, a range of amounts of IBT having a
lower limit equal to 95% of Target IBT and an upper limit equal to 105% of
Target IBT, and including all amounts of IBT equal to and greater than such
lower limit and equal to and less than such upper limit, each of such lower
and upper limits of the Target Range to be in the dollar amounts specified
by the Compensation Committee in connection with its approval of the
forecasted amount of Target IBT for such Fiscal Year.
Section 2. Compensation. Section 5 of the Agreement is hereby amended and
supplemented by adding thereto the following paragraphs (c), (d) and (e),
as follows:
(c) Alternate Incentive Bonus Compensation. For each Fiscal Year during the
Extended Employment Period in which IBT equals or is less than $5,000,000,
Incentive Bonus Compensation shall be determined exclusively in accordance
with the provisions of Section 5(b), above. For each Fiscal Year during the
Extended Employment Period in which IBT exceeds $5,000,000, notwithstanding
the provisions of Section 5(b), above, Incentive Bonus Compensation shall
be determined exclusively in accordance with the provisions of this Section
5(c) and Section 5(d) and (e), below. For each such Fiscal Year in which
IBT exceeds $5,000,000, the Executive shall be paid "Incentive Bonus
Compensation" in an amount equal to the percentages of IBT for such Fiscal
Year determined as follows:
(i) If IBT for such Fiscal Year exceeds $5,000,000 but does not equal or
exceed the lower limit of the Target Range for such Fiscal Year, the
Incentive Bonus Compensation for such Fiscal Year shall equal 2.5% of total
IBT for such Fiscal Year.
(ii) If IBT for such Fiscal Year equals or exceeds the lower limit of the
Target Range for such Fiscal Year, the Incentive Bonus Compensation for
such Fiscal Year shall equal 3.1% of the amount of total IBT for such
Fiscal year up to but not
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exceeding the upper limit of the Target Range for such Fiscal Year, plus
the sum of the amounts, if any, calculated pursuant to clause (iii), below.
(iii) If IBT in such Fiscal Year exceeds the upper limit of the Target
Range for such Fiscal Year, the Executive shall be entitled to additional
Incentive Bonus Compensation equal to (A) 3.5% of the amount of such excess
IBT up to, but not exceeding, $1,000,000 plus (B) 3.7% of the amount, if
any, by which such excess IBT exceeds $1,000,000 but does not exceed
$2,000,000, plus (C) 4% of the amount, if any, by which such excess IBT
exceeds $2,000,000 but does not exceed $3,000,000 plus (D) 5% of the
amount, if any, by which such excess IBT exceeds $3,000,000, but does not
exceed $4,000,000 plus (E) 2% of the amount, if any, by which such excess
IBT exceeds $4,000,000.
(d) Adjustment.
For any Fiscal Year, in the event that Target IBT exceeds the Target Adjustment
Amount, the amount of Incentive Bonus Compensation payable for such Fiscal
Year shall be adjusted by multiplying the amount calculated as set forth in
clauses (i), (ii) and (iii) of Section 5(c) above by a fraction, the
numerator of which is the Target Adjustment Amount and the denominator of
which is the Target IBT less one-half of the amount by which the Target IBT
exceeds the Target Adjustment Amount.
(ii) In the event that the Company or any of its subsidiaries shall, whether by
merger, consolidation, combination, purchase of assets or other form of
acquisition, acquire during any Fiscal Year another business (an
"Acquisition") the financial operations of which (A) were not taken into
account in the determination of Target IBT for such Fiscal Year and (B)
will, in accordance with generally accepted accounting principles, be
reported for such Fiscal Year on a consolidated basis with the operations
of the Company and its consolidated subsidiaries, whether as a "pooling" or
a "purchase" (as such terms are defined according to generally accepted
accounting principles), the Board of Directors may, in its discretion after
consultation with the Executive, make such adjustment to the Incentive
Bonus Compensation for such Fiscal Year, to the extent based on IBT
directly attributable to such Acquisition, as the Board of Directors may
determine to be equitable to the Executive and the Company in the
circumstances.
(iii) The Board of Directors shall be exclusively responsible, and is hereby
authorized, to make all determinations on behalf of the Company with
respect to the calculation of Incentive Bonus Compensation. In the event
that the Board of Directors and the Executive shall be unable to resolve
any dispute relating to the calculation of Incentive Bonus Compensation for
any Fiscal Year, the issue may be referred by either party to Ernst &
Young, LLP, or such other accounting firm of national reputation as shall
then be the Company's auditor, and the determination of the issue by such
firm shall be final and binding on all parties.
(d) Payment of Incentive Bonus Compensation. The Executive's Incentive Bonus
Compensation for each Fiscal Year during the Extended Employment Period
shall be payable within 10 days after the issuance of the Company's audited
financial statements for the related Fiscal Year. The Incentive Bonus
Compensation shall be payable in a combination of cash, deferred
compensation pursuant to a deferred compensation plan as provided below,
and Restricted Stock. That portion of the Incentive Bonus Compensation for
any such Fiscal Year (the "Cash Portion") which is the greater of (i) 75%
of the Base Compensation of the Executive for such Fiscal Year, or (ii)
such larger portion as the Board of Directors shall determine after
consideration of the Company's compensation policies for other executive
officers of the Company and such other criteria as it shall determine to be
relevant, shall be paid to the Executive in cash or a combination of cash
and deferred compensation allocated as provided in the deferred
compensation plan to be adopted by the Company as provided below. The
balance of the Incentive Bonus Compensation remaining after payment of the
Cash Portion (the "Restricted Stock Portion") shall be paid by the issuance
and delivery of that number of shares of Restricted Stock which equals the
dollar amount of the Restricted Stock Portion divided by the average
closing price per share of the Common Shares on the last 10 trading days of
such Fiscal Year. The Company shall use diligent efforts to adopt a
deferred compensation plan reasonably acceptable to the Executive pursuant
to which receipt by the Executive of a part of the Cash Portion may be
deferred and made payable pursuant to such deferred compensation plan. In
connection with the payment of the Restricted Stock Portion for any Fiscal
Year, the only restrictions which shall apply to such Restricted Stock
grants shall be the requirement of continued employment hereunder during
the three Fiscal Years immediately following such Fiscal Year, provided,
however, that if the
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Scheduled Employment Termination Date is less than three years from the
date of grant, the restrictions shall be limited to the time period which
ends on the Scheduled Employment Termination Date.
Section 3. Employee Benefits; Vacations.
(a) Section 7(a) of the Agreement is hereby amended and restated in its
entirety as follows:
(a) Benefit Plans. The Executive shall be entitled to participate in a deferred
compensation plan which the Company shall use reasonable efforts to adopt
on terms and conditions reasonably acceptable to the Executive. The Company
shall continue in effect any perquisite, benefit or compensation plan (in
addition to the deferred compensation provided for above) including its
profit-sharing plan and 401K plan, medical insurance plan, life insurance
plan, health and accident plan and disability plan in which the Executive
is currently participating, or shall maintain plans providing substantially
similar or improved benefits (collectively referred to as the "Benefit
Plans"); provided, however, that the Company may make modifications to the
Benefit Plans so long as such modifications (i) are generally applicable
either to all salaried employees of the Company, or, in connection with
plans which apply only to executive officers and/or other so-called highly
compensated employees of the Company, are generally applicable to such
executive officers and/or highly compensated employees, and, in either
case, (ii) do not discriminate adversely against the Executive or other
highly-compensated employees of the Company.
(b) Vacations. The Executive shall be entitled in each Fiscal Year to a
vacation of six weeks (30 working days) during the first five Fiscal Years
of the Extended Employment Period, and eight weeks (40 working days) during
the last five Fiscal Years of the Extended Employment Period, during all of
which time his compensation shall be paid in full, in addition to such
holidays and other non-working days as are consistent with the policies of
the Company for its executives generally. The Executive's unused vacation
days for any Fiscal Year shall not carry forward to any subsequent Fiscal
Year. In addition, the Executive shall be entitled to take a three-month
sabbatical leave of absence during any Fiscal Year of the last five Fiscal
Years of the Extended Employment Period, in lieu of his vacation time for
such Fiscal Year, during all of which time his compensation shall be paid
in full.
Section 4. Termination of Employment. Section 11(a)(1) is hereby amended
and restated in its entirety as follows:
Notice of Termination; Employment Termination Date.
Any termination of the Executive's employment by the Company or the Executive
shall be communicated by written Notice of Termination to the other party
thereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination under
the provision so indicated. If the Executive's employment shall be
terminated for any reason, or for no reason, other than termination for
Cause pursuant to Section 11(b) or voluntary termination of employment by
the Executive other than for Good Reason prior to the Scheduled Employment
Termination Date pursuant to Section 11(e)(2), all Restricted Stock held by
the Executive immediately, automatically and without any requirement of any
further action on the part of the Company or the Executive, shall be deemed
fully vested without any applicable restrictions, and shall be promptly
issued to the Executive without legend (except as to customary restrictions
relating to applicable securities laws); and all Incentive Bonus
Compensation then remaining unpaid, including any part of the Restricted
Stock Portion for which shares of Restricted Stock have not then been
issued to the Executive, and all Incentive Bonus Compensation for the
Fiscal Year in which the Employment Termination Date shall occur, shall be
payable in cash without reference to any requirement otherwise applicable
hereunder for payment partially in cash, partially in Restricted Stock
and/or partially pursuant to any deferred compensation plan adopted by the
Company.
Section 5. Stock Options. As a material part of the consideration to the
Executive for entering into this Amendment, the Company, through
the Compensation Committee or otherwise, shall grant to the
Executive options to purchase 200,000 Common Shares under and
subject to the provisions of the Company's 1994 Stock Incentive
Plan, as amended and supplemented as hereinafter set forth (the
"Plan"), at the price per share equal to the value thereof on
the date of the Company's 1998 Annual Meeting of Shareholders,
which shall be deemed for purposes of the Agreement to be the
closing price per share of the Common Shares on the NASDAQ
National Market on the immediately preceding trading day;
provided, however, that the
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maximum number of such options which may be qualified as Incentive Stock
Options under Section 422 of the Internal Revenue Code of 1986 as amended
("ISO's") shall be granted as such ISO's at a price per share equal to 110%
of the closing price of the Common Shares on the NASDAQ National Market on
such day. The term of such options shall be for ten years (except that in
the case of the ISO's, the term shall be limited to five years) and such
options shall vest and become exercisable ratably over the four successive
years following the date of grant. The Company agrees to adopt and propose
for approval at its 1998 Annual Meeting of Shareholders, an amendment to
the 1994 Stock Incentive Plan which shall increase by 600,000 the number of
shares available for grant thereunder, and the Company shall use its
reasonable best efforts to solicit approval of the Shareholders of the
Company of such amendment at such meeting. Notwithstanding any of the
provisions of this Agreement, this Amendment is and shall be conditioned
upon (i) the grant by the Company of the options described above in this
Section 5, (ii) the adoption of an amendment to the Plan conforming to the
provisions of this Section 5 and (iii) the approving vote of the
Shareholders of the Company at the 1998 Annual Meeting with respect to said
amendment to the Plan.
Section 6. Ratification and Confirmation of Agreement.
The provisions of the Agreement, as herein above restated and amended, are
and remain in full force and effect, and, as so amended and restated, the
Agreement is hereby fully ratified and confirmed.
IN WITNESS WHEREOF, the Company and the Executive have executed multiple
counterparts of this Agreement.
COMPANY: EXECUTIVE:
AMERILINK CORPORATION /s/ Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx -------------------------
Xxxxxxxx, Xxxx 00000 Name: Xxxxx X. Xxxxxxx
Address: 0000 Xxxxxx Xxxx
Xxx Xxxxxx, Xxxx 00000
By: /s/ Xxxxxx X. Govern
--------------------------------------------
Name: Xxxxxx X. Govern
Title: Senior Vice President - Operations
and by: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Assistant Secretary
SECTION 4. RATIFICATION AND CONFIRMATION OF AGREEMENT.
The provisions of the Agreement, as herein above restated and amended,
are and remain in full force and effect, and, as so amended and restated,
the Agreement is hereby fully ratified and confirmed.
IN WITNESS WHEREOF, the Company and the Executive have executed multiple
counterparts of this Agreement.
COMPANY: EXECUTIVE:
AMERILINK CORPORATION
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0000 Xxxx Xxxxxx-Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
By:
--------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board Address: 00 Xxxxx Xxxxxx Xxxx
of Directors, President Xxxxxxxx, Xxxx 00000
and Chief Executive Officer
and by:
-----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Secretary
