EXHIBIT 10.28
SETTLEMENT AGREEMENT
THIS AGREEMENT, dated and effective as of August 31, 2001, is by and
between AmeriVision Communications, Inc., an Oklahoma corporation (the
"COMPANY"), and Xxxxx X. Xxxxxx, an Oklahoma resident ("XXXXXX").
BACKGROUND INFORMATION
The Company and Xxxxxx are currently opposing parties in a civil
lawsuit pending presently in the Seventh Judicial District for the State of
Oklahoma, Oklahoma County, styled AmeriVision Communications, Inc.,
(Substituted) Plaintiff vs. Xxxxx Xxxxxx, et al., Defendants, Case No.
CJ-2001-1939 (the "Lawsuit"), and mutually desire to settle fully the Lawsuit on
the terms and conditions set forth herein. They are also parties to an
employment agreement the terms of which have been the subject of a dispute and
which they now wish to terminate and convert into an independent consulting
arrangement, and Xxxxxx has recently been elected to membership on the Company's
Board of Directors, thereby creating possible difficulties for the Company in
its relationship with a primary institutional lender which he wishes to
ameliorate.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, the parties agree as
follows:
OPERATIVE PROVISIONS
1. DISMISSAL OF LAWSUIT. As soon as practicable following the signing of this
Agreement, the Company shall dismiss the Lawsuit by filing its dismissal with
the court in substantially the following form:
IN THE DISTRICT COURT FOR OKLAHOMA COUNTY
STATE OF OKLAHOMA
AMERIVISION COMMUNICATIONS, INC., )
(Substituted) Plaintiff, )
vs. ) Case No. CJ-2001-1939
)
XXXXX XXXXXX, et al., )
Defendants. )
DISMISSAL
For value received, Plaintiff hereby dismisses with prejudice to
refiling its claims against Defendant Xxxxx Xxxxxx, reconfirms and reiterates
herein its previous dismissal with prejudice to refiling its claims against
Defendant Xxx X. Xxxxxxx, and dismisses without prejudice to refiling its claims
against Defendants Xxxx Xxxxxxxx and Xxxx X. Telling, each party to bear its or
his own costs and attorney fees.
/s/ Attorneys for Plaintiff
2. TERMINATION OF XXXXXX EMPLOYMENT AND EMPLOYMENT AGREEMENT. Xxxxxx shall be
deemed to have resigned from employment with the Company, and the Company shall
be deemed to have accepted such resignation as of the close of business on
Friday, August 31, 2001, and that certain Employment Agreement, dated May 24,
1999, by and between Xxxxxx and the Company, shall be deemed terminated and of
no further legal effect as of that same date and time. The Company shall timely
cause Xxxxxx to be furnished with the notification required by Section
4980B(f)(6) of the Internal Revenue Code of 1986, as amended, so that Xxxxxx may
elect continuation coverage for himself and his spouse under the Company's group
health plan, identical to the benefit coverage provided during the period of his
employment by the Company and for at least the 18 month period beginning as of
September 1, 2001.
Concurrently with his actual execution of this Agreement, Xxxxxx shall
return to the Company and relinquish the possession of that certain Company
owned Mercedes automobile which has been assigned to his use (the "AUTOMOBILE"),
all Company issued credit cards and any other tangible or intangible personal
property owned by the Company and currently within his possession; provided that
with respect to the Automobile, Xxxxxx is hereby granted an option, exercisable
during the period ended September 30, 2001, to acquire title thereto from the
Company for a purchase price of $10.00 and his assumption of all obligations
for which the Company is then responsible as a consequence of its ownership of
the Automobile. If the holder of such obligation shall not allow a transfer of
title unless the Company remains as the primary obligor, then Xxxxxx may acquire
the Automobile by acknowledging that he shall take title subject to the
obligation, shall be responsible for making all debt service and principal
amortization payments with respect thereto, and shall indemnify the Company
against and hold it harmless from all claims, liabilities, damages, costs and
expenses asserted against or incurred by the Company which arise out of Xxxxxx'x
ownership or use of the Automobile.
3. RESIGNATION FROM COMPANY BOARD OF DIRECTORS. The Company warrants and
represents to Xxxxxx that it believes his current status as a voting member of
the Company's Board of Directors may inhibit or prevent the Company from
engaging the professional services of a nationally recognized certified public
accounting and auditing firm, and that such inability may further cause the
Company to be in breach of its obligations under the Company's agreement with
its principal lender. Therefore, effective as of the close of business on
Friday, August 31, 2001, Xxxxxx'x resignation from service as an elected member
of the Company Board of Directors, herein deemed tendered, shall be deemed
accepted by the Company. Xxxxxx covenants and agrees that, following the
effectiveness of such resignation and subject to the provisions of the
succeeding paragraph, he shall not accept a nomination to run for the office of
Company director, nor, if elected to such office by Company shareholder action
taken over his objection, shall he serve in that position.
Notwithstanding the foregoing, the Company's Board of Directors shall
be required, during the month of February in each calendar year, to make a good
faith determination as to whether Xxxxxx'x status as a voting member of the
Company's Board of Directors would then cause the Company to be in breach of its
obligations under the lending agreement with its principal lender or would
threaten the Company's ability either to maintain the engagement of its then
existing independent certified public accounting and auditing firm or to engage
the professional services of a new, desired CPA firm of national reputation. If
such determination results in a decision that
Xxxxxx'x return to active membership on the Company's Board of Directors would
not constitute such a breach or effect such a threat, the Board of Directors
shall promptly so inform Xxxxxx and if he, in turn, informs the Board by written
statement that he wishes to again become a member of that body, the Board shall
(a) cause his name to be submitted as a nominee for election to the Board of
Directors at the next annual meeting of the Company's shareholders; and (b)
support Xxxxxx'x election to the Board unless it shall then be in possession of
information, not presently held, which causes its membership, by unanimous vote,
to conclude that such election would not be in the best interests of the
Company's shareholders. Irrespective of whether Xxxxxx is hereafter elected as a
member of the Company's Board of Directors, the Company acknowledges that Xxxxxx
is a founder of the Company, that such status is not in dispute and may not be
rescinded by the Company, and that Xxxxxx shall be so recognized in the
Company's public pronouncements, as the Board deems appropriate.
4. XXXXXX APPOINTMENT TO THE COMPANY BOARD OF DIRECTORS AS ADVISOR. Effective
September 1, 2001, subject to Xxxxxx'x execution and delivery of a counterpart
copy of a Confidentiality Agreement in the form of EXHIBIT A hereto (the
"CONFIDENTIALITY AGREEMENT"), and to his future performance in accordance with
its terms and the terms of this Agreement, Xxxxxx shall constitute an advisor to
the Company's Board of Directors, and in such capacity may attend all meetings
of the Board of Directors, as well as each meeting of any Board committee to
which he may be appointed as a member; provided that Xxxxxx (a) shall have no
right to vote on any matter coming before the Board of Directors or any such
committee; and (b) shall receive no fee for serving as a Board advisor. He
shall, however, be entitled to reimbursement for reasonable and substantiated
travel and lodging expenses associated with attendance at meetings of the Board.
Xxxxxx'x status as an advisor shall continue until the earliest to occur as
among (a) the termination of that certain Consulting Agreement identified in
paragraph 7 below; (b) Xxxxxx'x appointment as a member of the Company's Board
of Directors as described in paragraph 3 above; or (c) Xxxxxx'x breach of any
obligation set forth in the Confidentiality Agreement or this Agreement.
5. REIMBURSEMENT OF XXXXXX ATTORNEY FEES. The Company shall reimburse Xxxxxx to
the extent of $45,000 for attorney fees he has incurred since January 1, 2001,
in defending himself in the Lawsuit, and in engaging legal representation to
represent him in the defense of disputed allegations of wrongdoing made against
him by the Company outside of the Lawsuit. Subject to the Company's working
capital availability, the determination of which shall be made by the Company in
good faith, one-half of such payment ($22,500) shall be made by the Company on
Friday, September 21, 2001; and the remaining payment ($22,500) shall be made on
Friday, October 5, 2001; provided that if either such payment shall be deferred
as a consequence of the Company's determination of working capital
insufficiency, the same shall be made in any event no later than 30 days
following its due date.
6. AWARD OF COMPANY COMMON STOCK. For his service as a member of the Board of
Directors between the date of his election and August 31, 2001, and pursuant to
the terms and conditions of a resolution of the Company's Board of Directors
passed unanimously at the Board's meeting of July 27-28, 2001, the Company shall
issue to and in favor of Xxxxxx 1,000 shares of its authorized but previously
unissued common capital stock, $.01 par value (the "COMMON STOCK"), at the time,
in the manner, and pursuant to the same terms and conditions applicable to each
other
member of the Board as constituted on July 27-28, 2001; provided that any
condition of issuance that requires continued service as a voting member of the
Company's Board of Directors is hereby waived.
7. CONSULTING AGREEMENT. The parties hereto shall execute and deliver to each
other a Consulting Agreement in the form of EXHIBIT B hereto, the effective date
of which shall be September 1, 2001 (the "CONSULTING AGREEMENT").
8. VOTING TRUST FOR XXXXXX STOCK. During the pendency of the Consulting
Agreement (the "VOTING TRUST TERM"), Xxxxxx shall cause all shares of the
Company's Common Stock then registered in his name, either individually or
together with one or more additional parties, which exceed 4.99% of all shares
of the Company's Common Stock then issued and outstanding, to be held within and
subject to the terms of a Voting Trust Agreement, in the form attaching hereto
as EXHIBIT C.
9. PAYMENT OF XXXXXX BACK PAY. The Company covenants that Xxxxxx is entitled to
but has not been paid compensation due him under the terms of the Employment
Agreement from February 23, 2001, through August 31, 2001, in the gross sum of
$176,356.44 (the "BACK PAY"). The Company shall pay Xxxxxx his Back Pay, less
any portion thereof which the Company is required by federal or state law to
withhold, in accordance with the terms and conditions of that Promissory Note
which attaches hereto as EXHIBIT D, the original of which shall be executed by
the Company and delivered to Xxxxxx concurrently with the execution of this
Agreement.
10. MUTUAL RELEASES. For value received, and except as expressly set forth
herein and in the Exhibits attaching hereto (the terms of each of which are
incorporated into the body of this Agreement by express reference thereto), each
of the parties hereby releases and discharges the other, and, as the case may
be, its or his respective officers, directors, agents, employees, attorneys,
spouses, heirs, successors and assigns, of and from any and all liabilities,
debts, claims, damages, and causes of action, of whatever kind or character,
whether arising in tort or contract, law or equity, known or unknown, which
relate to or arise out of any transaction, occurrence or event that took place
on or before the date of this Agreement, including, but not limited to, all
claims that were alleged or could have been alleged in the Lawsuit, any claim by
Xxxxxx against the Company for unpaid dividends or other distributions in
respect of his Common Stock ownership (expressly including the $3,201,000
identified in the Company's audited consolidated financial statements, prepared
with respect to the year ended December 31, 2000, as constituting accrued but
unpaid distributions), and any claim by the Company for reimbursement from
Xxxxxx for any amount paid or owed by the Company to any third party. It is
expressly agreed that this release shall not be deemed to deny to either party
the right to prosecute a cause of action against Xxxxx Xxxxx.
11. DUTY OF INVESTIGATION. On or before March 31, 2002, the Company shall
conduct and complete a good faith investigation into the facts and
circumstances surrounding the original filing and prosecution of the Lawsuit by
Xx. Xxxxx and, in particular, (a) the involvement, if any, of the Company, its
officers and directors; and, (b) the merits of the claims asserted against
Xxxxxx in the Lawsuit, and in the Company's annual report on Form 10-K, as filed
with the United States Securities and Exchange Commission (the "COMMISSION") for
the period ended December 31, 2000,
and its separate Proxy Statement, filed in amended form with the Commission on
or about June 7, 2001 (collectively the "SEC FILINGS"). If such investigation
concludes that the accusations against Xxxxxx in the Lawsuit and/or SEC Filings
were materially erroneous, in whole or in part, then the Company shall promptly
(a) advise Xxxxxx in writing of such determination(s); and, (b) correct in
writing as needed the SEC Filings either by amendment to the applicable SEC
Filing or in a subsequent filing, as the Company, in its sole discretion, deems
appropriate, taking into account the reputation of the Company and of Xxxxxx. It
is expressly agreed, however, that the results of such investigation shall not
affect, in whole or in part, the enforceability of any term of this Settlement
Agreement by or against any party.
12. NON-DISPARAGEMENT. During the pendency of the Consulting Agreement and the
two year period following its termination, neither party may release or publish
any statement or other information concerning Xxxxxx'x employment with or
independent engagement by the Company, the termination of either such
relationship or the other's business operations or practices, unless, in any
such case, the same shall have been approved by the other or such release or
publication shall be required by statute, regulation or judicial order. EXHIBIT
E hereto constitutes a statement approved by the parties for dissemination, on
or after the date of this Agreement, by Xxxxxx or the Company as he or it shall
deem appropriate.
13. MISCELLANEOUS:
13.1 NOTICE. Any notice or other communication required or made
necessary by this Settlement Agreement shall be in writing, given to the parties
at the following addresses, and deemed received within five (5) days after being
sent first class mails, postage prepaid:
IF TO THE COMPANY: IF TO XXXXXX:
x/x Xxxxxx X. Xxxx, Xxx. Xxxxxxx X. Xxxxxxxxxxx, Esq.
Xxxx Xxxx Xxxxxxx Xxxxxx Xxxxx, Kline, Elliott, Xxxxxxxxxxx
& Xxxx, P.A. & Xxxxxx, P.C.
000 Xxxxx Xxxxxxxx Xxxxxx 000 XX 00xx Xxxxxx
Xxxxx, XX 00000 Xxxxxxxx Xxxx, XX 00000
13.2 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance the laws of the State of Oklahoma.
13.3 ASSIGNMENT. The rights and responsibilities under this Agreement
may not be assigned by any party without the express written consent of all
other parties.
13.4 WAIVER OR MODIFICATION. This Agreement constitutes the entire
agreement of the parties, and may be modified, amended or waived only by written
instrument executed by all parties.
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by means of multiple signature pages each containing less than all
required signatures, and by means of facsimile signatures, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.6 ENFORCEMENT. This Agreement may be specifically enforced in a
court of competent jurisdiction located in Oklahoma County, Oklahoma, which
venue shall be exclusive, without the necessity of posting bond or other
financial undertaking, the prevailing party to receive an award of reasonable
attorney fees in addition to such other relief as the court deems proper.
IN WITNESS WHEREOF, the parties have hereunto set their hands intending
to be bound hereby for the uses and purposes herein set forth.
THE COMPANY: XXXXXX:
/s/ XXXXXXX X. XXXXX /s/ XXXXX X. XXXXXX
------------------------------------ ---------------------------------------
Xxxxxxx X. Xxxxx, Chairman Xxxxx X. Xxxxxx
AmeriVision Communications, Inc.
Exhibits:
Exhibit A - Confidentiality Agreement
Exhibit B - Consulting Agreement
Exhibit C - Voting Trust Indenture
Exhibit D - Promissory Note
Exhibit E - Statement
