THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”) is
made and effective as of March 30, 2007, between EQUITY
MEDIA HOLDINGS CORPORATION , a Delaware corporation (the
“ Parent ” or the “ Company
”) and LARRY E. MORTON , a resident of the State of
Arkansas (the “ Employee ”).
This Agreement is
entered into in connection with that certain Agreement and Plan of
Merger dated April 7, 2006, as amended on May 5, 2006 and
September 14, 2006 (the “ Merger Agreement
”) among the Parent, Equity Broadcasting Corporation (“
EBC ”), and certain majority shareholders of EBC,
pursuant to which EBC will merge with and into Parent with Parent
being the surviving corporation.
In consideration
of the premises and mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows.
1.
Employment . The Company hereby employs the Employee
and the Employee hereby accepts employment by the Company, upon all
of the terms and conditions set forth in this Agreement.
2.
Employment Period . The period during which the
Employee shall serve as an employee of the Company shall commence
on the date hereof and, unless earlier terminated pursuant to this
Agreement, shall expire on the third anniversary of the date hereof
(the “ Employment Period ”).
3.
Duties and Responsibilities . The Employee agrees to
perform all duties required of President and Chief Executive
Officer of the Company. On the third anniversary of the date
hereof, or as otherwise sooner agreed to by the Employee and the
Company, the Employee agrees to step down as President and Chief
Executive Officer and for two years following the termination of
this agreement, the Employee will serve as Vice Chairman of the
Board of Directors and will perform such duties as the Board of
Directors and Employee mutually agree. Employee further agrees to
perform his duties honestly, diligently, competently, in good faith
and in the best interests of the Company and shall give his best
efforts in performing these duties for the Company. The Employee
further agrees that during his tenure as President and Chief
Executive Officer of the Company, the Employee shall devote his
full time to the rendering of services on behalf of the
Company.
4.
Compensation . In consideration for the
Employee’s services hereunder and the restrictive covenants
contained herein, and subject to the terms and conditions herein
during the Employment Period, the Company shall pay to the Employee
an annual base salary of Five Hundred and Twenty Thousand Dollars
and 00/100 (US $520,000.00) payable in accordance with the
Company’s customary payroll practices, which salary will be
reviewed annually by the
Board of
Directors of the Company (the “ Base Salary ”);
provided however, that during the Employment Period the Base Salary
shall not be reduced. Any bonus compensation in addition to the
Base Salary shall be determined at the discretion of the
compensation committee of the Board of Directors of the
Company.
There shall be
withheld from all amounts due to the Employee as compensation for
services performed by him such federal and state income taxes, FICA
and other amounts as may be required to be withheld under
applicable law.
5.
Grant of Stock Options . The Company shall grant the
Employee 2,000,000 stock options, adjusted for any and all splits,
for stock in the Company with an exercise price at fair market
value which options shall vest in four equal installments
commencing at the signing of this agreement and on each anniversary
thereafter and which shall be a part of and granted pursuant to the
terms of the Company’s 2007 Stock Incentive Plan adopted in
connection with the Merger Agreement. Said Stock Options shall be
exercisable for a minimum of five (5) years. Notwithstanding
any provisions contained herein to the contrary, in the event
Employee is terminated for any reason whatsoever the termination
shall be structured such that Employee shall have two years to
exercise his options.
6.
Management Incentive Pool . During the Employment
Period, Employee will be entitled to maximum participation in the
Company’s Management Incentive Compensation Plan, to be
established for current and future executives in conjunction with
the Merger Agreement, with a minimum amount of not less than
$3,040,000.00, subject to Employee ‘ s employment at
the time the target stock price is obtained.
7. Vacation
and Holidays; Insurance
(a) During
the Employment Period, the Employee shall be entitled to twenty
(20) business days of vacation leave each calendar year to be
taken at such times as the Employee and the Company shall mutually
determine and provided that no vacation time shall significantly
interfere with the duties required to be rendered by the Employee
hereunder. Any vacation time not taken by the Employee during any
calendar year may not be carried forward into any succeeding
calendar year.
(b) During
the Employment Period, the Employee shall also be entitled to take
regular office holidays in addition to the vacation leave provided
in Section 7(a) above.
(c) During
the Employment Period, the Employee shall be entitled to health,
medical, dental, disability, retirement, and life insurance benefit
plans fully funded by the Company in the normal course and
comparable at least to the level of benefits as those benefit plans
that were in place with Employee’s employment prior to the
Merger Agreement, and including any further benefit enhancements to
the extent exceeding such pre-merger benefit levels hereinafter
offered by the Company to its executive personnel as may be
approved by the Company’s Board of Director’s for all
employees..
8.
Expenses. During the Employment Period, the Employee
shall be entitled to reimbursement of reasonable expenses incurred
by him which reimbursement shall be subject to and made in
accordance with such policies and procedures as may be established
by the
2
Company and as
requested by the Board of Directors of the Company. Employee shall
be provided with a corporate credit card for out of pocket business
expenses, including but not limited to, travel and
accommodations.
(a)
Termination with Notice by Either Party . The Company
or the Employee may terminate this Agreement for any reason or no
reason upon sixty (60) days prior written notice to the other.
If the Company terminates the employment of the Employee without
Good Cause (as defined below), the Company shall pay the Employee
the remainder of Employee’s Compensation at the rate of the
Base Salary in effect as of the date immediately preceding the date
of termination and the cost of premiums for any Company sponsored
insurance policies or other benefits, medical, dental, disability,
retirement and travel plans (or the cash equivalent) for the
greater of twelve (12) months or the remainder of the Employment
Period, payable in the manner and at such times as the Base Salary
and benefits otherwise would have been payable to the Employee
hereunder were the Employee to continue to be employed by the
Company. If the Employee terminates his employment with the Company
hereunder without Good Cause (as defined below), the Company shall
pay the Employee the Base Salary earned and reasonable expenses
reimbursable under this Agreement incurred through the date of
Employee’s termination; provided that the Company shall not
be under any obligation to pay the Employee any unearned or
non-accrued Compensation, and the Employee shall not be entitled
to, any such severance compensation.
(b)
Termination for Good Cause by Company . In the case
of the Company terminating this Agreement, “ Good
Cause ” means any one or more of the
following:
(i)
a material breach or default by the Employee of the terms of this
Agreement which remains uncured after thirty (30) days
following Employee’s receipt from the Company of written
notice specifying such breach or default;
(ii)
gross negligence or willful misfeasance by Employee or the breach
of fiduciary duty by Employee in the performance of his duties as
an employee hereunder;
(iii)
the commission by Employee of an act of fraud, embezzlement or any
other crime in connection with Employee’s duties;
(iv)
conviction of Employee of a felony which involves dishonesty or a
breach of trust;
(v)
the Employee is unable to perform any of the functions of his
position for which he was hired, because such performance is
prohibited or enjoined by a judicial or administrative order or
other agreement enforcing any non-competition, non-solicitation or
other restrictive covenant or agreement to which the Employee is a
party.
In the event of a
termination for Good Cause, the Company will pay the Employee the
Base Salary earned and reasonable expenses reimbursable under this
Agreement incurred through the date of Employee’s
termination; except in the case of theft or fraud against the
Company in which case no payments of any kind shall be made by the
Company to the
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Employee. Upon
termination of the employee for Good Cause, as provided above, all
outstanding and unexercised stock options, vested shall remain with
the employee. Upon termination of Employee for Good Cause, as
provided above, the Employee shall also be deemed to have resigned
as a director of the Company (if such Employee is then a director)
and shall deliver to the Company a letter of resignation to this
effect. Other than as provided in this paragraph, the Company shall
have no further liability to the Employee in the event of
termination of Employee for Good Cause. A change in the
Employee’s duties from President and Chief Executive Officer
to Vice Chairman of the Board, whether after three years or sooner
as agreed to by Employee and the Company.
(c)
Termination for Good Cause by Employee . In the case of the
Employee terminating this Agreement, “ Good Cause
” means any one or more of the following: (i) there
shall be a continuing breach or continuing default by the Company
of the terms of this Agreement which remains uncured after thirty
(30) days following the Company’s receipt from the
Employee of written notice specifying such breach or default;
(ii) requirement by Company for Employee to relocate more than
fifty (50) miles; or (iii) a substantial change in
Employee’s requirements or duties except as provided
hereunder. If the Employee terminates his employment with Good
Cause, the Company shall pay the Employee the remainder of
Employee’s Compensation at the rate of the Base Salary in
effect as of the date immediately preceding the date of termination
and the cost of premiums for any Company sponsored insurance
policies or other benefits, medical, dental, disability or
retirement and travel plans (or the cash equivalent) for the
greater of twelve (12) months or the remainder of the
Employment Period, payable in the manner and at such times as the
Base Salary and benefits otherwise would have been payable to the
Employee hereunder were the Employee to continue to be employed by
the Company.
(d) In
the event of death of the Employee, Employee’s spouse, or in
the event of a death of the spouse, Employee’s children,
shall receive all payments and benefits contained
herein.
10.
Change in Control and Other Grounds Entitling Employee to
Terminate . “ Change in Control ” shall
mean (a) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions) of all or substantially
all of the assets of the Company; (b) any consolidation or
merger or other business combination of the Company with any other
entity where the shareholders of the Company, immediately prior to
the consolidation or merger or other business combination would
not, immediately after the consolidation or merger or other
business combination, beneficially own, directly or indirectly,
shares representing fifty percent (50%) of the combined voting
power of all of the outstanding securities of the entity issuing
cash or securities in the consolidation or merger or other business
combination (or its ultimate paren
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