Exhibit 10.38
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ACT Teleconferencing, Inc.
Agreement
Long Term Stock Incentive for ▇▇▇▇ ▇▇▇▇▇▇
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Whereby it is hereby agreed:
(1.) ACT Teleconferencing, Inc. "ACT" agrees to issue ▇▇▇▇ ▇▇▇▇▇▇ with 4 year
restricted ACT stock based on a compensation plan linked to large telco and
other global customers. This is defined as global conferencing revenues of
which Concert/AT&T are the present incumbents (global). Existing ACT
companies with global accounts such as Ernst & Young, CSFB, Philips are
EXCLUDED from this arrangement. New global customers such as NTT, KPN,
France Telecom, or large industrial companies such as GE or GM or Siemens
resulting in new ACT conferencing revenues would qualify for this
incentive.
(2.) This incentive is limited to a 4 year plan. The calculation is based upon
a notional 10% stake in the global accounts business (i.e. 25% of the value
is acquired each year, for the next 4 years). Also, 25% of the stock is
released from selling restriction per year and ownership also vests 25% per
annum over this 4-year period.
(3.) The buyout calculation is at 2 times historic recorded audited revenue as
defined in (1) above (provided a minimum PBT of global business is above
20% per annum). PBT to be determined by the Chief Financial Officer.
Disagreements to be referred to the Audit Committee who's discretion is
final. Each yearly component shall only become due on the 1/st/ of July of
each year commencing July 1, 2001.
(4.) On current performance -- ignoring growth -- (see calculation page attached
on Appendix A) and assuming global (today's Concert) revenue stays stable
at $8m per annum and profitability above 20%, the theoretical bonus is
today worth $1.6m or $400,000 per annum being the first realized 25% at
July 1, 2002.
(5.) ACT stock is issued with 4 year restriction including a one-year Rule 144
restriction. For calculation purposes ACT shall use a value of 2 times
historic audited revenue for the same period (notwithstanding ACT price at
time of issue); however if ACT market price is higher than 2 times revenue
at time of issue, the ACT market price will be used.
(6.) Initially, this bonus would cap at $3m. Board has discretion to revise
upwards based on growth/profit performance. The maximum compensation
expense pursuant to this bonus to be expenses for any year on any proxy
statement, prospectus or filing is not to exceed $750,000 per annum. If
more than this has been achieved in any one year, the excess will be
renegotiated and deferred for stock issuance in a following year. If
performance is
superior during any one year the Board has discretion to accelerate
vesting of ownership subject to the $750,000 cap mentioned above.
(7.) A further notional 10% stake based on VoIP revenues is available to be
discussed and negotiated with Gene also on a phantom basis. An informal
target of $7m exists, however this is entirely dependent on developments
within the Internet and revenue and profit generation and no obligation
currently exists upon ACT in any way shape or form.
(8.) ACT will investigate the tax consequences for ▇▇▇▇ ▇▇▇▇▇▇ and advise him
accordingly; however all tax consequences of this plan are to be paid or
arranged by Gene. The bonus will be expensed over a 4-year period
commencing July 1, 2001, and taxes will be recognized accordingly.
(9.) In regard to the $237,000 loan to ▇▇▇▇ ▇▇▇▇▇▇, all efforts will be made
for it to be concurrently transferred to a bank as part of this agreement
and secured by a portion of these shares. Until such time will be secured
by the issuance of these shares, and the previous security of stock
options falls away with this Agreement unless variable accounting takes
effect in which case the options or portion thereof will remain as
security.
(10.) This Agreement supersedes all other Global Concert/AT&T/VoIP linked bonus
agreements between ▇▇▇▇ ▇▇▇▇▇▇ and ACT Teleconferencing, Inc. Normal
annual bonus plan as determined by the Chairman of ACT remains in place
and is unaffected by this agreement.
(11.) The first issuance of stock according to the formula in Appendix A is
32,000 shares.
AGREED THIS 1st DAY OF JULY, 2001
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▇▇▇▇ ▇▇▇▇▇▇ ACT Teleconferencing, Inc.
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