EMPLOYMENT AGREEMENT
Exhibit
10(g)
AGREEMENT,
dated as of the 5th
day of
May, 2006 (this
“Agreement”), by and between Alltel Corporation, a Delaware corporation
(the “Company”), and Xxxxxxxx X. Xxxxxxx (the
“Executive”).
WHEREAS,
the Board of Directors of the Company (the “Board”), has determined that it is
in the best interests of the Company and its stockholders to
assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control that ensure
that
the compensation and benefits expectations of the Executive will be satisfied
and that provide the Executive with compensation and benefits arrangements
that
are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this
Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Section
1. Certain
Definitions.
(a)
“Effective Date” means the first date during the Change of Control Period (as
defined herein) on which a Change of Control occurs. Notwithstanding anything
in
this Agreement to the contrary, if a Change of Control occurs and if the
Executive’s employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (1) was at the request of a third
party that has taken steps reasonably calculated to effect a Change of Control
or (2) otherwise arose in connection with or anticipation of a Change of
Control, then “Effective Date” means the date immediately prior to the date of
such termination of employment.
(b) “Change
of Control Period” means the period commencing on the date hereof and ending on
the tenth anniversary of the date hereof; provided,
however,
that,
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the
“Renewal Date”), unless previously terminated, the Change of Control Period
shall be automatically extended so as to terminate three years from such Renewal
Date, unless, at least 60 days prior to the Renewal Date, the Company shall
give
notice to the Executive that the Change of Control Period shall not be so
extended.
(c) “Affiliated
Company” means any company controlled by, controlling or under common control
with the Company.
(d) “Change
of Control” means:
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(1) Any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the
then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided,
however,
that,
for purposes of this Section 1(d), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Affiliated Company or (iv) any acquisition by any corporation pursuant to a
transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and
1(d)(3)(C);
(2) Any
time
at which individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided,
however,
that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual
or
threatened solicitation of proxies or consents by or on behalf of a Person
other
than the Board;
(3) Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving the Company or any of its subsidiaries, a sale
or
other disposition of all or substantially all of the assets of the Company,
or
the acquisition of assets or stock of another entity by the Company or any
of
its subsidiaries (each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the then-outstanding shares of common stock (or, for a
non-corporate entity, equivalent securities) and the combined voting power
of
the then-outstanding voting securities entitled to vote generally in the
election of directors (or, for a non-corporate entity, equivalent governing
body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of
such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-
2
outstanding
voting securities of such corporation, except to the extent that such ownership
existed prior to the Business Combination, and (C) at least a majority of the
members of the board of directors (or, for a non-corporate entity, equivalent
governing body) of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or
(4) Approval
by the stockholders of the Company of a complete liquidation or dissolution
of
the Company.
Section
2. Employment
Period.
The
Company hereby agrees to continue the Executive in its employ, subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (the
“Employment Period”). The Employment Period shall terminate upon the Executive’s
termination of employment for any reason.
Section
3. Terms
of Employment.
(a)
Position
and Duties.
(1)
During the Employment Period, (A) the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 30-day period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location
less
than 35 miles from such office.
(2) During
the Employment Period, and excluding any periods of vacation and sick leave
to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs
of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such responsibilities. During
the
Employment Period, it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities
do
not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that, to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall
not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.
(b) Compensation.
(1)
Base
Salary.
During
the Employment Period, the Executive shall receive an annual base salary (the
“Annual Base Salary”) at an annual rate at least equal to 12 times the highest
monthly base salary paid or payable, including any base salary that has been
earned but deferred, to the Executive by the Company and the Affiliated
Companies in respect of the 6-month period immediately preceding the month
in
which the
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Effective
Date occurs. The Annual Base Salary shall be paid at such intervals as the
Company pays executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually, beginning no more than
12 months after the last salary increase awarded to the Executive prior to
the
Effective Date. Any increase in the Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. The Annual
Base Salary shall not be reduced after any such increase and the term “Annual
Base Salary” shall refer to the Annual Base Salary as so increased.
(2) Short-Term
Bonuses.
In
addition to the Annual Base Salary, the Executive shall be awarded, for each
fiscal year ending during the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the annualized amount of the pre-established
maximum short-term bonus(es) that may be earned by the Executive under the
Company’s short-term incentive plan(s), or any comparable bonus under any
predecessor or successor plan(s), including,
without limitation, the Company’s Performance Incentive Compensation Plan and
the Executive Incentive Compensation Plan, in each case, as in effect from
time
to time (the “Short-Term Bonus Plans”),
for the
fiscal year in which the Effective Date occurs or, if no short-term bonus(es)
are established for such year, the fiscal year immediately preceding the fiscal
year in which the Effective Date occurs (the “Maximum Annual Bonus”). Each such
Annual Bonus shall be paid no later than 30 days after the end of the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect
to
defer the receipt of such Annual Bonus pursuant to an arrangement that meets
the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).
(3) Long-Term
Cash Incentive Bonuses.
In
addition to the Annual Base Salary and Annual Bonus, the Executive shall be
awarded, for each fiscal year ending during the Employment Period, a long-term
cash incentive bonus (the “LTIP Bonus”) at least equal to the pre-established
maximum bonus that may be earned by the Executive under the Company’s long-term
cash incentive compensation plan(s), or any comparable bonus under any
predecessor or successor plan(s), including,
without limitation, the Company’s Long-Term Performance Incentive Compensation
Plan as in effect from time to time (the
“LTIP”), for the performance period commencing immediately prior to the
Effective Date, but excluding for this purpose the LTIP Bonus granted to the
Executive with respect to the period commencing on the Distribution Date (as
defined in the Distribution Agreement by and between Alltel Corporation and
Alltel Holding Corporation Dated as of December 8, 2005) and ending on December
31, 2007 (the “Maximum LTIP Bonus”) on terms and conditions no less favorable,
in the aggregate, than the most favorable of those provided by the Company
and
the Affiliated Companies for the Executive under such plans as in effect at
any
time during the 6-month period immediately preceding the Effective Date or,
if
more favorable to the Executive, those provided generally at any time after
the
Effective Date to other peer executives of the Company and the Affiliated
Companies. Each such LTIP Bonus shall be paid no later than 30 days after the
end of the performance period for which the LTIP Bonus is awarded, unless the
Executive shall elect to defer the receipt of such LTIP Bonus pursuant to an
arrangement that meets the requirements of Section 409A of the
Code.
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(4) Equity
Incentive, Savings and Retirement Plans.
During
the Employment Period, the Executive shall be entitled to participate in all
equity incentive, including without limitation any stock option, stock
appreciation right, restricted stock, restricted stock unit or other equity
or
equity-based compensation plans, practices, policies, and programs (other than
the LTIP) and savings and retirement plans, practices, policies, and programs,
in each case, applicable generally to other peer executives of the Company
and
the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with equity incentive opportunities (measured
with respect to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and the
Affiliated Companies for the Executive under such plans, practices, policies
and
programs as in effect at any time during the 6-month period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and the Affiliated Companies.
(5) Welfare
Benefit Plans.
During
the Employment Period, the Executive and/or the Executive’s family, as the case
may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the
Company and the Affiliated Companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and the Affiliated Companies,
but in no event shall such plans, practices, policies and programs provide
the
Executive with benefits that are less favorable, in the aggregate, than the
most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 6-month period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company
and
the Affiliated Companies.
(6) Expenses.
During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and the Affiliated Companies in effect for the Executive at any time
during the 6-month period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated
Companies.
(7) Fringe
Benefits.
During
the Employment Period, the Executive shall be entitled to fringe benefits,
including, without limitation, tax and financial planning services, payment
of
club dues, and, if applicable, use of an automobile and payment of related
expenses, in accordance with the most favorable plans, practices, programs
and
policies of the Company and the Affiliated Companies in effect for the Executive
at any time during the 6-month period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and the
Affiliated Companies.
5
(8) Office
and Support Staff.
During
the Employment Period, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and the Affiliated Companies
at any time during the 6-month period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and the
Affiliated Companies.
(9) Paid-Time
Off.
During
the Employment Period, the Executive shall be entitled to paid vacation, sick
leave, sabbatical, holiday and other paid-time off (“Paid-Time Off”) in
accordance with the most favorable plans, policies, programs and practices
of
the Company and the Affiliated Companies as in effect for the Executive at
any
time during the 6-month period immediately preceding the Effective Date or,
if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and the Affiliated
Companies. Without limiting the generality of the foregoing, during the
Employment Period, in no event shall the Executive receive fewer paid vacation
days and holidays (including floating holidays) than the Executive was eligible
to receive at any time during the fiscal year immediately prior to the year
in
which the Effective Date occurs.
Section
4. Termination
of Employment.
(a)
Death
or Disability.
The
Executive’s employment shall terminate automatically if the Executive dies
during the Employment Period. If the Company determines in good faith that
the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of “Disability”), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”),
provided
that,
within the 30 days after such receipt, the Executive shall not have returned
to
full-time performance of the Executive’s duties. “Disability” means the absence
of the Executive from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due to mental
or physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or
the
Executive’s legal representative.
(b) Cause.
The
Company may terminate the Executive’s employment during the Employment Period
with or without Cause. “Cause” means:
(1) the
willful and continued failure of the Executive to perform substantially the
Executive’s duties (as contemplated by Section 3(a)(1)(A)) with the Company or
any Affiliated Company (other than any such failure resulting from incapacity
due to physical or mental illness or following the Executive’s delivery of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company that specifically identifies the manner in which the
Board or the Chief Executive Officer of the
6
Company
believes that the Executive has not substantially performed the Executive’s
duties, or
(2) the
willful engaging by the Executive in illegal conduct or gross misconduct that
is
materially and demonstrably injurious to the Company.
For
purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority (A) given pursuant to a resolution
duly adopted by the Board, or if the Company is not the ultimate parent
corporation of the Affiliated Companies and is not publicly-traded, the board
of
directors of the ultimate parent of the Company (the “Applicable Board”), (B)
upon the instructions of the Chief Executive Officer of the Company or a senior
officer of the Company or (C) based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Applicable Board (excluding the Executive, if the
Executive is a member of the Applicable Board) at a meeting of the Applicable
Board called and held for such purpose (after reasonable notice is provided
to
the Executive and the Executive is given an opportunity, together with counsel
for the Executive, to be heard before the Applicable Board), finding that,
in
the good faith opinion of the board, the Executive is guilty of the conduct
described in Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof
in detail.
(c) Good
Reason.
The
Executive’s employment may be terminated by the Executive for Good Reason or by
the Executive voluntarily without Good Reason. “Good Reason” means:
(1) the
assignment to the Executive of any duties inconsistent in any respect with
the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
3(a), or any other diminution in such position, authority, duties or
responsibilities (whether or not occurring solely as a result of the Company’s
ceasing to be a publicly traded entity), excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of notice thereof given by the
Executive;
(2) any
failure by the Company to comply with any of the provisions of Section 3(b),
other than an isolated, insubstantial and inadvertent failure not occurring
in
bad faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(3) the
Company’s requiring the Executive (i) to be based at any office or location
other than as provided in Section 3(a)(1)(B), (ii) to be based at a location
other
7
than
the
principal executive offices of the Company if the Executive was employed at
such
location immediately preceding the Effective Date, or (iii) to travel on Company
business to a substantially greater extent than required immediately prior
to
the Effective Date;
(4) any
purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or
(5) any
failure by the Company to comply with and satisfy Section 10(c).
For
purposes of this Section 4(c), any good faith determination of Good Reason
made
by the Executive shall be conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason pursuant to
a
Notice of Termination given during the 90-day period immediately following
the
first anniversary of the Effective Date shall be deemed to be a termination
for
Good Reason for all purposes of this Agreement. The Executive’s mental or
physical incapacity following the occurrence of an event described above in
clauses (1) through (5) shall not affect the Executive’s ability to terminate
employment for Good Reason.
(d) Notice
of Termination.
Any
termination by the Company for Cause, or by the Executive for Good Reason,
shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 11(b). “Notice of Termination” means a written notice
that (1) indicates the specific termination provision in this Agreement relied
upon, (2) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and (3) if the Date of Termination
(as defined herein) is other than the date of receipt of such notice, specifies
the Date of Termination (which Date of Termination shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
that
contributes to a showing of Good Reason or Cause shall not waive any right
of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s respective rights
hereunder.
(e) Date
of Termination.“Date
of
Termination” means (1) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the date of receipt
of
the Notice of Termination or any later date specified in the Notice of
Termination, (which date shall not be more than 30 days after the giving of
such
notice), as the case may be, (2) if the Executive’s employment is terminated by
the Company other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination, (3) if the Executive resigns without
Good Reason, the date on which the Executive notifies the Company of such
termination, and (4) if the Executive’s employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
Section
5. Obligations
of the Company upon Termination.
(a) Good
Reason; Other Than for Cause, Death or Disability.
If,
during the Employment Period, the
8
Company
terminates the Executive’s employment other than for Cause or Disability or the
Executive terminates employment for Good Reason:
(1) the
Company shall pay to the Executive, in a lump sum in cash within 30 days after
the Date of Termination, the aggregate of the following amounts:
(A) the
sum
of (i) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (ii) notwithstanding
any provision of any Short-Term Bonus Plans or LTIP, including, without
limitation, any provision of any Short-Term Bonus Plans or LTIP requiring
continued employment after the completed fiscal year or other measuring period,
the amount of any incentive compensation under any Short-Term Bonus Plans or
LTIP that has been earned by the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any Short-Term Bonus
Plans or the LTIP, but has not yet been paid to the Executive,
(iii)
the product of (A) the greater of (x) the Maximum Annual Bonus and (y) the
annualized amount of the pre-established maximum short-term bonus(es) that
may
be earned by the Executive under the Company’s Short-Term Bonus Plans for the
fiscal year in which the Date of Termination occurs (such greater amount, the
“Recent Annual Bonus”) and (B) a fraction, the numerator of which is the number
of days in the applicable performance period through the Date of Termination
and
the denominator of which is 365, (iv) for each performance period
then-outstanding under the LTIP, an amount equal to the product of (A) the
greater of (x) the Maximum LTIP Bonus and (y) the pre-established maximum bonus
that may be earned by the Executive under the LTIP for the performance period
commencing immediately prior to the Date of Termination (such greater amount,
the “Recent LTIP Bonus”) and (B) a fraction, the numerator of which is the
number of days in the applicable performance period under the LTIP through
the
Date of Termination and the denominator of which is 1095, provided,
that
with respect to the performance period commencing under the LTIP on or about
the
Distribution Date and ending on December 31, 2008, a fraction, the numerator
of
which is the total number of days from the period commencing January 1, 2006
through the Date of Termination and the denominator of which is the total number
of days from January 1, 2006 until December 31, 2008, and (v) any accrued
Paid-Time Off pay to the extent not theretofore paid (the sum of the amounts
described in subclauses (i), (ii), (iii), (iv) and (v), the “Accrued
Obligations”);
(B) the
amount equal to the product of (i) three and
(ii)
the sum of (A) the Executive’s Annual Base Salary, (B) the Recent Annual Bonus
and (C) the Recent LTIP Bonus; and
(C) an
amount
equal to the sum of (i) excess of (A) the actuarial equivalent of the benefit
under the Company’s qualified defined benefit retirement plan (the “Retirement
Plan”) (utilizing actuarial assumptions no less favor-
9
able
to
the Executive than those in effect under the Retirement Plan immediately prior
to the Effective Date) and any excess or supplemental defined benefit retirement
plan in which the Executive participates (collectively, the “SERP”) that the
Executive would receive if the Executive’s employment continued for three years
after the Date of Termination, assuming for this purpose that (1) all accrued
benefits are fully vested, (2) the Executive’s age is increased by the number of
years that the Executive is deemed to be so employed and (3) the Executive’s
compensation in each of the three years is that required by Sections 3(b)(1),
3(b)(2) and 3(b)(3) payable in equal monthly installments over such
three-year
period, over (B) the actuarial equivalent of the Executive’s actual benefit
(paid or payable), if any, under the Retirement Plan and the SERP as of the
Date
of Termination and (ii) an amount equal to the sum of the Company matching
or
other Company contributions under the Company’s qualified defined contribution
plans and any excess or supplemental defined contribution plans in which the
Executive participates that the Executive would receive if the Executive’s
employment continued for three years after the Date of Termination, assuming
for
this purpose that (w) the Company’s contribution under the Company’s Profit
Sharing Plan is equal to the greater of (1) four percent of Compensation (within
the meaning of the Alltel Corporation Profit-Sharing Plan) or (2) the highest
percent contribution made by the Company in the three years preceding the year
in which the Effective Date occurs, (x) the Executive’s benefits under such
plans are fully vested, (y) the Executive’s compensation in each of the three
years is that required by Sections 3(b)(1), 3(b)(2) and 3(b)(3) and (z) to
the
extent that the Company contributions are determined based on the contributions
or deferrals of the Executive, that the Executive’s contribution or deferral
elections, as appropriate, are those in effect immediately prior to the Date
of
Termination;
(2) for
three years
after the Executive’s Date of Termination, or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy,
but,
to the extent required in order to comply with Section 409A, in no event beyond
the end of the second calendar year that begins after the Executive’s
“separation from service” within the meaning of Section 409A (the “Benefit
Continuation Period”), the Company shall continue benefits to the Executive
and/or the Executive’s family at least equal to, and at the same cost to the
Executive and/or the Executive’s family, as those that would have been provided
to them in accordance with the plans, programs, practices and policies described
in Section 3(b)(5) and 3(b)(7) if the Executive’s employment had not been
terminated or, if more favorable to the Executive, as in effect generally at
any
time thereafter with respect to other peer executives of the Company and the
Affiliated Companies and their families; provided,
however,
that,
if the Executive becomes reemployed with another employer and is eligible to
receive such benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan, and such other benefits shall not be provided by the
Company, during such applicable period of eligibility. The Executive’s
entitlement to COBRA continuation coverage under Section 4980B of
10
the
Code
(“COBRA Coverage”) shall not be offset by the provision of benefits under this
Section 5(a)(2) and the period of COBRA Coverage shall commence at the end
of
the Benefit Continuation Period. For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall
be
considered to have remained employed until the end of the Benefit Continuation
Period and to have retired on the last day of such period;
(3) the
Company shall, at its sole expense as incurred, provide the Executive with
outplacement services the scope and provider of which shall be selected by
the
Company, provided
that
such outplacement benefits shall begin at the Date of Termination and shall
end
not later than the last day of the second calendar year that begins after the
Date of Termination; and
(4) to
the
extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive any Other Benefits (as defined in Section 6).
Notwithstanding
the foregoing provisions of this Section 5(a), to the extent required in order
to comply with Section 409A of the Code, cash amounts or benefits that would
otherwise be payable or provided under this Section 5(a) during the six-month
period immediately following the Date of Termination shall instead be paid,
with
interest on any delayed payment at the applicable federal rate provided for
in
Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after
the date that is six months following the Executive’s “separation from service”
within the meaning of Section 409A.
(b) Death.
If the
Executive’s employment is terminated by reason of the Executive’s death during
the Employment Period, the Company shall provide the Executive’s estate or
beneficiaries with the Accrued Obligations and the timely payment or delivery
of
the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date
of
Termination. With respect to the provision of the Other Benefits, the term
“Other Benefits” as utilized in this Section 5(b) shall include, without
limitation, and the Executive’s estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by
the
Company and the Affiliated Companies to the estates and beneficiaries of peer
executives of the Company and the Affiliated Companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time
during the 6-month period immediately preceding the Effective Date or, if more
favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in
effect on the date of the Executive’s death with respect to other peer
executives of the Company and the Affiliated Companies and their
beneficiaries.
(c) Disability.
If
the
Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Period, the Company shall provide the Executive with
the
Accrued Obligations and the timely payment or delivery of the Other Benefits,
and shall have no other severance obligations under this Agreement. The Accrued
Obligations
11
shall
be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination, provided, that to the extent required in order to comply with
Section 409A of the Code, amounts and benefits to be paid or provided under
this
Section 5(c) shall be paid, with Interest, or provided to the Executive on
the
first business day after the date that is six months following the Executive’s
“separation from service” within the meaning of Section 409A. With respect to
the provision of the Other Benefits, the term “Other Benefits” as utilized in
this Section 6(c) shall include, and the Executive shall be entitled after
the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and
the
Affiliated Companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 6-month period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other
peer
executives of the Company and the Affiliated Companies and their
families.
(d) Cause;
Other Than for Good Reason.
If
the
Executive’s employment is terminated for Cause during the Employment Period, the
Company shall provide the Executive with the Executive’s Annual Base Salary
through the Date of Termination, and the timely payment or delivery of the
Other
Benefits, and shall have no other severance obligations under this Agreement.
If
the Executive voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, the Company shall provide to the
Executive the Accrued Obligations and the timely payment or delivery of the
Other Benefits, and shall have no other severance obligations under this
Agreement. In such case, all the Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination,
provided, that to the extent required in order to comply with Section 409A
of
the Code, amounts and benefits to be paid or provided under this sentence of
Section 5(d) shall be paid, with Interest, or provided to the Executive on
the
first business day after the date that is six months following the Executive’s
“separation from service” within the meaning of Section 409A.
Section
6. Non-exclusivity
of Rights.
Nothing
in this Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or the Affiliated Companies and for which the Executive may qualify, nor,
subject to Section 11(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any other contract or agreement with
the
Company or the Affiliated Companies. Amounts that are vested benefits or that
the Executive is otherwise entitled to receive under any plan, policy, practice
or program of or any other contract or agreement with the Company or the
Affiliated Companies at or subsequent to the Date of Termination (“Other
Benefits”) shall be payable in accordance with such plan, policy, practice or
program or contract or agreement, except as explicitly modified by this
Agreement. Without limiting the generality of the foregoing, the Executive’s
resignation under this Agreement with or without Good Reason, shall in no way
affect the Executive’s ability to terminate employment by reason of the
Executive’s “retirement” under any compensation and benefits plans, programs or
arrangements of the Affiliated Companies, including without limitation any
retirement or pension plans or arrangements or to be eligible to receive
benefits under any com-
12
pensation
or benefit plans, programs or arrangements of the Affiliated Companies,
including without limitation any retirement or pension plan or arrangement
of
the Affiliated Companies or substitute plans adopted by the Company or its
successors, and any termination which otherwise qualifies as Good Reason shall
be treated as such even if it is also a “retirement” for purposes of any such
plan. Notwithstanding the foregoing, if the Executive receives payments and
benefits pursuant to Section 5(a) of this Agreement, the Executive shall not
be
entitled to any severance pay or benefits under any severance plan, program
or
policy of the Company and the Affiliated Companies, unless otherwise
specifically provided therein in a specific reference to this Agreement.
Section
7. Full
Settlement.
The
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense, or other claim, right or action
that
the Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by
way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether
or
not the Executive obtains other employment. The Company agrees to pay as
incurred (within 10 days following the Company’s receipt of an invoice from the
Executive), to the full extent permitted by law, all legal fees and expenses
that the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, the Executive or others of the validity
or enforceability of, or liability under, any provision of this Agreement or
any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus,
in
each case, Interest.
Section
8. Certain
Additional Payments by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any Payment would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that, after payment by the Executive of all taxes
(and any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but
excluding any income taxes and penalties imposed pursuant to Section 409A,
the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. The Company’s obligation to make Gross-Up Payments
under this Section 8 shall not be conditioned upon the Executive’s termination
of employment.
(b) Subject
to the provisions of Section 8(c), all determinations required to be made
under this Section 8, including whether and when a Gross-Up Payment is required,
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Ernst & Young LLP, or such
other nationally recognized certified public accounting firm as may be
designated by the Executive (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has
13
been
a
Payment or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive may appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to
this Section 8, shall be paid by the Company to the Executive within 5 days
of
the receipt of the Accounting Firm’s determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time
of
the initial determination by the Accounting Firm hereunder, it is possible
that
Gross-Up Payments that will not have been made by the Company should have been
made (the “Underpayment”), consistent with the calculations required to be made
hereunder. In the event the Company exhausts its remedies pursuant to Section
8(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that
has
occurred and any such Underpayment shall be promptly paid by the Company to
or
for the benefit of the Executive.
(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company
of
the Gross-Up Payment. Such notification shall be given as soon as practicable,
but no later than 10 business days after the Executive is informed in writing
of
such claim. The Executive shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which the Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that the Company desires to contest such claim, the
Executive shall:
(1) give
the
Company any information reasonably requested by the Company relating to such
claim,
(2) 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 reasonably
selected by the Company,
(3) cooperate
with the Company in good faith in order effectively to contest such claim,
and
(4) 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
additional interest and penalties) incurred in connection with such contest,
and
shall indemnify and hold the Executive harmless, on an after-tax basis, for
any
Excise Tax or income tax (including interest and penalties) imposed as a result
of such representation and payment of costs
14
and
expenses. Without limitation on the foregoing provisions of this Section 8(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either
pay
the tax claimed to the appropriate taxing authority on behalf of the Executive
and direct the Executive to 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 pays such claim and directs the Executive to xxx for a refund,
the Company shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties)
imposed with respect to such payment or with respect to any imputed income
in
connection with such payment; and provided,
further,
that
any extension of the statute of limitations relating to payment of taxes for
the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the
Company’s control of the contest shall be limited to issues with respect to
which the 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.
(d) If,
after
the receipt by the Executive of a Gross-Up Payment or payment by the Company
of
an amount on the Executive’s behalf pursuant to Section 8(c), the Executive
becomes entitled to receive any refund with respect to the Excise Tax to which
such Gross-Up Payment relates or with respect to such claim, the Executive
shall
(subject to the Company’s complying with the requirements of Section 8(c),
if applicable) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If,
after payment by the Company of an amount on the Executive’s behalf pursuant to
Section 8(c), a determination is made that the Executive shall not be entitled
to any 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 days after such determination, then the amount of such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required
to
be paid.
(e) Notwithstanding
any other provision of this Section 8, the Company may, in its sole discretion,
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Executive, all or any portion of any
Gross-Up Payment, and the Executive hereby consents to such
withholding.
(f) Definitions.
The
following terms shall have the following meanings for purposes of this Section
8.
(i) “Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code, together
with any interest or penalties imposed with respect to such excise
tax.
(ii) A
“Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit
of
the Executive, whether paid or payable pursuant to this Agreement or
otherwise.
15
Section
9. Confidential
Information.
The
Executive shall hold in a fiduciary capacity for the benefit of the Company
all
secret or confidential information, knowledge or data relating to the Company
or
the Affiliated Companies, and their respective businesses, which information,
knowledge or data shall have been obtained by the Executive during the
Executive’s employment by the Company or the Affiliated Companies and which
information, knowledge or data shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate
or
divulge any such information, knowledge or data to anyone other than the Company
and those persons designated by the Company. In no event shall an asserted
violation of the provisions of this Section 9 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
Section
10. Successors.
(a) This
Agreement is personal to the Executive, and, without the prior written consent
of the Company, shall not be assignable by the Executive other than by will
or
the laws of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors and assigns. Except as provided in Section 10(c), without the prior
written consent of the Executive this Agreement shall not be assignable by
the
Company.
(c) The
Company will require 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 to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place. “Company” means
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise.
Section
11. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect. This Agreement may not be amended or modified other than
by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
16
if
to the
Executive:
|
At
the most recent address on file at the
Company.
|
if
to the
Company:
ALLTEL
Corporation
Xxx
Xxxxxx Xxxxx
Xxxxxx
Xxxx, Xxxxxxxx 00000
Attention:
General Counsel
or
to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such United
States federal, state or local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive
or
the Company may have hereunder, including, without limitation, the right of
the
Executive to terminate employment for Good Reason pursuant to Sections 4(c)(1)
through 4(c)(5), shall not be deemed to be a waiver of such provision or right
or any other provision or right of this Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, subject to Section
1(a), prior to the Effective Date, the Executive’s employment may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this Agreement.
From and after the Effective Date, except as specifically provided herein,
this
Agreement shall supersede any other agreement between the parties with respect
to the subject matter hereof.
(g) If
any
compensation or benefits provided by this Agreement may result in the
application of Section 409A of the Code, the Company shall, in consultation
with
the Executive, modify the Agreement in the least restrictive manner necessary
in
order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A or in order to comply with
the provisions of Section 409A, other applicable
17
provision(s)
of the Code and/or any rules, regulations or other regulatory guidance issued
under such statutory provisions and without any diminution in the value of
the
payments to the Executive.
18
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
|
/s/
Xxxxxxxx
X. Xxxxxxx
|
|
Xxxxxxxx
X. Xxxxxxx
|
| Alltel Corporation |
| By: /s/ Xxxxxxx X. Xxxxxx |
|
Xxxxxxx
X. Xxxxxx
|
|
Executive
Vice President,
|
|
Secretary
and General Counsel
|
19
