EMPLOYMENT AGREEMENT
Exhibit
(10)(c)(1)
AGREEMENT,
dated as of November 16th,
2007
(this “Agreement”), by and between Alltel Corporation, a Delaware corporation
(the “Company”), and Xxxxx X. Xxxx (the “Executive”).
Section
1. Certain Definitions.
(a) “Affiliated
Company” means any company controlled by, controlling or under common control
with the Company and “Affiliated Companies” means all such
companies.
(b)
“Board” means the Board of Directors of the Company.
(c) “Change
of Control” means:
(1) the
acquisition by any Person, other than the Sponsors, including any “group” (as
defined in section 13(d) of the Exchange Act), through one transaction or a
series of related transactions of 50% or more of the combined voting power
of
the then outstanding voting securities of the Company;
(2) the
merger, consolidation or similar transaction involving the Company or its
Affiliates as a result of which Persons who were shareholders of the Company
immediately prior to such merger or consolidation, do not, immediately
thereafter, own, directly or indirectly, more than 50% of the combined voting
power entitled to vote generally in the election of directors of the merged
or
consolidated company, provided that any such transaction shall be deemed to
constitute a Change of Control unless such Persons own such interest in
substantially the same proportion as immediately prior to the transaction except
that any increase in proportionate ownership by the Sponsors shall be counted
as
if it were continued ownership for purposes of this paragraph; or
(3) a
shareholder vote approving the liquidation or dissolution of the
Company.
(d)
“Effective Date” means November 16th,
2007.
(e)
“Person” means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
(f)
“Sponsors” shall mean TPG Partners V, L.P., GS Capital Partners VI, L.P. and
their respective affiliates (as such term is defined in Rule 405 under the
Securities Act).
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”); 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 Employment Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless, at least 90 days prior to the Renewal Date, the Company or the Executive
shall give written notice to the other that the Employment Period shall not
be
so extended. Following a Change in Control which occurs after the
Effective Date, if the second anniversary of such Change in Control is later
than the then ending date of the Employment Period, the Employment Period shall
be extended to the second anniversary of such Change in Control. The
Employment Period shall terminate upon the Executive's termination of employment
for any reason.
Section
3. Terms of Employment.
(a)
Position, Duties and Certain Repurchase Authority.
(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 six month 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 50 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.
(3) Authority
to Cause the Company to Exercise Its Call Right. During the portion
of the Employment Period ending on the three-year anniversary of the
Effective
2
Date
(but, if a Change of Control shall have occurred prior to such anniversary,
until the second anniversary of such Change of Control), the Executive will
have
the authority to direct the Company to exercise the call right described in
Section 3(b) of the Management Stockholders Agreement, dated as of November
16,
2007, among the Company, Atlantis Holdings LLC, the Majority Stockholders (as
defined in such Stockholders Agreement) and the individuals listed on Schedule
A
attached to such Stockholders Agreement, subject to the terms set forth therein,
in respect of “Invested Equity” (as such term is defined in Investment
Agreements executed by employees of the Company and the Affiliated Companies
in
connection with the acquisition of stock of the Company by the Sponsors on
the
date hereof, such term being deemed to include common stock of the Company
acquired pursuant to the exercise of stock options included in the term Invested
Equity) held by employees (other than himself) whose employment is terminated
by
the Company and the Affiliated Companies without “cause,” by the employee for
“good reason,” or by reason of the employee’s death or “disability” (each such
term as defined for each respective employee in the Alltel Corporation 2007
Stock Option Plan), in each case subject to approval by the Board, which
approval shall not be unreasonably withheld.
(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 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
participate in, for each fiscal year ending during the Employment Period, the
annual cash bonus plan (the “Annual Bonus”) generally applicable to peer
executives of the Company and the Affiliated Companies, on substantially similar
terms and conditions (excluding permitted differences in the amount of the
bonus
that may be earned), including, without limitation, participation in the Alltel
Corporation Special Annual Bonus Plan and the Alltel Corporation Performance
Incentive Compensation Plan, in each case, subject to the terms and conditions
thereof. Following a Change in Control occurring after the Effective Date,
the
bonus opportunity under the Annual Bonus plan for the Executive shall not be
reduced from the bonus opportunity under the Annual Bonus plan in effect
immediately prior to the Change in Control.
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(3)
Savings and Retirement Plans. During the Employment Period, the Executive shall
be entitled to participate in all savings and retirement plans, practices,
policies, and programs, in each case, applicable generally to peer executives
of
the Company and the Affiliated Companies, but, with the exception of the
supplemental executive retirement plan (the "SERP") which will be terminated,
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.
Following a Change in Control occurring after the Effective Date, the aggregate
level of benefits from savings and retirement plans that the Executive
participates in shall not be less than the aggregate level of benefits from
savings and retirement plans available to the Executive before the Change in
Control.
(4)
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 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. Following a Change in Control after
the Effective Date, the aggregate level of benefits of welfare benefit plans
that the Executive participates in shall not be less than level of benefits
of
welfare benefit plans available to the Executive before the Change in
Control. Notwithstanding the foregoing, an amount in cash equal to
the value of the health benefits under the Company’s Supplement Executive
Retirement Plan shall be paid to the Executive as soon as practicable (but
not
more than 20 days) after a termination of the Executive’s employment, the amount
of such payment to be determined based on the methodology set forth on Exhibit
B
hereto and based on the assumption that such health benefits would commence
following the cessation of coverage under the Company’s health plan for active
employees and the Benefit Continuation Period (if any).
(5)
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,
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as
in effect generally at any time thereafter with respect to peer executives
of
the Company and the Affiliated Companies.
(6)
Fringe Benefits. During the Employment Period, the Executive shall be entitled
to fringe benefits including, without limitation, secretarial and administrative
support, office space, use of company aircraft, paid time off, holiday,
sick-leave and other similar benefits, consistent with the plans, practices,
programs and policies of the Company and the Affiliated Companies in effect
for
the Executive immediately prior to the Effective Date.
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, 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:
(i)
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 Company believes that the Executive
has not substantially performed the Executive’s duties, or
(ii)
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
5
Companies
and is not publicly-traded, the board of directors of the ultimate parent of
the
Company (the “Applicable Board”), (B) based upon the advice of counsel for the
Company or (C) given by specific instruction of the Employee’s direct superior,
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 this Section 4(b), 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, without the Executive’s prior written consent:
(i)
a
material diminution in the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a); or
(ii)
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; or
(iii)
a
relocation of a Participant’s primary work location more than 50 miles from the
Participant’s work location immediately prior to the Effective Date;
or
(iv)
a
resignation by the Executive for any reason during the 90 day period following
the first anniversary of a Change in Control which occurs after the Effective
Date;
provided
that, within ninety days following the Executive becoming aware of the
occurrence of any of the events set forth herein (other than the events
described in clause (iv) above, the Executive shall have delivered written
notice to the Company of his intention to terminate his employment for Good
Reason, which notice specifies in reasonable detail the circumstances claimed
to
give rise to the Executive’s right to terminate his employment for Good Reason,
and the Company shall not have cured such circumstances within twenty days
following the Company’s receipt of such notice. The Executive’s
mental or physical incapacity following the occurrence of an event described
above in clauses (i) through (iii) 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
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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. The Company and the
Executive shall take all steps necessary (including with regard to any
post-termination services by the Executive) to ensure that any termination
described in this Section 4 constitutes a “separation from service” within the
meaning of Section 409A of the Code, and notwithstanding anything contained
herein to the contrary, the date on which such separation from service takes
place shall be the “Date of Termination.”
Section
5. Obligations of the Company upon Termination.
(a) Certain
Terminations After a Change in Control. If during the Employment
Period and during the two-year period after a Change in Control occurring after
the Effective Date, or in contemplation thereof, the Company terminates the
Executive’s employment other than for Cause (and other than as a result of the
Executive’s Disability) or the Executive terminates his 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, subject to Section 5(f) below, the sum of the following
amounts (the “Change in Control Severance”):
(A)
the
sum of (i) the Executive’s Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (ii) any accrued paid vacation, sick leave,
sabbatical, holiday and other paid-time off to the extent not theretofore paid
(the sum of the amounts described in subclauses (i) and (ii) above, the “Earned
Pay”), (iii) notwithstanding any provision of any Annual Bonus plan, including,
without limitation, any provision of any such plan requiring continued
employment after a completed fiscal year, the amount of any
incentive
7
compensation
under any such plan that has been earned by the Executive for a completed fiscal
year preceding the Date of Termination, but has not yet been paid to the
Executive (the sum of the amounts described in subclauses (i), (ii) and (iii),
the “Accrued Obligations”) and (iv) the product of (a) the highest Annual Bonus
amount earned by the Executive (excluding any bonus designated as a “stretch
bonus” by the Company contemporaneous with the time that it is announced to the
Executive) for any of the three years preceding the year in which occurs the
Date of Termination (the “Reference Bonus”) and (b) a fraction, the numerator of
which is the number of days in the fiscal year in which the Date of Termination
occurs through the Date of Termination and the denominator of which is 365
(such
product, the “Pro Rata Bonus”); and
(B)
the
amount equal to the product of (i) three and (ii) the sum of the Executive’s
Annual Base Salary and the Reference Bonus; and
(2)
for
three years after the Executive’s Date of Termination (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 (which in the case of any health benefits provided
hereunder shall be determined on an after-tax basis), as those that would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 3(b)(4) hereof 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 peer executives of the Company
and the Affiliated Companies and their families; provided, however,
that, the health
care benefits provided during the Benefit Continuation Period shall be provided
in such a manner that such benefits (and the costs and premiums thereof) are
excluded from the Executive’s income for federal income tax purposes and, if the
Company reasonably determines that providing continued coverage under one or
more of its health care benefit plans contemplated herein could be taxable
to
the Executive, the Company shall provide such benefits at the level required
hereby through the purchase of individual insurance coverage; provided, further, 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 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.
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(b) Certain
Terminations More than Three Years After the Effective Date. If
during the Employment Period, other than during the three-year period after
the
Effective Date and other than under circumstances entitling the Executive to
the
Change in Control Severance benefits, the Company terminates the Executive’s
employment other than for Cause (and other than as a result of the Executive’s
Disability) or the Executive terminates his 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, subject to Section 5(f) below, the sum of the following
amounts:
(A)
the
Accrued Obligations and the Pro Rata Bonus; and
(B) an
amount equal the product of (i) the greater of (a) one and (b) the numbers
of
years remaining in the Employment Period (computed to a fraction of a year
based
on complete calendar months remaining in the Employment Period without regard
to
such termination) (the “Severance Period”) and (ii) the sum of the Executive’s
Annual Base Salary and the Reference Bonus; and
(2)
the
Company provide the Executive with the benefits described in paragraph 5(a)(2)
above, provided that the Benefit Continuation Period shall be the Severance
Period.(c) Death, Disability and Other than for Good Reason. If the Executive’s
employment is terminated by reason of the Executive’s death or Disability or by
the Executive without Good Reason, during the Employment Period, the Company
shall provide the Executive (or his estate or beneficiaries) with the Accrued
Obligations, and shall have no other severance obligations under this Agreement.
The Accrued Obligations shall be paid in a lump sum in cash within 30 days
of
the Date of Termination.
(e)
Cause. If the Executive’s employment is terminated for Cause during
the Employment Period, the Company shall provide the Executive with the
Executive’s Earned Pay through the Date of Termination and shall have no other
severance obligations under this Agreement.
(f)
Notwithstanding the foregoing provisions of this Section 5, in the event that
the Executive is a “specified employee” within the meaning of Section 409A of
the Code (as determined in accordance with the methodology established by the
Company as in effect on the Date of Termination) (a “Specified Employee”) cash
amounts that would otherwise be payable or provided under this Section 5 during
the six-month period immediately following the Date of Termination (other than
the Accrued Obligations) 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 (the “Delayed Payment Date”).
(g)
In
the event of a termination of Executive’s employment giving rise to rights under
Sections 5(a) or 5(b), each of the Executive and the Company agree to execute
a
mutual general
9
release
of claims and non-disparagement agreement, in the form attached hereto as Exhibit A (the
“Release”). The obligations
of the Company pursuant to Section 5(a) and (b)
hereof (other than the Accrued Obligations) are subject to the execution by
the
Executive of the Release within 30 days of the Executive’s receipt of the
executed release from the Company, which shall be provided to the Executive
within 30 days of the Date of Termination. In the event that
the Executive does not so receive the executed Release from the Company within
such period, the Executive’s obligation to execute such release as a
precondition to receiving the benefits under Sections 5(a) or (b) as applicable,
shall cease.
Section
6. Non-exclusivity of Rights.
Nothing
in Section 5 hererof or elsewhere 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 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 compensation 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) or (b) 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.
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) at any time from the
Effective Date through the Executive’s remaining lifetime (or, if longer,
through the 20th
anniversary of the Effective Date), to the full extent permitted by law, all
legal fees and expenses that the Executive may
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reasonably
incur as a result of any contest 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; provided, however,
that the
Executive shall be required to return (within 10 days following the Executive’s
receipt of demand therefore from the Company) all such payments, plus Interest
from the date on which each such payment was made through the date on which
such
payment is returned to the Company if the Executive does not prevail in respect
of at least one material claim (whether Executive is prosecuting or defending
such claim) in such contest. In the event that, following the
termination of the Employment Period, at the time at which an amount would
be
payable to the Executive pursuant to this Agreement the Executive has a
contractual obligation to pay money to the Company, the Company shall be
entitled to offset such obligation against the amount otherwise required to
be
paid by the Company hereunder.
Section
8. Certain Additional Payments by the Company.
(a)
Anything in this Agreement to the contrary notwithstanding and subject to
Section 11(f), 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; provided, however,
that the
obligations to the Executive pursuant to this Section 8 shall be subject to
the
Executive taking all steps reasonably requested by the Company in order to
qualify for the exemption from the Excise Tax for privately-held companies,
if
available, including without limitation waiver of any Payments subject to
shareholder approval in a manner that is consistent with customary practices.
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 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 determination by the Accounting Firm shall
be binding upon the Company
11
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
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
12
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)
Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by
the
Company to the Executive within five days of the receipt of the Accounting
Firm’s determination; provided that, the Gross-Up
Payment shall in all events be paid no later than the end of the Executive’s
taxable year next following the Executive’s taxable year in which the Excise Tax
(and any income or other related taxes or interest or penalties thereon) on
a
Payment are remitted to the Internal Revenue Service or any other applicable
taxing authority or, in the case of amounts relating to a claim described in
Section 8(c) that does not result in the remittance of any federal, state,
local
and foreign income, excise, social security and other taxes, the calendar year
in which the claim is finally settled or otherwise
resolved. 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.
13
(ii)
A
“Payment” shall mean any payment, benefit or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code), including
but not limited to accelerated vesting of compensatory awards, to or for the
benefit of the Executive, whether paid or payable pursuant to this Agreement
or
otherwise.
Section
9. Confidentiality; Non-Compete; Non-Disclosure;
Non-Disparagement.
(a)
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.
(b)
In
consideration for the payments to be made to the Executive under the Prior
Agreement (as defined below) and the Alltel Corporation Supplemental Executive
Retirement Plan and the vesting of the Executive's equity compensation awards
in
connection with the transactions contemplated by the Agreement and Plan of
Merger among Alltel Corporation, Atlantis Holdings LLC and Atlantis Merger
Sub,
Inc. dated May 20, 2007, the Executive and the Company agree that the Company
would likely suffer significant harm from the Executive’s competing with the
Company during the Employment Period and for a reasonable period of time
thereafter. Accordingly, the Executive agrees that he will not,
during the Employment Period and for a period of two (2) years following the
termination of the Employment Period for any reason, directly or indirectly,
become employed by, serve as an agent or consultant to, become a partner,
member, principal, stockholder or other owner (other than a holder of less
than
5% of the outstanding voting shares of any publicly held company) of the
Business for any Person (whether or not for compensation) that is engaged in,
or
otherwise competes with the Business; provided, however,
that the
restrictions of this paragraph 9(b) do not apply following the termination
of
the Employment Period by the Company without Cause or by the Executive for
Good
Reason, except that in the event of any such termination that occurs more than
three years after the Effective Date, such restrictions shall apply unless
the
Executive elects to forego the benefits under paragraphs (5)(a) or (b) hereof,
as applicable, to which he would otherwise be entitled in respect of such
termination. For purposes of this Agreement, the “Business” shall
mean wireless communications carriers operating within the United
States.
(c)
The
Executive hereby agrees that upon the termination of the Employment Period,
he
shall not take, without the prior written consent of the Company, any business
plans,
contact
lists, strategic plans or reports or other document (in whatever form) of the
Company or any of its affiliates, which is of a confidential nature relating
to
the Company or its affiliates, or, without limitation, relating to its or their
methods of distribution, or any description of any formulas or secret processes
and will return any such information (in whatever form) then in his
possession.
(d)
During the Employment Period and for two (2) years thereafter, the Executive
hereby agrees not to, directly or indirectly, solicit or assist any other person
or entity in soliciting any employee of the Company or any of its affiliates
to
perform services for any entity (other than the Company or its affiliates),
attempt to induce any such employee to leave the employ of the Company or its
affiliates, or hire or engage on behalf of himself or any other Person (as
defined below) any employee of the Company or anyone who was employed by the
Company during the six-month period preceding such hiring or engagement; provided, however,
that the
restrictions of this paragraph 9(e) shall not apply following the termination
of
the Employment Period by the Company without Cause or by the Executive for
Good
Reason, except that in the event of any such termination that occurs more than
three years after the Effective Date, such restrictions shall apply unless
the
Executive elects to forego the benefits under paragraphs (5)(a) or (b) hereof,
as applicable, to which he would otherwise be entitled in respect of such
termination. An individual’s response to a broad and general
advertisement or solicitation not specifically targeting or intending to target
employees of the Company, its subsidiaries or any of affiliates shall not be
deemed a violation of this Section 9(e).
(e)
The
parties hereto hereby declare that it is impossible to measure in money the
damages which will accrue to the Company by reason of a failure by the Executive
to perform any of his obligations under this Agreement and, in particular,
under
this Section 9. Accordingly, if the Company institutes any action or
proceeding to enforce the provisions hereof, to the extent permitted by
applicable law (including, but not limited to, injunctive relief) the Executive
hereby waives the claim or defense that the Company has an adequate remedy
at
law, and the Executive shall not urge in any such action or proceeding the
claim
or defense that any such remedy at law exists.
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
15
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:
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
16
employment
for Good Reason pursuant to Sections 4(c)(i) through 4(c)(iv), 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 provided in Section 5(a)
hereof, the Executive shall not be entitled to benefits in the nature of
severance pay upon a termination of the Executive's employment by the Company
without Cause or by the Executive for Good Reason during the three years after
the Effective Date, except that the Executive shall be entitled to the Accrued
Obligations. 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, provided, however, that
notwithstanding any provision of this Agreement to the contrary, including
Section 8 of this Agreement, (i) Section 8 of the Employment Agreement by and
between the Executive and the Company dated as of [ ] (the “Prior
Agreement”) shall survive in its entirety with respect to the transactions
contemplated by the Agreement and Plan of Merger among Alltel Corporation,
Atlantis Holdings LLC and Atlantis Merger Sub, Inc. dated May 20, 2007, provided
that Section 8 of the Prior Agreement shall be modified by Section 8(e) hereof
and (ii) the third sentence of Section 7 of the Prior Agreement shall survive
in
its entirety with respect to payments and benefits under the Prior Agreement
from the Effective Date through the Executive’s remaining lifetime (or, if
longer, through the 20th
anniversary of the Effective Date).
(g)
Within the time period permitted by the applicable Treasury Regulations, the
Company may, in consultation with the Executive, modify the Agreement, in the
least restrictive manner necessary and without any diminution in the value
of
the payments to the Executive, in order to cause the provisions of the Agreement
to comply with the requirements of Section 409A of the Code, so as to avoid
the
imposition of taxes and penalties on the Executive pursuant to Section 409A
of
the Code.
[remainder
of page left intentionally blank]
17
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.
ALLTEL
CORPORATION
/s/
Xxxxxxx
X.
Xxxxxx
Chief
Strategy Officer and
General
Counsel
|
/s/
Xxxxx X.
Xxxx
|
|
|
XXXXX
X. XXXX
|
18
