EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 7, 1999, by and between
CENTENNIAL CELLULAR CORP., a Delaware corporation (the "Company"), and XXXXXXX
XXXXX (the "Employee").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Employee to enter into
employment with the Company for the period provided in this Agreement, and the
Employee is willing to accept such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby covenant and
agree as follows:
1. Employment. (a) The Company hereby agrees to employ the Employee,
and the Employee hereby agrees to accept such employment with the Company,
beginning on January 7, 1999 (the "Commencement Date") and continuing for the
period set forth in Section 2 hereof, all upon the terms and conditions
hereinafter set forth.
(b) The Employee affirms and represents that as of the commencement of
his employment by the Company on the Commencement Date, he will be under no
obligation to any former employer or other party which is in any way
inconsistent with, or which imposes any restriction upon, the Employee's
acceptance of employment hereunder with the Company, the employment of the
Employee by the Company, or the Employee's undertakings under this Agreement.
2. Term of Employment. (a) Unless earlier terminated as provided in
this Agreement, the term of the Employee's employment under this Agreement shall
be for a period beginning on the Commencement Date and ending on September 30,
2002 (the "Initial Term").
(b) The term of the Employee's employment under this Agreement shall
be automatically renewed for additional one-year terms (each a "Renewal Term")
upon the expiration of the Initial Term or any Renewal Term unless the Company
or the Employee delivers to the other, at least ninety (90) days prior to the
expiration of the Initial Term or the then current Renewal Term, as the case may
be, a written notice specifying that the term of the Employee's employment will
not be renewed at the end of the Initial Term or such Renewal term, as the case
may be. The period from the Commencement Date until September 30, 2002 or, in
the event that the Employee's employment hereunder is earlier terminated as
provided herein or renewed as provided in this Section 2(b), such shorter or
longer period, as the case may be, is hereinafter called the "Employment Term".
3. Duties. The Employee shall be employed as Chief Executive Officer
of the Company, shall faithfully and competently perform such duties as inhere
in such position and as are specified in the By-laws of the Company and shall
also perform and discharge such other executive employment duties and
responsibilities as the Board of Directors of the Company shall from time to
time determine so long as they are consistent with those performed by a chief
executive officer of a similar business. In all cases, Employee will have
general responsibility and authority over the day to day operations of the
business and will have such duties as are customary for a chief executive. The
Employee shall perform his duties principally at the offices of the Company in
Monmouth County, New Jersey, with such travel to such other locations from time
to time as the Board of Directors of the Company may reasonably prescribe.
Except as may otherwise be approved in advance by the Board of Directors of the
Company, and except during vacation periods and reasonable periods of absence
due to sickness, personal injury or other disability, the Employee shall devote
his full business time throughout the Employment Term to the services required
of him hereunder. The Employee shall render his business services exclusively
to the Company and its subsidiaries during the Employment Term and shall use his
best efforts, judgment and energy to improve and advance the business and
interests of the Company and its subsidiaries in a manner consistent with the
duties of his position. Notwithstanding the preceding sentence, the Employee
shall be entitled to participate as a director of not more than two (2) other
business enterprises so long as such participation does not (i) involve a
substantial amount of the Employee's time, (ii) impair the Employee's ability to
perform his duties under this Agreement or (iii) violate the provisions of
Section 9 of this Agreement. For so long as he serves as the Company's Chief
Executive Officer, the Employee will be nominated to serve on the Board of
Directors of the Company.
4. Salary and Bonus. (a) Salary. As compensation for the complete and
satisfactory performance by the Employee of the services to be performed by the
Employee hereunder during the Employment Term, the Company shall pay the
Employee a base salary at the annual rate of Two Hundred Fifty Thousand Dollars
($250,000) (said amount, together with any increases thereto as may be
determined from time to time by the Board of Directors of the Company in its
sole discretion, being hereinafter referred to as "Salary"). Any Salary payable
hereunder shall be paid in regular intervals in accordance with the Company's
payroll practices from time to time in effect. It is the Company's plan to
review the Employee's Salary if the Company's Fiscal 1999 Plan to be approved by
the Board of Directors of the Company is achieved by the Company for the fiscal
year ending May 31, 1999.
(b) Bonus. The Employee shall be eligible to receive bonus
compensation from the Company in respect of each fiscal year (or portion
thereof) occurring during the Employment Term in accordance with the Company's
management bonus plan as in effect from time to time (pro rated for any portion
of a fiscal year occurring during the Employment Term), in each case as may be
determined by the Board of Directors of the Company in its sole discretion on
the basis of
2
performance-based criteria to be established from time to time by the Board of
Directors in its sole discretion. Such bonus amount will be $225,000 if the
Fiscal 1999 Plan to be approved by the Board of Directors of the Company is
achieved by the Company for the fiscal year ending May 31, 1999, subject to
increase if such Fiscal 1999 Plan is exceeded.
5. Other Benefits; Company Stock. (a) General. During the Employment
Term, the Employee shall:
(i) be eligible to participate in employee fringe benefits and
pension and/or profit sharing plans that may be provided by the Company for
its senior executive employees in accordance with the provisions of any
such plans, as the same may be in effect from time to time;
(ii) be eligible to participate in any medical and health plans or
other employee welfare benefit plans that may be provided by the Company
for its senior executive employees in accordance with the provisions of any
such plans, as the same may be in effect from time to time;
(iii) be entitled to the number of paid vacation days in each calendar
year determined by the Company from time to time for its senior executive
officers, provided that such number of paid vacation days in each calendar
year shall not be less than twenty (20) work days (four calendar weeks);
the Employee shall also be entitled to all paid holidays given by the
Company to its senior executive officers;
(iv) be eligible for consideration by the Board of Directors of the
Company for awards of stock options under any stock option plan which may
be established by the Company for its and its subsidiaries' key employees,
the amount, if any, of shares for which options may be granted to Employee
to be in the sole discretion of the Board of Directors of the Company;
(v) be entitled to sick leave, sick pay and disability benefits in
accordance with any Company policy that may be applicable to senior
executive employees from time to time; and
(vi) be entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Employee in the performance
of his duties hereunder in accordance with the Company's normal policies
from time to time in effect (including, without limitation, relocation
expenses).
(b) Options. Simultaneously with the execution and delivery of this
Agreement by the parties hereto, the Company has granted the Employee options to
purchase 135,000 shares of Class A Common Stock, $.01 par value ("Common
Stock"), of the Company at a purchase price of $41.50 per share, which options
shall vest over a four-year period commencing on July 31,
3
1999 subject to performance vesting criteria, all as provided in the Option
Agreement of even date herewith between the Company and the Employee. The
Company will increase the option pool for all employees by an amount equal to 2%
of the Company's issued and outstanding equity as of the Effective Time of the
Merger on the first anniversary of the date of this Agreement if the Fiscal 1999
Plan of the Company is met or exceeded, and Employee will be eligible to
participate in such increased option pool at the discretion of the Board of
Directors of the Company.
6. Confidential Information. The Employee hereby covenants, agrees and
acknowledges as follows:
(a) The Employee has and will have access to and will participate in
the development of or be acquainted with confidential or proprietary
information and trade secrets related to the business of the Company and
any present or future subsidiaries or affiliates of the Company
(collectively with the Company, the "Companies"), including but not limited
to (i) customer lists; claims histories, adjustments and settlements and
related records and compilations of information; the identity, lists or
descriptions of any new customers, referral sources or organizations;
financial statements; cost reports or other financial information; contract
proposals or bidding information; business plans; training and operations
methods and manuals; personnel records; software programs; reports and
correspondence; and management systems, policies or procedures, including
related forms and manuals; (ii) information pertaining to future
developments such as future marketing or acquisition plans or ideas, and
potential new business locations and (iii) all other tangible and
intangible property, which are used in the business and operations of the
Companies but not made public. The information and trade secrets relating
to the business of the Companies described hereinabove in this paragraph
(a) are hereinafter referred to collectively as the "Confidential
Information", provided that the term Confidential Information shall not
include any information (x) that is or becomes generally publicly available
(other than as a result of violation of this Agreement by the Employee),
(y) that the Employee receives on a nonconfidential basis from a source
(other than the Companies or their representatives) that is not known by
him to be bound by an obligation of secrecy or confidentiality to any of
the Companies or (z) that was in the possession of the Employee prior to
disclosure by the Companies.
(b) The Employee shall not disclose, use or make known for his or
another's benefit any Confidential Information or use such Confidential
Information in any way except as is in the best interests of the Companies
in the performance of the Employee's duties under this Agreement. The
Employee may disclose Confidential Information when required by a third
party and applicable law or judicial process, but only after providing
immediate notice to the Company at any third party's request for such
information, which notice shall include the Employee's intent with respect
to such request.
(c) The Employee acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 6 would be
4
inadequate and, therefore, agrees that the Companies shall be entitled to
injunctive relief in addition to any other available rights and remedies in
case of any such breach or threatened breach by the Employee (and the
Employee hereby waives any requirement that any of the Companies provide a
bond or other security in connection with the issuance of any such
injunction); provided, however, that nothing contained herein shall be
construed as prohibiting the Companies from pursuing any other rights and
remedies available for any such breach or threatened breach.
(d) The Employee agrees that upon termination of his employment with
the Company for any reason, the Employee shall forthwith return to the
Company all Confidential Information in whatever form maintained
(including, without limitation, computer discs and other electronic media).
(e) The obligations of the Employee under this Section 6 shall, except
as otherwise provided herein, survive the termination of the Employment
Term and the expiration or termination of this Agreement.
(f) Without limiting the generality of Section 10 hereof, the Employee
hereby expressly agrees that the foregoing provisions of this Section 6
shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination. (a) The Employee's employment hereunder shall be
terminated upon the occurrence of any of the following:
(i) death of the Employee;
(ii) the Employee's inability to perform his duties on account of
disability or incapacity for a period of one hundred eighty (180) or more
days, whether or not consecutive, within any period of twelve (12)
consecutive months;
(iii) the Company giving written notice, at any time, to the Employee
that the Employee's employment is being terminated "for cause" (as defined
below);
(iv) the Company giving written notice, at any time, to the Employee
that the Employee's employment is being terminated other than pursuant to
clause (i), (ii) or (iii) above;
(v) the Employee terminates his employment hereunder for "Good Reason"
(as defined below); or
(vi) the Employee terminates his employment hereunder for any reason
whatsoever (whether by reason of retirement, resignation or otherwise),
other than for "Good Reason".
5
The following actions, failures and events by or affecting the
Employee shall constitute "cause" for termination within the meaning of clause
(iii) above: (A) a conviction of the Employee of, or the entering of a plea of
nolo contendere by the Employee with respect to, a felony, (B) abuse of
controlled substances or alcohol (in the case of alcohol abuse, that has a
material adverse affect on Employee's performance of his obligations under this
Agreement) or acts of dishonesty or moral turpitude by the Employee that are
materially detrimental to one or more of the Companies, (C) acts or omissions by
the Employee that the Employee knew or reasonably should have known would
materially damage the business of one or more of the Companies, (D) gross
negligence by the Employee in the performance of, or wilful disregard by the
Employee of, his material obligations under this Agreement or otherwise relating
to his employment, which gross negligence or wilful disregard continues
unremedied for a period of fifteen (15) days after written notice thereof to the
Employee or (E) failure by the Employee to obey the reasonable and lawful orders
and policies of the Board of Directors that are material to and consistent with
the provisions of this Agreement (provided that, in the case of an indictment
described in clause (A) above, and in the case of clause (B) or (C) above, the
Employee shall have received written notice of such proposed termination and a
reasonable opportunity to discuss the matter with the Board of Directors of the
Company, followed by a notice that the Board of Directors of the Company adheres
to its position). For purposes of this Agreement, "Good Reason" means (1) the
Company shall have materially diminished the Employee's duties, responsibility
or authority without his consent, (2) the Employee's title shall have been
changed without his consent, (3) the Employee's base salary shall have been
reduced without his consent or (4) the Company shall relocate to a location more
than twenty-five miles away from its existing site without the Employee's
consent and, in each such case, such material diminution, change, reduction or
relocation shall continue unremedied for a period of fifteen (15) days after
written notice thereof to the Company
(b) In the event that the Employee's employment is terminated by the
Company pursuant to clause (iv) of Section 7(a) above or by the Employee
pursuant to clause (v) of said Section 7(a), whether during the Initial Term or
during any Renewal Term pursuant to Section 2(b) above, then (i) the Company
shall pay to the Employee, as severance pay or liquidated damages or both,
monthly payments at the rate per annum of his Salary at the time of such
termination for a period from the date of such termination to the date which is
twelve (12) months after such termination plus a pro rata portion of any bonus
payable with respect to the fiscal year during which such termination occurred
if the Company's Plan for such fiscal year is achieved (such pro rata bonus to
be payable within thirty days after the close of such fiscal year) and (ii) the
Company shall continue to provide the Employee with life insurance and medical
and health insurance coverage at levels comparable to those in effect prior to
such termination for a period from the date of such termination to the earlier
to occur of (x) the date which is twelve (12) months after such termination and
(y) the date upon which the Employee becomes eligible to be covered for such
benefits through his employment with another employer.
6
(c) Notwithstanding anything to the contrary expressed or implied
herein, except as required by applicable law and except as set forth in Section
7(b) above, the Company (and its affiliates) shall not be obligated to make any
payments to the Employee or on his behalf of whatever kind or nature by reason
of the Employee's cessation of employment (including, without limitation, by
reason of termination of the Employee's employment by the Company's for
"cause"), other than (i) such amounts, if any, of his Salary as shall have
accrued and remained unpaid as of the date of said cessation and (ii) such other
amounts, if any, which may be then otherwise payable to the Employee pursuant to
the terms of the Company's benefits plans or pursuant to clause (vi) of Section
5(a) above.
(d) No interest shall accrue on or be paid with respect to any portion
of any payments hereunder.
8. Non-Assignability. (a) Neither this Agreement nor any right or
interest hereunder shall be assignable by the Employee or his beneficiaries or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section 8(a) shall preclude the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity.
(b) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or to assignment by operation of law, and
any attempt, voluntary or involuntary, to effect any such action shall be null,
void and of no effect.
9. Restrictive Covenants.
(a) Competition. During the Employment Term and, in the event the
Employee's employment is terminated (i) by the Company pursuant to clause (iii)
or (iv) of Section 7(a) above or (ii) by the Employee as provided in clause (vi)
of said Section 7(a), during the twelve (12) month period following such
termination, the Employee will not directly or indirectly (as a director,
officer, executive employee, manager, consultant, independent contractor,
advisor or otherwise) engage in competition with, or own any interest in,
perform any services for, participate in or be connected with any business or
organization which engages in competition with any of the Companies within the
meaning of Section 9(d), provided, however, that the provisions of this Section
9(a) shall not be deemed to prohibit the Employee's ownership of not more than
two percent (2%) of the total shares of all classes of stock outstanding of any
publicly held company, or ownership, whether through direct or indirect stock
holdings or otherwise, of one percent (1%) or more of any other business.
(b) Non-Solicitation. During the Employment Term and during the twelve
(12) month period following the end of the Employment Term for any reason
whatsoever (or, if later, the twelve (12) month period following termination of
the Employee's employment with the
7
Company), the Employee will not directly or indirectly induce or attempt to
induce any employee of any of the Companies to leave the employ of the Company
of such subsidiary or affiliate, or in any way interfere with the relationship
between any of the Companies and any employee thereof.
(c) Non-Interference. During the Employment Term and, in the event the
Employee's employment is terminated (x) by the Company pursuant to clause (iii)
or (iv) of Section 7(a) above or (y) by the Employee as provided in clause (v)
of said Section 7(a), during the twelve (12) month period following such
termination, the Employee will not directly or indirectly hire, engage, send any
work to, place orders with, or in any manner be associated with any supplier,
contractor, subcontractor or other business relation of any of the Companies if
such action by him would have an adverse effect on the business, assets or
financial condition of any of the Companies, or materially interfere with the
relationship between any such person or entity and any of the Companies.
(d) Certain Definitions.
(i) For purposes of this Section 9, a person or entity (including,
without limitation, the Employee) shall be deemed to be a competitor of one
or more of the Companies, or a person or entity (including, without
limitation, the Employee) shall be deemed to be engaging in competition
with one or more of the Companies, if such person or entity either (1)
conducts the Specified Business (as hereinafter defined) as a significant
portion of its business or (2) derives revenues from the Specified Business
in any Specified Region (as hereinafter defined) that exceed 50% of the
revenues derived by the Companies from the Specified Business in such
Specified Region. For purposes of this Agreement, "Specified Business"
means (A) providing rural cellular telephone service or engaging in a
business which the board of directors of one or more of the Companies shall
have formally proposed be conducted by one or more of such Companies at the
time of termination of the Employee's employment with the Company or (B)
conducting, operating, carrying out or engaging in the business of managing
any entity described in clause (A), in either case in the the geographic
region encompassing the service areas in which any of the Companies
conduct, or are actively investigating the possibility of conducting, their
businesses at the time of termination of the Employee's employment with the
Company (the "Specified Region").
(ii) For purposes of this Section 9, no corporation or entity that may
be deemed to be an affiliate of the Companies solely by reason of its being
controlled by, or under common control with, Welsh, Carson, Xxxxxxxx &
Xxxxx VIII, L.P. or any of their respective affiliates other than the
Companies, will be deemed to be an affiliate of the Companies.
(e) Certain Representations of the Employee. In connection with the
foregoing provisions of this Section 9, the Employee represents that his
experience, capabilities and circumstances are such that such provisions will
8
not prevent him from earning a livelihood. The Employee further agrees that the
limitations set forth in this Section 9 (including, without limitation, time and
territorial limitations) are reasonable and properly required for the adequate
protection of the current and future businesses of the Companies. It is
understood and agreed that the covenants made by the Employee in this Section 9
(and in Section 6 hereof) shall survive the expiration or termination of this
Agreement.
(f) Injunctive Relief. The Employee acknowledges and agrees that a
remedy at law for any breach or threatened breach of the provisions of Section 9
hereof would be inadequate and, therefore, agrees that the Company and any of
its subsidiaries or affiliates shall be entitled to injunctive relief in
addition to any other available rights and remedies in cases of any such breach
or threatened breach (and the Employee hereby waives any requirement that any of
the Companies provide a bond or other security in connection with the issuance
of any such injunction); provided, however, that nothing contained herein shall
be construed as prohibiting the Company or any of its affiliates from pursuing
any other rights and remedies available for any such breach or threatened
breach.
10. Binding Effect. Without limiting or diminishing the effect of
Section 8 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notices. All notices which are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be sufficient in
all respects if given in writing and (i) delivered personally, (ii) mailed by
certified or registered mail, return receipt requested and postage prepaid,
(iii) sent via a nationally recognized overnight courier or (iv) sent via
facsimile confirmed in writing to the recipient, if to the Company at the
Company's principal place of business, and if to the Employee, at his home
address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto, provided, however, that any notice sent by certified or registered mail
shall be deemed delivered on the date of delivery as evidenced by the return
receipt.
12. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
13. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of Section 6 or
9 hereof is void or constitutes an unreasonable restriction against the
Employee, the provisions of such Section 6 or 9 shall not be rendered void but
shall apply with respect to such extent as such court may judicially determine
constitutes a reasonable restriction under the circumstances. If any part of
this Agreement other than Section 6 or 9 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be deemed
to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions
9
of this Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other covenant
or provision.
14. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
15. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10
IN WITNESS WHEREOF, the Company and the Employee have duly executed
and delivered this Agreement as of the day and year first above written.
CENTENNIAL CELLULAR CORP.
By /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
/s/ Xxxxxxx Xxxxx
-----------------------------------
Xxxxxxx Xxxxx
11
