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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Agreement is made as of the fourth day of August, 1997 (the
"Effective Date"), between Paging Network, Inc., a Delaware corporation
("PageNet"), and Xxxx X. Xxxxxx, Xx., of Tallahassee, Florida (the "Executive").
W I T N E S S E T H:
WHEREAS, PageNet and the Executive desire to enter into an employment
relationship upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive will be employed in a capacity in which he may
receive and contribute to confidential information, as to which PageNet desires
fully to protect its rights;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Employment. The Executive hereby agrees to serve as a
corporate officer with the title of Chairman, President and Chief Executive
Officer of PageNet, for the term of this Agreement, subject to the terms set
forth herein and the provisions of the Bylaws of PageNet. During his employment
in such position, Executive shall report directly to the Board of Directors of
PageNet (the "PageNet Board"). During his employment hereunder, the Executive
shall devote his efforts and attention, substantially on a full-time basis, to
the performance of the duties required of him as an executive of PageNet. It is
agreed and understood that the Executive may continue to serve as a director
(or similar position) of those entities for which the Executive presently
serves, and the Executive may serve in such capacities for other entities
provided such service does not materially interfere with the Executive's duties
and responsibilities hereunder.
2. Compensation. As compensation for his services during the term
of this Agreement, the Executive shall receive the amounts and benefits set
forth in subsections (a), (b), (c), (d), (e) and (f) below:
(a) A base salary effective as of the Effective Date of
six hundred fifty thousand dollars ($650,000) per year (the "Base
Salary"), prorated for any partial year of employment, subject to
annual review for increases in the sole discretion of the PageNet
Board after recommendation of the Compensation Committee of the
PageNet Board (the "Compensation Committee"), in light of the
performance of PageNet and the Executive. The Executive's salary shall
be payable semi-monthly, or in accordance with
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PageNet's regular payroll practices in effect from time to time for
senior executives of PageNet.
(b) Annual incentive compensation during the term of
this Agreement with a target of three hundred fifty thousand dollars
($350,000), such incentive compensation hereinafter referred to as
the "Incentive Bonus". The Incentive Bonus shall be determined by the
executive incentive bonus plan, which shall be approved by the PageNet
Board (after recommendation of the Compensation Committee) in its sole
discretion based upon the achievement by PageNet of its overall
corporate objectives for such year. The level of the Incentive Bonus
will depend upon the PageNet Board's determination of the degree to
which the objectives have been met. The objectives, the executive
incentive bonus plan and levels of performance on which the Incentive
Bonus will be determined may be changed from time to time by the
PageNet Board (after recommendation of the Compensation Committee).
The Incentive Bonus shall be payable to the Executive in full only if
the Executive is actively employed on the February 1 following the
calendar year for which the Incentive Bonus is being paid, and
otherwise the Executive shall be considered for a bonus on a pro rata
basis in the discretion of the PageNet Board for any partial calendar
year of employment (so long as the Executive has not been terminated
for "Good Cause," as defined in Section 12 below) and shall be paid in
total no later than the later of: (i) February 1 of the year following
the calendar year for which the Incentive Bonus is being paid, or (ii)
fifteen (15) business days following the determination of the amount
of the Incentive Bonus for the calendar year for which the Incentive
Bonus is to be paid. The Incentive Bonus shall be payable as follows:
(i) no less than forty percent (40%) of the amount of the Incentive
Bonus shall be paid through the original issuance to the Executive of
that number of shares of Paging Network, Inc. Common Stock, $.01 par
value per share (the "Common Stock"), having a value (calculated based
on the market value of the Common Stock on such date as the bonus is
determined) equal to the portion of the Incentive Bonus to be paid in
Common Stock, provided, that the Executive, in his sole discretion,
may elect to increase the percentage of the Incentive Bonus payable in
Common Stock up to a maximum of one hundred percent (100%), and (ii)
the remainder of the Incentive Bonus shall be paid in cash. Any Common
Stock issued to the Executive pursuant to the provisions of this
Section 2(b) shall have been registered under the Securities Act of
1933, as amended (the "Securities Act").
(c) Participation by the Executive in, in accordance with
the terms of, any employee benefit plans maintained from time to time
by PageNet for the purpose of providing retirement, deferred
compensation, health care, life insurance, disability and similar
benefits to senior executives of PageNet.
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(d) The original issuance to the Executive of 11,510
shares of Common Stock pursuant to the Paging Network, Inc.1997
Restricted Stock Plan, which shares have been registered under the
Securities Act.
(e) Participation by the Executive in, in accordance with
the terms of and at the discretion of the PageNet Board (after
recommendation of the Compensation Committee), any employee stock
purchase plan, stock option plan or other incentive plans made
generally available to senior executives of PageNet. Initially, and as
an inducement essential to the Executive's entering into this
Agreement, the Executive shall be granted a stock option for 600,000
shares of Common Stock, such option to be granted at an exercise price
of $8.688, being the fair market value of a share of Common Stock on
the Effective Date. Such option shall be granted, to the extent of
500,000 shares, under the 1991 Stock Option Plan (which shares have
been registered under the Securities Act) and, to the extent of
100,000 shares, in an option not issued under any plan and the shares
of which the Company shall promptly register on Form S-8 under the
Securities Act. Such option shall vest and become exercisable as
follows: (i) 200,000 shares shall vest on the Effective Date, and (ii)
the remaining shares shall vest in equal installments on each of the
first and second anniversaries of the Effective Date so long as the
Executive's employment continues on such anniversary dates, with all
such shares being vested in the event of a Change in Control (as
hereinafter defined), provided, that any such accelerated vesting upon
a Change in Control shall be subject to the Executive's agreement to
remain as President and Chief Executive Officer for a reasonable
period of time (not to exceed three (3) months) after such Change in
Control in order to facilitate any transition occasioned by such
Change in Control.
(f) Reimbursement of ordinary and necessary travel and
other expenses (other than those provided in Section 3 below), subject
to PageNet's standard policies (including required documentation and
approvals).
3. Relocation and Commuting. PageNet will provide the Executive
with the following during the term of this Agreement and the Executive's
employment hereunder:
(a) PageNet will provide a furnished apartment in the
Dallas, Texas metropolitan area for the exclusive use of the Executive
and his family (up to a maximum of $3,000 per month), provided that
the cost of providing such furnished apartment shall be payable to the
Executive if and when he purchases a residence in the Dallas, Texas
metropolitan area.
(b) PageNet shall provide the Executive with private jet
transportation, through a time-sharing arrangement, to and from the
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Executive's primary residence in Florida and to and from Dallas, Texas
or wherever the Executive is conducting PageNet business.
4. Term.
(a) This Agreement and the Executive's employment
hereunder shall be effective as of the Effective Date, and shall
continue until July 31, 1998. This Agreement shall be automatically
renewed for successive one-year periods at the end of the initial
term, unless either party gives notice to the other of its intent to
terminate this Agreement not less than 90 days prior to the
commencement of any such one-year renewal period. In the event such
notice to terminate is properly given, this Agreement shall terminate
at the end of the initial term or the one-year renewal period during
which the notice is given, as the case may be.
(b) The Executive's employment hereunder may be
terminated by either party prior to the end of the term hereof
(including any renewal period) upon written notice to the other
party, provided that, in the event of such termination, PageNet shall
be obligated to make the payments and provide the benefits, if any,
described in Section 5 below. In the event of any termination, the
Executive agrees to resign any offices he holds on such date as an
officer or director of PageNet or any of its subsidiaries and other
affiliates.
5. Termination Payments. Upon termination of the Executive's
employment prior to the end of the term of this Agreement (including any
renewal term), PageNet shall pay to the Executive in cash any amount payable
pursuant to (a) and (b) below, and shall for the period or at the time
specified provide the other benefits described in (c), if any, below:
(a) If: (i) the Executive's employment is terminated by
PageNet other than for "Good Cause," as defined in Xxxxxxx 00 xxxxx,
(xx) the Executive's employment is terminated by reason of the
Executive's death or "Disability," as defined in Section 12 below; or
(iii) the Executive elects to terminate his employment for "Good
Reason," as defined in Section 12 below, then the Executive shall be
paid his Base Salary through the end of the initial term or the
one-year renewal period, as the case may be, during which his
employment is terminated, and his pro rata bonus for such calendar
year during which his employment is terminated.
(b) If the Executive's termination of employment is not
described in (a) above, the Executive shall be paid any unpaid Base
Salary through the date of termination.
(c) If the Executive's termination of employment is
described in (a) above, any health care and life insurance benefits
coverage provided to the
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Executive at his date of termination shall be continued at the same
level and in the same manner through the initial term or the relevant
one-year renewal period, as the case may be, during which his
employment is terminated and any additional coverages the Executive
had at termination, including dependent coverage, will also be
continued for such period on the same terms. Any costs the Executive
was paying for such coverages at the time of termination shall
continue to be paid by the Executive. If the terms of any benefit plan
referred to in this section do not permit continued participation by
the Executive, as provided in this subsection, then PageNet will
arrange for other coverage providing substantially similar benefits.
6. Nondisclosure: Confidentiality. The Executive agrees that
during the term of his employment and for a period of two (2) years after
termination, he shall not, directly or indirectly, disclose or give to others
any confidential fact or information not available to the public concerning
PageNet's financial operations and businesses. Such confidential business
information includes any non-public business plans, financial information,
financial systems, financing arrangements, and any other secret or confidential
work, knowledge, know-how, trade secret or confidential business information,
confidential information relating to customer accounts, customer needs, product
mix, organization, strategy, research and development, discoveries, software in
various stages of development, design, drawings, specifications, techniques,
processes, procedures, "know-how," marketing techniques and materials, marketing
and development plans, price lists, pricing policies and other confidential
information relating to customers.
7. Non-Solicitation. The Executive agrees that during the term of
his employment and for a period of one (1) year after termination, he shall
not, directly or indirectly, for himself or on behalf of another, hire any
employee, or solicit or induce any employee to leave his or her employment with
PageNet or any of its subsidiaries or affiliates.
8. Tax Gross-Up.
(a) In the event that any of the benefits provided for in
Section 3 hereof will be subject to income tax imposed by the Internal
Revenue Code of 1986, as amended (the "Code") and any applicable state
and local income tax law (collectively, the "Tax"), the Corporation
shall immediately pay to or to the order of the Executive an
additional amount (the "Gross-up Payment") such that the net amount
retained by the Executive, after deduction of any Tax on such benefits
and any federal, state and local income tax on the payment provided
for by this Section 8(a), shall be equal to the amount of such
benefits, placing the Executive in the same after-tax financial
position in which he would have been if he had not incurred any such
income tax liability for the benefits provided under Section 3 hereof.
For purposes of determining
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the amount of the Gross-up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal individual rate of
federal income taxation on compensation in the calendar year in which
the Gross-up Payment is to be made and state and local income taxes at
the highest marginal individual rate of taxation on compensation in
the state and locality of the Executive's residence on the last day of
the calendar year for which the gross-up payment is to be made, net of
the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes.
(b) In the event that the Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
determination, the Executive shall repay to the Corporation at the
time that the amount of such reduction in Tax is finally determined
the portion of the Gross-up Payment attributable to such reduction
(plus the portion of the Gross-up Payment attributable to the Tax and
federal, state and local income tax imposed on the Gross-up Payment
being repaid by the Executive, if such repayment results in a
reduction in Tax or in federal, state and local income tax deductions)
plus interest on the amount of such repayment at the rate provided in
Section 1274(d) of the Code.
9. Damages and Injunctive Relief. The Executive agrees that the
breach of any of his obligations under Sections 6 or 7 of this Agreement (a)
may cause injury to PageNet and that PageNet is entitled to seek and obtain
compensation and damages, and (b) may cause irreparable injury to PageNet and
that, accordingly, PageNet may seek and obtain injunctive relief against the
breach or threatened breach of those provisions, in addition to other remedies
at law or in equity which may be available.
10. Assignment: Successors.
(a) The rights and benefits of the Executive under this
Agreement, other than accrued and unpaid amounts due hereunder, are
personal to him and shall not be assignable, except with the prior
written consent of PageNet.
(b) This Agreement shall not be assignable by PageNet,
provided, that with the consent of the Executive, PageNet may assign
this Agreement to (i) another corporation wholly-owned by it, either
directly or through one or more other corporations, or (ii) any
corporate successor of PageNet or any such corporation.
(c) Notwithstanding the foregoing, any business entity
succeeding to substantially all of the business of PageNet by
purchase, merger, consolidation, sale of assets or otherwise, shall be
required as a condition to the closing of such transaction to agree to
be bound by and shall adopt and assume this Agreement.
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11. Notices. Any notice or other communications under this
Agreement shall be in writing, signed by the party making the same, and shall
be delivered personally or sent by certified or registered mail, postage
prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxxx, Xx.
Quinque Farm
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
If to PageNet:
Vice President-Human Resources
Paging Network, Inc.
0000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address or agent as may hereafter be designated by either
party hereto. All such notices shall he deemed given on the date personally
delivered or mailed.
12. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Change in Control" shall mean:
(i) The acquisition (other than from PageNet) by
any person, entity. or "group," within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this
purpose, any employee benefit plan of PageNet or its
subsidiaries which acquires beneficial ownership of voting
securities of PageNet) of beneficial ownership (within the
meaning of Rule l3d-3 promulgated under the Exchange Act)
of 25% or more of either the then outstanding shares of Common
Stock or the combined voting power of PageNet's then
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outstanding voting, securities entitled to vote generally in
the election of directors;
(ii) The failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at
least a majority of the PageNet Board; or
(iii) Approval by the stockholders of PageNet of a
reorganization, merger or consolidation or the issuance of
shares in connection therewith, in each case, with respect to
which persons who were the stockholders of PageNet immediately
prior to such reorganization, merger or consolidation or the
issuance of shares in connection therewith do not, immediately
thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of PageNet
or of the sale of all or substantially all of the assets of
PageNet.
(b) "Disability" shall mean the total and permanent
inability of the Executive due to illness, accident or other physical
or mental incapacity to perform the usual duties of his employment
under this Agreement for more than one hundred eighty (180) days
during any consecutive twelve (12) month period.
(c) The "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(d) "Good Cause" shall mean and be limited to (i) an act
or acts of personal dishonesty taken by the Executive and intended to
result in material personal enrichment of the Executive at the expense
of PageNet, (ii) violation by the Executive of the Executive's
obligations under Section 1 of this Agreement or violation by the
Executive of PageNet's Principles of Business Conduct Policy which are
willful and deliberate on the Executive's part, (iii) the conviction
of the Executive of a felony or (iv) the violation by the Executive of
the provisions of Section 6 or 7 or the willful engaging by the
Executive in conduct materially injurious to PageNet.
(e) "Good Reason" shall mean:
(i) 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 1 of this Agreement, or any
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other action by PageNet which results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by PageNet
promptly after receipt of notice thereof given by the
Executive;
(ii) A failure to pay any amount due to the
Executive hereunder or a reduction in the Executive's
compensation or benefits or any other material breach of this
Agreement by PageNet; or
(iii) Any purported termination by PageNet of the
Executive's employment otherwise than as expressly permitted
by this Agreement any such purported termination being
ineffective.
(f) The "Incumbent Board" at any time shall mean the
persons who are then members of the PageNet Board and who (a) are
members of the PageNet Board as of the date hereof, or (b) become
members of the PageNet Board hereafter upon nomination for election by
at least a majority of the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to
the election of the directors of PageNet, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act).
13. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the substantive laws of the State of Texas.
14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any one or more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provisions in every other respect and
of the remaining provisions of this Agreement shall not be in any way impaired.
15. Entire Agreement. Except as contained in a Stock Option
Agreement of even date herewith and PageNet's Principles of Business Conduct
Policy (collectively the "Other Agreements"), this Agreement contains the
entire agreements of the parties hereto with respect to the subject matter
contained herein. There are no restrictions, promises, covenants, or
undertakings, other than those expressly set forth herein or contained in the
Other Agreements, the PageNet employee benefit or incentive compensation plans,
between PageNet and the Executive. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the matters
set forth herein. This Agreement may not be amended or modified except by a
writing executed by the parties.
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In Witness Whereof, the parties hereto have set their hands and seals
as of the date first written above.
PAGING NETWORK, INC.
By: /s/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx, Senior Vice President
and General Counsel
EXECUTIVE
/s/ XXXX X. XXXXXX, XX.
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Xxxx X. Xxxxxx, Xx.
