EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.2
THIS
EXECUTIVE EMPLOYMENT AGREEMENT (this Agreement), dated July 1, 2007, is by
and
between NORTH PITTSBURGH TELEPHONE COMPANY, a Pennsylvania business corporation
(hereinafter called “Employer”), and NORTH PITTSBURGH SYSTEMS, INC., a
Pennsylvania corporation and the sole shareholder of Employer (“NPSI”), each
having its principal office at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx
00000-0000, on the one hand, and N. XXXXXXX XXXXXXXX (hereinafter called
“Employee”), on the other hand.
WHEREAS,
Employee is currently employed by Employer as an executive officer pursuant
to
the terms of an Amended and Restated Executive Employment Agreement dated as
of
April 19, 2002 as extended and amended by an Extension of Amended and Restated
Executive Employment Agreement and Retention Payment Program, dated October
29,
2003, and a letter agreement dated in March 2002 between Employer and Employee
pertaining to and headed “Retention Payment Program” (such Amended and Restated
Executive Employment Agreement as so extended and amended, and such letter
agreement headed “Retention Payment Program”, are hereinafter referred to
collectively as the “Existing Agreement”);
WHEREAS,
Employer believes that it is in the best interests of Employer, and Employee
is
willing to agree, that the employment arrangements between Employer and Employee
be extended and otherwise amended as provided in this Agreement;
WHEREAS,
Employee also is an executive officer of NPSI;
WHEREAS,
retaining Employee’s skills and his experience with and understanding of the
business and operations of NPSI and its subsidiaries would be extremely valuable
to maximizing benefits for NPSI’s shareholders and NPSI’s subsidiaries’
customers and other constituencies;
WHEREAS,
NPSI therefore wishes to encourage Employee to continue his employment with
Employer and his services to NPSI and its other subsidiaries and deems it
appropriate to compensate Employee for the benefits that Employee would help
to
achieve for NPSI’s shareholders and NPSI’s and its subsidiaries’
constituencies;
NOW,
THEREFORE, for and in consideration of the mutual promises, agreements and
covenants herein contained, the parties, intending to be legally bound, hereby
agree as follows:
1. Termination
of Existing Agreement. The Existing Agreement is hereby
terminated, effective as of the date of this Agreement; provided,
however, that such termination shall neither affect any right of either
Employer or Employee that arose prior to (including but not limited to any
right
based on facts or circumstances occurring prior to but becoming known to the
party with such right only after) such termination of the Existing Agreement
nor
relieve either Employer or Employee of responsibility for satisfying or the
consequences of having failed to satisfy any obligation under the Existing
Agreement that under the Existing Agreement it or he was to satisfy prior to
such termination of the Existing Agreement.
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2. Employment. Employer
shall continue to employ Employee, and Employee accepts such continued
employment by Employer, upon the terms and conditions of this
Agreement.
3. Term. The
term of employment under this Agreement (the “Term”) shall commence on the date
of this Agreement and shall terminate at 5 p.m. on March 31, 2008.
4. Fidelity
Payment. Employee and Employer each agrees and confirms that
neither has any further obligation to the other with respect to any “Fidelity
Payment” (as such term is used in the Existing Agreement).
5. Compensation
and Benefits.
(a) By
Employer. For all services rendered by Employee hereunder, Employer
shall (i) pay Employee a base annual salary, payable in equal monthly
installments, one at the end of each monthly period, with the base annual salary
presently in effect through December 31, 2007 being $255,800; (ii) include
the
Employee as a participant in the Employer’s salaried employees’ benefit programs
and provide to Employee benefits under each such salaried employees’ benefit
program that are no less favorable to Employee than the benefits that were
provided to Employee under such benefit plan on May 31, 2007 (or would have
been
provided to Employee under such benefit plan as of May 31, 2007 if Employee
had
been employed by Employer and covered by such benefit plan on May 31, 2007),
including but not limited to post retirement benefits; and (iii) provide
Employee with the use of an automobile. Use of the automobile shall
be subject to such rules and limitations as Employer may establish from time
to
time. Salary payments shall be subject to withholding and other
applicable taxes. All compensation payable under the Executive Bonus
Plans referred to in subparagraph (c) immediately below shall be included in
the
calculation of Employee’s retirement benefits. In addition to any
other benefits that may apply to Employee, or that may be implemented during
the
term of this Agreement, Employer shall provide to Employee such additional
life
insurance on the life of Employee as shall be necessary to cause the aggregate
of the life insurance provided by Employer on the life of Employee to equal
not
less than three and one-fourth (3¼) times Employee’s base salary, and the costs
of all such life insurance aggregating three and one-fourth (3¼) times
Employee’s base salary shall be borne 100% by Employer.
(b) Annual
Review of Base Salary. Employer will review Employee’s base
salary on at least an annual basis for the purpose of determining any increase
which may be justified or merited.
(c) Bonus
Plan. NPSI shall (and shall use its best efforts to cause its
successors, if any, as the majority shareholder of Employer to) maintain an
Executive Bonus Plan in effect throughout the Term and include Employee as
a
participant in each such Executive Bonus Plan; provided, however,
that NPSI (and any such successor to NPSI) annually may modify or amend the
targets and matrices on the basis of which bonuses are to be determined,
calculated or awarded under any such Executive Bonus Plan, so long as such
targets and matrices as so modified or amended are reasonably related to the
reasonable expectations and goals of NPSI’s (or such successor’s) business for
the relevant period.
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6. Duties
and Office. Employee is serving, at the direction of Employer’s
President and/or Board of Directors, as an executive officer of Employer with
the title of Chief Operating Officer (and, at the direction of the Presidents
and/or Boards of Directors of the respective corporations, as an executive
officer of NPSI with the titles of Executive Vice President, Chief Operating
Officer and Secretary, an executive officer of Pinnatech, Inc., a subsidiary
of
NPSI, with the title of President, and an executive officer of Penn Telecom,
Inc, a subsidiary of NPSI, with the titles of Vice President – Marketing &
Service and Secretary), and Employee’s duties in that capacity are as
set forth in Schedule A attached hereto, with the understanding that Employee’s
duties may from time to time be modified or expanded by Employer’s President
and/or Board of Directors as the business interests of Employer may
require. It is expressly understood and agreed that Employer’s Board
of Directors may elect or assign Employee to a different position having
different responsibilities and duties than those set forth in such Schedule
A
and different compensation and benefits than those set forth in Paragraph 5
hereof, provided that:
(a) Prior
to the occurrence of a Change of Control (as defined below), the different
position to which Employee is so elected or assigned shall be an executive
office with responsibilities and duties equal to or greater than those set
forth
in this Agreement and the Schedule A attached hereto; and
(b) Upon
and after the occurrence of a Change of Control, the limitations set forth
in
clause (a) immediately above shall not apply, and the different position to
which Employee is then so elected or assigned may be a non-executive position
with responsibilities and duties lesser than those set forth in this Agreement
and the Schedule A attached hereto; and
provided,
further, however, that in no event, whether before or after the
occurrence of a Change of Control and regardless of any change in the position,
responsibilities and/or duties of Employee hereunder, shall the compensation
and
benefits provided to Employee under this Agreement be less than those set forth
in Paragraph 5 hereof.
For
purposes of this Agreement, a
Change of Control shall be deemed to have occurred in the event
of: (i) the acquisition, directly or indirectly, by any person
or entity (other than NPSI), or persons or entities acting in concert (a
“group”), whether by purchase, merger, consolidation or otherwise, of voting
power over that number of shares of the capital stock of either Employer or
NPSI
which, when combined with the existing voting power of such person, entity
or
group, aggregates voting power over such number of shares of the capital stock
of Employer or NPSI as then has the right to cast fifty percent (50%) or more
of
the votes which all shareholders of Employer or NPSI would be entitled to cast
in the election of directors of Employer or NPSI, respectively, under normal
circumstances (that is, for example, without giving effect to any such voting
rights of preferred shares existing by reason of a default in the payment of
preferred dividends) and without giving effect to any elimination of voting
rights of “control shares” (as defined in 15 Pa. C.S. Section 2562) pursuant to
Subchapter G of Chapter 25 of the Pennsylvania Business Corporation Law of
1988,
as amended, or any successor or comparable statute (a “controlling interest”) or
(ii) the sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of
Employer or NPSI to a transferee or transferees other than NPSI, Employer,
an
entity of which a controlling interest is
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owned,
directly or indirectly, by Employer or NPSI, or a person, entity or group which,
prior to the sale, lease, exchange or other transfer of assets, owns, directly
or indirectly, a controlling interest in Employer or NPSI. All fringe
and other employee benefits applicable to Employee which have a vesting schedule
shall be deemed fully vested as of the date of a Change of Control.
7. Exclusivity
of Employment. Employee agrees to work full-time and, except to
the extent permitted otherwise pursuant to the following provisions of this
Paragraph 7, exclusively for Employer, NPSI and NPSI’s other subsidiaries and
devote his talents, skills, attention, best efforts and time during normal
business hours and such other times as may be necessary, to the business and
affairs of Employer, NPSI and NPSI’s other subsidiaries and to discharge the
responsibilities assigned to him and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to
him. Employee shall not during the term of this Agreement be engaged
in any other employment without the consent of Employer. Employee may
(i) serve on civic or charitable boards or committees, (ii) perform volunteer
work for any charitable, educational, civic or other nonprofit organization,
including but not limited to youth sports teams and clubs, and (iii) participate
in non-competing family-owned businesses, so long as such activities do not
interfere with the performance of Employee’s job responsibilities under this
Agreement.
8. Non-solicitation
of Employees or Customers. Employee agrees that during his
employment with Employer and continuing for fifteen (15) months thereafter,
Employee shall not, directly or indirectly, for his own account or as an agent,
servant or employee of any business or organization, engage, hire or offer
to
hire or entice away any then current officer, employee, agent or customer of
Employer, NPSI or any of Employer’s or NPSI’s subsidiaries, joint ventures or
related entities, or in any other manner persuade or attempt to persuade any
then current officer, employee, agent or customer of Employer, NPSI or any
of
Employer’s or NPSI’s subsidiaries, joint ventures or related entities
to discontinue his or her relationship therewith for any reason.
9. Confidential
Information & Employer Materials.
(a) Employee
acknowledges that Employer has, through Employee and other key personnel,
developed valuable confidential information such as, but not limited to, plans,
diagrams, equipment specifications, business strategies, pricing methods,
policies, resolutions, negotiations, customer/client lists, technical data,
computer programs, algorithms and trade secrets relating to the business of
Employer, NPSI or other subsidiaries of NPSI. Confidential
information includes information which is not generally known in the business
conducted by Employer, NPSI or any of NPSI’s subsidiaries or affiliates, but
does not include general skills, generally known knowledge and experience
acquired by Employee during his employment with Employer. Employee
covenants and agrees not to disclose this confidential information outside
Employer and expressly covenants and agrees (i) not to provide any such
confidential information to any new employer of Employee and (ii) to use his
best efforts both during and after his employment with Employer to prevent
the
dissemination of any such confidential information outside
Employer. Employee further covenants and agrees to use such
confidential information exclusively for the benefit of Employer, NPSI and/or
NPSI’s other subsidiaries and
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to
make
any new employer of Employee aware of Employee’s obligations under this
Paragraph 9.
(b) Any
such confidential information developed by Employee, whether developed during,
before or after the term of this Agreement, shall be the property of
Employer. Should Employer elect to apply for any patent, copyright or
other right relating to any of the confidential information or to any
development made by Employee on behalf of Employer, NPSI or any of NPSI’s other
subsidiaries or affiliates during Employee’s employment with Employer or any of
NPSI’s subsidiaries or affiliates (whether during or before the term of this
Agreement), Employee shall, upon written request of Employer, assign and
transfer to Employer (or such other entity or person as Employer shall direct)
Employee’s entire right, title and interest therein. Employee further
agrees to assist Employer with the prosecution of any such application, whether
such assistance is requested during or after the term of this
Agreement.
(c) All
documents and materials of any nature pertaining to activities of Employer,
NPSI
or any of NPSI’s subsidiaries or affiliates, which are in Employee’s possession
or control, including but not limited to memoranda, notebooks, notes, data
sheets, papers, tapes and computer disks, and whether in writing or in any
electronic or other recording medium, are and shall be the sole property of
Employer, and each such item and all copies and reproductions of them shall
be
given to Employer upon Employee’s separation from employment with Employer and
at any earlier time when requested by Employer.
10. Expenses. Employer
shall reimburse Employee for all reasonable and necessary expenses incurred
by
Employee in carrying out Employee’s duties under this
Agreement. Employee shall present to Employer, on a monthly basis, an
itemized account of such expenses in any form required by the
Employer.
11. Termination
By Employee. Employee may, with or without cause,
terminate his employment with Employer by giving not less than thirty (30)
days’
prior written notice to Employer. Employee shall continue to render
his services to Employer in accordance with this Agreement until the effective
date of such termination unless Employer states otherwise, and Employee shall
be
paid his regular compensation to the date of termination.
12. Termination
of Employee by Employer.
(a) Without
Cause. Employer shall have the right, without cause or stated
reason, to terminate Employee’s employment at any time.
(b) For
“Just or Good Cause”. Employer may terminate Employee’s
employment at any time for “just or good cause.” “Just or good cause”
may include, but is not limited to:
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(i)
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Violation
by Employee of any of the provisions of this Agreement (including
but not
limited to those set forth in Paragraphs 7, 8 and 9
hereof);
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(ii)
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Employee’s
disloyalty, insubordination or dishonesty toward Employer or commission
or
conviction (whether that conviction be a consequence
of
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plea,
finding or verdict) of a felony or of any crime involving moral
turpitude;
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(iii)
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Employee’s
persistent incompetence or persistent neglect of his assigned
duties;
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(iv)
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Employee’s
public actions which may damage the business interests
or image of Employer, NPSI or any of NPSI’s subsidiaries or affiliates;
or
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(v)
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Employee’s
actions in the workplace which violate Employer’s standards of employee
conduct.
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13. Severance
Compensation.
(a) Termination
by Employer Other Than for “Just or Good Cause”. If prior to the
expiration of Employee’s term of employment under this Agreement, Employer
terminates Employee’s employment under this Agreement other than for “just or
good cause”, then Employer shall be obligated to pay to Employee, within thirty
(30) days after the date of such termination (or such longer period after such
termination as then shall be prescribed by or advisable under Section 409A
of
the Internal Revenue Code (the “Code”) or the regulations promulgated
thereunder), a severance amount equal to the aggregate of Employee’s annual base
salary (at its level as of the date of termination) which would be payable
to
Employee for the balance of the present term of employment under this Agreement;
provided, however, that in no event shall the severance amount to
be paid Employee under this provision exceed two hundred and fifty percent
(250%) of Employee’s annual base salary (at its level as of the date of such
termination) or be less than one hundred twenty-five percent (125%) of such
annual base salary.
(b) Termination
by Employer for “Just or Good Cause” or by Employee by Retirement or
Resignation. In the event of the termination of Employee’s
employment by Employer for just or good cause (as described in Paragraph 12(b)
above) or by Employee by his retirement or resignation, Employer shall have
no
obligation to pay Employee any severance amount described in this Paragraph
13.
14. Bona
Fide Executive/High Policy Making Employee Retirement
Program. Employee acknowledges that he is presently a bona fide
executive and/or high policy making employee of Employer and that he recognizes
and has been informed that Employer may, at its discretion, require that
Employee retire at the age of sixty-five (65) years or older if for the two
(2)
year period immediately before retirement Employee has remained employed in
a
bona fide executive or high policy making position and if at that time Employee
is entitled to an immediate nonforfeitable annual retirement benefit from a
pension, profit sharing savings, or deferred compensation plan, or any
combination of such plans of Employer, which benefit equals in the aggregate
at
least $44,000 annually or such greater amount as may be set forth in the
provisions of the federal Age Discrimination in Employment Act, as amended,
which Act concerns mandatory retirement of bona fide executives or high policy
makers.
15. Death
During Employment. If Employee dies during the term of his
employment hereunder, Employer shall pay to Employee’s estate the compensation
that would otherwise be payable to Employee up to the end of the month in which
his death occurs.
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16. Interpretation. This
Agreement shall be construed in accordance with, and be governed by, the laws
of
the Commonwealth of Pennsylvania.
17. Notices. Any
notice required or desired to be given under this Agreement shall be deemed
given if in writing and sent by certified mail, return receipt requested, to
Employee’s residence (if the notice is being given to Employee) or to Employer’s
principal office, to the attention of the President (or, if Employee is the
President, to the attention of the Chairman of the Board of Directors) of
Employer (if the notice is being given to Employer); except
that Employer may deliver the written notice to the person of
Employee in lieu of such mailing.
18. Waiver
of Breach. Employer’s waiver of, or failure to act upon, a
breach of any provision in this Agreement by Employee shall not operate or
be
construed as a waiver of any subsequent breach by Employee. No waiver
shall be valid unless in writing and signed by an authorized officer of
Employer.
19. Assignment.
Employee acknowledges that his services are unique and are personal to
Employer. Employee may not assign his rights or delegate his duties
or obligations under this Agreement. Employer’s rights and
obligations under this Agreement shall inure to the benefit of, and shall be
binding upon, Employer’s successors and assigns. Employer shall
provide to any person, entity or group that Employer is aware is likely to
acquire a controlling interest in Employer or NPSI a copy of this Agreement,
make that person/entity/group aware of the provisions of this Agreement and
require that person/entity/group, as a condition of the acquisition, to
acknowledge and agree to the provisions of this Agreement.
20. Arbitration
of Claims and Disputes. Except to the extent expressly set forth
to the contrary in the second paragraph of this Paragraph 20, no civil action
concerning any dispute, controversy or claim between Employee and Employer
or
NPSI arising out of or in connection with this Agreement or out of Employee’s
employment with or the termination of Employee’s employment with Employer or any
affiliate of Employer shall be instituted before any court; all such disputes,
controversies and claims shall instead be submitted to final and binding
arbitration under the auspices of The American Arbitration Association in
Pittsburgh, Pennsylvania. Such arbitration shall be conducted in
accordance with the rules, protocols and procedures of The American Arbitration
Association. Except to the extent expressly set forth to the contrary
in the second paragraph of this Paragraph 20, this provision shall apply to
any
and all such disputes, controversies and claims, whether asserted by or against
Employer or NPSI and/or against any employee, officer, alleged agent, director
or affiliate of Employer or NPSI with regard to any matter arising out of or
in
connection with this Agreement or out of or in connection with Employee’s
employment with or the termination of Employee’s employment with Employer or any
affiliate of Employer, including, but not limited to, any claim relating to
the
purported validity, interpretation, enforceability or breach of Employer’s
standards of Employee conduct or this Agreement and/or any other claim or
controversy arising out of the employment relationship (or the nature of the
relationship) or the commencement or termination of that relationship,
including, but not limited to, claims for violation of law and/or for breach
of
covenant, breach of implied covenant of good faith and fair dealing, wrongful
termination, breach of contract, and/or intentional infliction of emotional
distress, defamation, breach of right of privacy, interference with the
advantageous or contractual relations, conspiracy and/or other tort claims
of
any kind. All costs and expenses of the arbitration, including but
not limited to reasonable attorneys’ fees,
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shall
be
allocated among the parties according to the arbitrators’
discretion. The arbitrators’ award resulting from such arbitration
shall be final, binding and nonappealable and may be confirmed and entered
as a
final judgment in any court of competent jurisdiction and enforced
accordingly. Furthermore, the parties hereto expressly agree that,
except to the extent expressly set forth to the contrary in the second paragraph
of this Paragraph 20, proceeding to arbitration and obtaining an award
thereunder shall be a condition precedent to the bringing or maintaining of
any
action in any court with respect to any dispute arising under or in connection
with this Agreement.
The
first
paragraph of this Paragraph 20 shall not apply to any dispute, controversy
or
claim arising under any of Paragraphs 7, 8 and 9 of this
Agreement. This Paragraph 20 shall not give Employee the right to
seek a stay or injunction of any Employer action pending resolution of a claim
or dispute through arbitration.
21. Entire
Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof, and all prior
understandings and previously executed employment agreements between Employer
and/or NPSI, on the one hand, and Employee, on the other hand, if any,
(including but not limited to the Existing Agreement) are hereby
superceded. This Agreement may not be changed orally but only by an
agreement in writing signed by all the parties hereto.
22. Headings. The
headings in this Agreement are for convenience only and shall not be deemed
to
or used to interpret or construe any provision of this Agreement.
23. Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
24. Counsel. Employee
acknowledges that he has been provided with notice that he may review this
Agreement with legal counsel of his choosing prior to
signing. Employee further acknowledges that Employee has had adequate
time to exercise the opportunity to consult
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of page intentionally left blank.]
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with
legal counsel of his choosing with regard to this Agreement and that he is
entering into this Agreement after having had full opportunity to review its
provisions.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
| NORTH PITTSBURGH TELEPHONE COMPANY | |||||
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By |
/s/
X. X.
Xxxxx
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| Attest |
/s/
Xxxxxxx X.
Xxxxxxx
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(Seal)
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| NORTH PITTSBURGH SYSTEMS, INC. | |||||
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By |
/s/
X. X. Xxxxx
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| Attest |
/s/
Xxxxxxx X.
Xxxxxxx
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(Seal)
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(Employee) |
/s/
N. Xxxxxxx
Xxxxxxxx
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| Attest |
/s/
Xxxxxxx X.
Xxxxxxx
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SCHEDULE
A
NOTE: This
Exhibit includes general responsibilities of the Officer position listed below.
This description of responsibilities is not all-inclusive.
RESPONSIBILITIES
– Executive Vice President and Chief Operating Officer and
Secretary
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1.
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Chief
Operating Officer– Responsible for the operation of North Pittsburgh
Telephone Company (“NPTC”) as directed by the Board of Directors of North
Pittsburgh Systems, Inc. (“NPSI”) and NPTC’s President. Provide leadership
and management to the Executive Vice President, Vice President –
Regulatory Affairs, and to the Vice President – Operations of NPTC, giving
direction and support in achieving NPTC’s goals and
objectives.
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2.
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Marketing–
Responsible for the management and coordination of all marketing
and
advertising activities of NPSI and each of its subsidiaries, including
NPTC, Penn Telecom, Inc. (“PTI”) and Pinnatech, Inc. (“Pinnatech”)
Responsible also for investigating and directing the deployment of
all
products and services to meet customer demand for each of NPSI’s
subsidiaries.
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3.
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Strategic
Planning– Evaluate information presented by strategic planning groups,
analyze new business opportunities, and prepare for future business
development, for NPSI and each of its
subsidiaries.
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4.
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Pinnatech/Nauticom–
Serve as President of Pinnatech and in that role be responsible for
operation of Pinnatech’s personnel, sales, training, advertising, and
profit and loss, and provide direction for business expansion and
customer
satisfaction.
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5.
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Salary
Committee & Employee Union– Participate as Chief Negotiator in all
union negotiations and grievance procedures involving NPSI or any
of its
subsidiaries, including NPTC and Pinnatech. Serve on the Salary Committees
of NPSI and its subsidiaries, which committees review management
employees’ evaluations, establish wage schedules and evaluate management
wage increases.
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6.
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Secretary/Board
of Directors– Serve as Secretary of, and attend and be responsible for
preparing minutes of the meetings of the Boards of Directors of,
NPSI,
NPTC and PTI. Make financial and operational reports at meetings
of NPSI’s
and its subsidiaries’ Boards of Director meetings as
requested.
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7.
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Administrative
Duties– Perform all administrative duties, such as hire, train and
motivate the departmental workforce, for the marketing and service
departments of NPSI and its subsidiaries. Conduct salary and performance
reviews of employees in these departments. Administer departmental
budgets
for these departments. Communicate to staff and direct efforts to
achieving all goals of NPSI and its
subsidiaries.
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Note: Although
the employee is a full-time employee of NPTC, the time and expenses incurred
in
the employee’s providing services to NPSI or any of NPSI’s subsidiaries other
than NPTC, as contemplated above, will be allocated to and charged against
the
account of NPSI or such other subsidiary of NPSI.
