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EXHIBIT 10.21
FORM OF MANAGEMENT CONTRACTS WITH
XX. XXXXXX AND XX. XXXXX
October 7, 1997
[name]
Dear [name]:
The Board of Directors (the "Board") of Frontier Corporation, on
behalf of Frontier and its subsidiaries and affiliates (together,
the "Company") has determined that it is in the best interests of
the Company and its shareowners to welcome you as an employee of
Frontier, and to retain your services for the future and in case
of a "Change of Control", as defined later in this letter
agreement ("Agreement"). It is therefore the intent of this
Agreement to assure your complete dedication to the Company by
providing you with compensation and benefits arrangements while
you fulfill your duties now and during the pendency of a Change
of Control, should such an event occur, which provide you with a
measure of security commensurate with your importance to the
Company, and to assure itself of continuity in its relationship
with customers and employees.
Therefore, upon your signature on a counterpart of this
Agreement, the following terms and conditions shall become
effective as stated below. However, this Agreement does not
supersede any stock option agreements or restricted stock grant
agreements between the Company and you, all of which shall remain
in full force and effect.
1. Employment.
1.1 Term. The Company shall employ you in an executive
position as Senior Vice President - Marketing at the Senior Vice
President level, or in such comparable management capacity as the
Company may from time to time designate. This Agreement shall
become effective as of October 15, 1997. This Agreement shall
continue from year to year thereafter, unless earlier terminated
or extended in accordance with its terms. You acknowledge that,
except as set forth in this Agreement, your employment is "at
will".
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If, during the Term, a "person" (as that term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) commences any action that,
if consummated, would result in a Change of Control of the
Company or if any person publicly announces an intention or
proposal to commence any such action, you agree that you will not
leave the Company's employ (other than as a result of death or
Disability), you will render the services contemplated in this
Agreement for the reasonable duration of the Company's defense
against such action and until such action has been abandoned or
terminated or a Change in Control has occurred, and you will
actively promote the Company's interest during such period.
Any termination of your employment during the Term for reasons
other than your death shall be evidenced by a written notice
("Notice of Termination"), which shall specify the provision of
this Agreement relied upon for such termination and describe with
reasonable detail the facts and circumstances claimed by the
sender of such Notice of Termination to provide the basis for
termination. Any such Notice of Termination shall also specify
the effective date of termination (the "Termination Date"). If
you die during the Term, the Termination Date shall be the date
of your death.
1.2 Present and Future Duties. Your role in the Company
shall be that of senior marketing executive with responsibility
for marketing and related activities where responsibility is
assigned in connection with that role. You shall perform all
duties required of or incidental to your position with the
Company, and such specific duties as may be assigned to you. You
agree to use your best efforts in the business of the Company and
to devote your full time attention and energy to the business of
the Company. You agree not to work, either on a part-time or
independent contracting or consulting basis, with or without
compensation, for any other business or enterprise during the
Term without the Company's prior consent. Such consent shall not
be unreasonably withheld in the case of service on the boards of
directors of other corporations and community organizations.
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1.3 Base Compensation. The Company shall pay you as base
compensation at an annual salary rate of $_________, in
installments in accordance with the Company's policies from time
to time in effect. Thereafter, your annual salary may be
adjusted by the Company consistent with the Company's results and
your performance during the prior year. However, unless the
annual salaries of all senior executives of the Company are
reduced across-the-board, your annual salary in any year shall
not be less than your annual salary during the prior year.
1.4 Incentive Compensation. The Company shall establish
and review with you from time to time the performance goals
("Performance Goals") for the Company and for you individually,
and a methodology for calculating the amount of incentive
compensation to be paid upon achievement of such Performance
Goals. Your eligibility for a corporate bonus will be calculated
on the same basis as other similarly situated executives. Your
incentive will be based on the success of the Company as
reflected in increased shareowner value, with such metrics to be
mutually agreed upon by you with the Chief Executive Officer of
the Company, and with the subsequent concurrence of the Board.
Incentive compensation shall be payable to you at such time or
times as are established under the Company's policies (including
the Company's Executive Compensation Program) in effect from time
to time.
1.5 Benefits; Perquisites. You shall be entitled to
receive the benefits and perquisites provided by the Company
under its Executive Compensation program in effect from time to
time for executives at the Senior Vice President level.
1.6 Expenses. You shall be reimbursed for any reasonable
expenses prudently incurred in connection with your employment
during the Term, upon presentation to the Company of an itemized
account and receipts of such expenses as required by the
Company's policies from time to time in effect.
2. Developments and Intellectual Property. You acknowledge
that all developments, including but not limited to trade secrets
(including strategies, business plans and customer lists),
discoveries, improvements, ideas and writings which either
directly or indirectly relate to or may be useful in the business
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of the Company (the "Developments") which you, either alone or in
conjunction with any other person or persons, shall conceive,
make, develop, acquire or acquire knowledge of during the Term
are the sole and exclusive property of the Company. You will
cooperate with the Company's reasonable requests to obtain or
maintain rights or protections under United States or foreign law
with respect to all Developments. The Company will reimburse you
for all reasonable expenses incurred by you in order to comply
with this provision of this Agreement, regardless of when such
expenses may be incurred.
3. Confidential Information. You acknowledge that by reason
of your employment by the Company, especially as a senior
executive thereof, you may now or will in the future have access
to information of the Company that the Company deems to be
confidential and/or proprietary, including but not limited to,
information about the Company's target markets and customer
segments, strategies, plans, products and services, methods of
operation, employees, financial forecasts and results, sales,
profits, expenses, customer lists and the relationships between
the Company or a subsidiary and its customers, suppliers and
others who have business dealings with it. You covenant and
agree that during the Term and thereafter, without time or
geographic limitation, you will not disclose any such information
to any person without the prior written authorization of the
Chief Executive Officer of the Company or the Board.
If your employment ends for any reason other than your
death, you agree to return promptly to Company all such
information and any other tangible product or document which has
been produced or received by, or otherwise submitted to you
during your employment, and no copies shall be retained by you or
made available to any other person or entity. This provision
includes but is not limited to information printed or stored on
paper, magnetic tape, floppy disks, hard drives or other computer
storage media.
4. Non-Competition.
4.1 Covenant. You and the Company acknowledge that you
have a special, unique and extraordinary expertise in
telecommunications, and also a special, unique and extraordinary
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expertise in the marketing area, and that in your employment with
the Company, you will have continuing access to information about
the Company's target markets, strategies, plans, product or
service offerings, methods of operation, financial and operating
expectations and results, customer base, sales, marketing and
pricing strategies, most valued employees, and customer and
supplier relationships. In consideration of the benefits
provided to you under this Agreement, which you acknowledge are
independent consideration, you covenant and agree that during the
Restricted Period (as defined below), you will not, directly or
indirectly, without the Company's prior consent, own, manage,
operate, finance, join, control or participate in the ownership
or control of, or be associated as an officer, director,
executive, partner or principal, agent, representative,
consultant or otherwise with, or use or permit your name to be
used in connection with, any enterprise that directly or
indirectly competes (as defined below) with any
telecommunications business of the Company in a Restricted Area
(as defined below). You acknowledge that so long as you are able
to use your skills for enterprises that do not directly or
indirectly compete with the business of the Company, you will not
be unreasonably limited in your ability to work.
4.2 Definitions.
4.2.1 "Competes" means the production, marketing,
promotion, distribution or selling of any product, capability,
functionality or service of any person or entity other than the
Company which resembles or competes with a product or service
produced, marketed, promoted, distributed or sold by the Company
(or to your knowledge was under development by the Company)
during the period of your employment by the Company (whether
under this Agreement or otherwise).
4.2.2 "Restricted Area" means:
(a) The Standard Metropolitan Statistical Area (or the
equivalent) in which any employee or independent contractor sales
office, place of employment, business address or POP maintained
by the Company is located; or
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(b) Any state of the United States, any province of
Canada or any foreign country from which the Company or any of
its subsidiaries or affiliates derives more than $25 million in
revenue.
4.2.3 "Restricted Period" means:
(a) The period of your employment by the Company
(whether under this Agreement or otherwise), if your employment
is terminated because of your death or Disability;
(b) The period of your employment by the Company
(whether under this Agreement or otherwise) and 24 months
thereafter, if your employment is terminated by the Company for
Cause or without Cause (and not by the Company following Change
of Control), unless this Agreement ends or is terminated under
Section 1.2 in which event the Restricted Period shall be 12
months;
(c) The period of your employment by the Company
(whether under this Agreement or otherwise) and, if this
Agreement is still in effect at the Termination Date, the number
of months remaining in the Term at the Termination Date or 12
months, whichever is longer (but in no event more than 24
months), if you terminate your employment voluntarily (and not
for Good Reason); or
(d) The period of your employment by the Company under
this Agreement, if your employment is terminated by you for Good
Reason (unless this Agreement ends or is terminated under Section
1.2 in which event the Restricted Period shall be 12 months) or
by the Company on any basis following Change of Control.
4.2.4 Exception. This Section shall not be
construed to prohibit the ownership by you of not more than 1% of
any class of securities of any corporation which competes with
the Company and which has a class of securities registered
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
4.3 Savings Clause. You and the Company specifically
agree that this covenant not to compete and its specific
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limitations constitute a reasonable covenant under the
circumstances and is supported by the consideration stated above,
and further agree that if, in the opinion of any court of
competent jurisdiction, any of the provisions of this Section 4
are ever determined by a court to exceed the time, geographic
scope or other limitations permitted by applicable law in any
jurisdiction, then such excessive provisions shall be deemed
reduced, in such jurisdiction only, to the maximum time,
geographic scope or other limitation permitted in such
jurisdiction, and you agree to the enforcement of the remainder
of the covenant as so amended.
5. Non-Solicitation. You also covenant and agree that during
the Restricted Period set out in Section 4.2.3, and without
regard to the activity or activities in which you are engaging,
whether it is within or without the telecommunications industry,
you will not, directly or through employees, agents, recruiters,
independent contractors or others: (a) offer, promise, provide
or guarantee employment, work for compensation, business
opportunity or other means of financial gain, or solicit, invite
an inquiry on employment or other compensatory relationship,
respond to such inquiry with a promise or grant of an employment
or other compensatory relationship, or otherwise seek to
influence any person to leave the Company or to undertake
activities that would be adverse to the Company's interests,
where such person is employed by the Company or is in an
independent contractor relationship in which a majority of their
time is spent on Company-related activities, or is a supplier of
services to the Company who would thereafter become unavailable
to provide such services to the Company, or who has been in such
an employment or independent contractor relationship within the
12 months prior to your contact(s); or (b) solicit from, convert,
attempt to convert, divert business from, or attempt to divert
business from any of the Company's customers, customer accounts
or locations, whether such activity is intended to benefit you or
any other person or entity, and whether or not such activity is
successful.
6. Equitable Relief. You specifically acknowledge that the
restrictions contained in each of Sections 2, 3, 4 and 5 of this
Agreement are, in view of the nature of the business of the
Company, and your position with it, reasonable and necessary to
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protect the legitimate interests of the Company, and that any
violation of the provisions of those Sections will result in
irreparable injury to the Company for which there would be no
adequate remedy at law. You also acknowledge that the Company
shall be entitled to preliminary and permanent injunctive relief,
without the necessity of proving actual damages, and to an
equitable accounting of all earnings, profits and other benefits
arising from such violation. These rights shall be cumulative
and in addition to any other rights or remedies to which the
Company may be entitled. You agree to submit to the jurisdiction
of any New York State court located in Monroe County or the
United States District Court for the Western District of New York
or of the state court or the federal court located in or
presiding over the county in which the Company has its corporate
headquarters at the applicable time in any action, suit or
proceeding brought by the Company to enforce its rights under
Sections 2, 3, 4 and/or 5 of this Agreement, and that any
separate claim you have shall not constitute a defense to the
enforcement of the covenants and agreements in those paragraphs.
7. Company's Obligations upon Termination. The sole
obligations of the Company upon the termination of your
employment are as set forth in this Section 7. Any and all
amounts to be paid to you in connection with your termination
shall be paid, at the Company's election, either: (a) in a lump
sum promptly after the Termination Date, and not more than 30
days thereafter, or (b) as salary continuation for a period
identified by the number of years' salary to be paid as
severance.
7.1 Termination upon Disability or Death. If your
employment with the Company ends by reason of your death or
Disability (as defined later in this Agreement), the Company
shall pay you all amounts earned or accrued through the
Termination Date but not paid as of the Termination Date,
including:
7.1.1 Base compensation;
7.1.2 Reimbursement for reasonable and necessary
expenses incurred by you on behalf of the Company during the
Term;
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7.1.3 Pay for earned but unused vacation and
floating holidays;
7.1.4 All compensation you previously deferred (if
any) to the extent not yet paid; and
7.1.5 An amount equal to your "Pro Rata Bonus".
Your Pro Rata Bonus shall be determined by multiplying the "Bonus
Amount" (as defined below) by a fraction, the numerator of which
is the number of days in the fiscal year through the Termination
Date and the denominator of which is 365. The term "Bonus
Amount" means the greater of: (i) your identified or standard
bonus for that part of the bonus year during which you were
employed, using the Performance Criteria and the actual
performance metrics of the Company applied to the time period
until the Termination Date occurs, and only to that period; or
(ii) the bonus paid or payable to you with respect to the fiscal
year preceding the year in which the Termination Date occurs. No
bonus will cover any period after the date that your employment
ends, or use any Performance Criteria or actual performance
metrics of the Company established or achieved after that date.
The amounts described in Sections 7.1.1 through 7.1.4,
inclusive, are called elsewhere in this Agreement, collectively,
the "Accrued Compensation".
Except as otherwise provided in this Section 7.1, your
entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit
plans and other applicable programs and practices, including any
long term compensation benefits, then in effect.
7.2 Termination Without Cause. If the Company terminates
your employment without Cause (as defined later in this
Agreement), the Company shall pay you:
7.2.1 All Accrued Compensation;
7.2.2 A Pro Rata Bonus (as defined in Section 7.1.5
above); and
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7.2.3 Severance ("Severance") equal to: (a) two
times the sum of (i) the annual base compensation you would have
received for the entire fiscal year in which the Termination Date
occurs plus (ii) the Bonus Amount plus (iii) $______ (being the
agreed cash equivalent of the annual value of the perquisites
provided to you under the Company's Executive Compensation
Program), plus (iv) the Company contributions which would have
been made on your behalf to the 401(k) retirement savings plan
maintained by the Company (b) reduced by the present value
(determined as provided in Section 280G(d)(4) of the Internal
Revenue Code of 1986 as amended (the "Code")). The foregoing
shall be in lieu of any other amount of severance relating to
salary or bonus continuation to be received by you upon
termination of your employment under any severance plan, policy
or arrangement of the Company.
In addition, the Company shall continue to provide to you
and your family at the Company's expense, for 24 months following
the Termination Date, the life insurance, medical, dental, vision
and hospitalization benefits provided to you and your family
immediately prior to the Termination Date.
Except as otherwise provided in this Section 7.2, your
entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit
plans and other applicable programs and practices then in effect.
7.3 Termination for Cause or Voluntary Termination. If
your employment is terminated for Cause (as defined later in this
Agreement), or if you voluntarily terminate your employment other
than for Good Reason, the Company shall pay you all Accrued
Compensation. Except as otherwise provided in this Section 7.3,
your entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit
plans and other applicable programs and practices then in effect.
7.3.1 You and Company acknowledge that at the
inception of this Agreement, the Company has agreed to pay the
reasonable costs of travel and temporary living expenses in
connection with this Agreement. You agree that, except in
connection with a Change of Control, within such reasonable time
period as you and Company agree, not to exceed 180 days, you will
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move your residence to such place as Company has its headquarters
location, under the Company's relocation program, plus such
amounts as have been agreed to with you. You agree that, if you
should decline to make such move, or should fail to comply with
Company's request or directive, such refusal or failure shall be
a basis for Company to terminate your employment for Cause, at
its election, and without action of the Board. This subsection
7.3.1 shall cease to apply upon a Change of Control.
7.4 Termination for Good Reason or by Company Following
Change of Control. If you terminate your employment for Good
Reason or the Company terminates your employment following a
Change of Control, the Company shall pay you:
7.4.1 All Accrued Compensation;
7.4.2 A Pro Rata Bonus; and
7.4.3 Severance equal to: (a) two times the sum of
(i) the annual base compensation you would have received for the
entire fiscal year in which the Termination Date occurs plus (ii)
the Bonus Amount plus (iii) $______ (being the agreed cash
equivalent of the annual value of the perquisites provided to you
under the Company's Executive Compensation Program), plus (iv)
the Company contributions which would have been made on your
behalf to the 401(k) retirement savings plan maintained by the
Company (b) reduced by the present value (determined as provided
in Section 280G(d)(4) of the Code). The foregoing severance
shall be in lieu of any other amount of severance relating to
salary or bonus continuation to be received by you upon
termination of your employment under any severance plan, policy
or arrangement of the Company.
In addition, the Company shall continue to provide to you
and your family at the Company's expense, for 36 months following
the Termination Date, the life insurance, medical, dental, vision
and hospitalization benefits provided to you and your family
immediately prior to the Termination Date.
The Company shall reimburse you for all reasonable legal
fees and expenses which you may incur following a Change of
Control as a result of the Company's attempts to contest the
validity or enforceability of this Agreement or your attempts to
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obtain or enforce any right or benefit provided to you under this
Agreement, provided any actions you have taken are determined to
have been undertaken in good faith and upon a reasonable basis.
Except as otherwise provided in this Section 7.4, your
entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit
plans and other applicable programs and practices, including any
long term compensation benefits, then in effect.
8. Gross-Up Payment. Notwithstanding anything else in this
Agreement, if it is found that any or all of the payments made to
you, including but not limited to payments made by the Company,
or under any plan or arrangement maintained by the Company, to
you or for your benefit (other than any additional payments
required under this Section 8) (the "Payments") would be subject
to the excise tax imposed by Section 4999 of the Code or you
incur any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties,
collectively the "Excise Tax"), then you are entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such
that, after you pay all taxes (including 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, you will retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. The
procedures for the calculation and contesting of any claim that
such Excise Tax is due are set forth in the Addendum.
9. No Obligation to Mitigate Damages. You are not required to
mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, and the
amounts to be paid to you under Section 7 of this Agreement shall
not be reduced by any compensation you may earn from other
sources. However, if, during any period that you would otherwise
be entitled to receive any payments or benefits under this
Agreement, you breach your obligations under Section 2, 3 or 4 of
this Agreement, the Company may immediately terminate any and all
payments and the provision of benefits (to the extent permitted
by law and the terms of the benefit plans maintained by the
Company from time to time) hereunder.
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10. Successor to Company. The Company will require any
successor or assignee to all or substantially all of the business
and/or assets of the Company, whether by merger, sale of assets
or otherwise, by agreement in form and substance reasonably
satisfactory to you, to assume and agree to perform the Company's
obligations under this Agreement in the same manner and to the
same extent that the Company would be required to perform them if
such succession or assignment had not taken place. Such
agreement of assumption must be express, absolute and
unconditional. If the Company fails to obtain such an agreement
within three business days prior to the effective date of such
succession or assignment, you shall be entitled to terminate your
employment under this Agreement for Good Reason.
11. Survival. Notwithstanding the expiration or termination of
this Agreement, except as otherwise specifically provided
herein, your obligations under Sections 2, 3 and 4 of this
Agreement and the obligations of the Company under this Agreement
shall survive and remain in full force and effect.
This Agreement shall inure to the benefit of, and be
enforceable by, your personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you die while any amounts are still
payable to you, all such amounts, unless otherwise provided in
this Agreement, shall be paid in accordance with the terms of
this Agreement to your devisee(s), legatee(s) or other
designee(s) or, if there is no such designee(s), to your estate.
12. Definitions. Whenever used in this Agreement, the
following terms shall have the meanings below:
12.1 "Cause" means:
12.1.1 You have willfully and continually failed to
substantially perform your duties (other than due to an
incapacity resulting from physical or mental illness or due to
any actual or anticipated failure after you have given a Notice
of Termination for Good Reason) after a written demand for
substantial performance is delivered to you by the Chief
Executive Officer or the Board which specifically identifies the
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manner in which it is believed that you have not substantially
performed your duties; or
12.1.2 You have willfully engaged in conduct which
is demonstrably and materially injurious to the Company
(monetarily or otherwise), including but not limited to a breach
of fiduciary duty; or
12.1.3 You have willfully engaged in conduct which
is illegal or in violation of the Company's Code of Ethics; or
12.1.4 You have been convicted of a felony or a
crime involving moral turpitude; or
12.1.5 You have violated the provisions of Section 2
and/or Section 3 and/or Section 4 and/or Section 5 of this
Agreement
and, in any of the events described in Sections 12.1.1 through
12.1.5 above, the Board adopts a resolution or its minutes
reflect a finding that in the good faith opinion of the Board you
were culpable for the conduct set forth in any of Sections 12.1.1
through 12.1.5 and specifying the particulars thereof in detail.
For the purposes of this Agreement, no act or failure to act on
your part shall be considered willful unless done, or omitted to
be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interests of the
Company. Any such resolution of the Board must receive the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held
for the purpose of considering the issue, and you must receive
reasonable notice of the meeting and have an opportunity, with
your counsel, to present your case to the Board.
12.2 "Change of Control" means:
12.2.1 The consummation of a consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which the shares of the
Company's common, voting equity are to be converted into cash,
securities or other property. For the purposes of this
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Agreement, a consolidation or merger with a corporation which was
a wholly-owned direct or indirect subsidiary of the Company
immediately before the consolidation or merger is not a Change of
Control; or
12.2.2 The sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all
or substantially all of the Company's assets; or
12.2.3 The approval by the Company's shareowners of
any plan or proposal for the liquidation or dissolution of the
Company; or
12.2.4 Any person, as that term is used in Section
13(d) and 14(d) of the Exchange Act (other than the Company, any
trustee or other fiduciary holding securities of the Company
under an employee benefit plan of the Company, a direct or
indirect wholly-owned subsidiary of the Company or any other
company owned, directly or indirectly, by the shareowners of the
Company in substantially the same proportions as their ownership
of the Company's common, voting equity), is or becomes the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
Company's then outstanding common, voting equity; or
12.2.5 During any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director (other than a
director designated by a person who has entered into an agreement
with the Company to effect a transaction described in this
Section 12.2.5) whose election or nomination for election by the
Company's shareowners was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period or whose election or nomination
for election was previously so approved (the "Incumbent Board"),
cease for any reason to constitute a majority of the Board.
12.3 "Disability" means:
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12.3.1 Your absence from your 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; or
12.3.2 A physical or mental condition which prevents
you from satisfactorily performing your duties with the Company
and such incapacity or condition is determined to be total and
permanent by a physician selected by the Company or its insurers
and reasonably acceptable to you and/or your legal
representative.
12.4 "Good Reason" means:
12.4.1 Without your express written consent, after a
Change of Control, a significant reduction in title and
authority, or the assignment to you of duties with the Company or
with a person, as that term is used in Section 13(d) and 14(d) of
the Exchange Act, in control of the Company materially diminished
from the duties assigned to you immediately prior to a Change of
Control; or
12.4.2 Without your express written consent, after a
Change of Control, any reduction by the Company or any person, as
that term is used in Section 13(d) and 14(d) of the Exchange Act,
in control of the Company in your annual base compensation or
annual bonus at Standard (or equivalent) rating from the amounts
of such compensation and/or bonus in effect immediately before
and during the fiscal year in which the Change of Control
occurred (except that this Section 12.4.2 shall not apply to
across-the-board salary or bonus reductions similarly affecting
all executives of the Company and all executives of any person in
control of the Company); or
12.4.3 Without your express written consent, after a
Change of Control, the failure by the Company or any person, as
that term is used in Section 13(d) and 14(d) of the Exchange Act,
in control of the Company to increase your annual base
compensation or annual bonus at Standard (or equivalent) rating
at the times and in comparable amounts as they are increased for
similarly situated senior executive officers of the Company and
of any person, as that term is used in Section 13(d) and 14(d) of
the Exchange Act, in control of the Company; or
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12.4.4 Without your express written consent, after a
Change of Control, the failure by the Company or by any person,
as that term is used in Section 13(d) and 14(d) of the Exchange
Act, in control of the Company to continue in effect any benefit
or incentive plan or arrangement (except any benefit plan or
arrangement which expires by its own terms then in effect upon
the occurrence of a Change of Control) in which you are
participating at the time of the Change of Control, unless a
replacement plan or arrangement with at least substantially
similar terms is provided to you; or
12.4.5 Without your express written consent, after a
Change of Control, the taking of any action by the Company or by
any person, as that term is used in Section 13(d) and 14(d) of
the Exchange Act, in control of the Company which would adversely
affect your participation in or materially reduce your benefits
under any benefit plan or arrangement or deprive you of any other
material benefit (including any miscellaneous benefit which is
not represented and protected by a written plan document or
trust) enjoyed by you at the time of a Change of Control; or
12.4.6 You terminate your employment (other than
because of your death or Disability) by giving the Company a
Notice of Termination with a Termination Date not later than the
first anniversary of the Change of Control; or
12.4.7 Any failure by the Company to comply with any
of its material obligations under this Agreement, after you have
given notice of such failure to the Company and the Company has
not cured such failure promptly after its receipt of such notice.
13. Notice. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be
deemed given when mailed by certified mail, return receipt
requested, or by nationally recognized overnight courier, receipt
requested, when addressed to you at your official business
address when employed by the Company or at your home address as
reflected in the Company's records from time to time and when
addressed to the Company at its corporate headquarters, to the
attention of the Board, with a required copy to the Company's
highest ranking legal executive or officer.
18
14. Amendment and Assignment. This Agreement cannot be
changed, modified or terminated except in a writing. You may not
assign your duties with the Company to any other person. The
Company may assign its obligations under this Agreement to one of
its principal subsidiaries for administrative purposes.
15. Severability. If any provision of this Agreement or the
application of this Agreement to anyone or under any
circumstances is determined by a court to be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provisions or
applications of this Agreement which can be effective without the
invalid or unenforceable provision or application, and such
invalidity or unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. Remedies Cumulative; No Waiver. No remedy conferred on you
or on the Company by this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to any other remedy given
under this Agreement or now or later existing at law or in
equity. No delay or omission by you or by the Company in
exercising any right, remedy or power under this Agreement or
existing at law or inequity shall be construed as a waiver of
such right, remedy or power, and any such right, remedy or power
may be exercised by you or the Company from time to time and as
often as is expedient or necessary.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to any applicable conflicts of laws.
18. Counterparts. This Agreement may be signed by you and on
behalf of the Company in one or more counterparts, each of which
shall be one original but all of which together will constitute
one and the same instrument.
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If this Agreement correctly sets forth our agreement on its
subject matter, please sign and return to me the enclosed copy of
this Agreement. Please keep the other copy for your records.
Sincerely,
FRONTIER CORPORATION
By: -------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
Agreed to on
[name]
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ADDENDUM TO LETTER AGREEMENT DATED ___________, 1997
The following provisions shall apply to the calculation and
procedures relating to the Gross-Up Payment in accordance with
Section 8 of the Agreement.
1. The Company's independent auditors in the fiscal year
in which the Change of Control occurs (the "Accounting Firm")
shall determine whether and when a Gross-Up Payment is required,
the amount of such Gross-Up Payment and the assumptions to be
used in making such determination. The Accounting Firm shall
provide detailed supporting calculations, together with a written
opinion with respect to the accuracy of such calculations, to you
and the Company within 15 business days of the receipt of a
written request from either you or the Company. If the
Accounting Firm is serving (or has served within the three years
preceding the Change in Control) as accountant or auditor for the
person in control of the Company following the Change of Control
or any affiliate thereof, you may appoint another nationally
recognized accounting firm to make the determinations required in
connection with the Gross-Up Payment and the substitute
accounting firm shall then be referred to as the Accounting
Firm). The Company shall pay you any Gross-Up Payment,
determined in accordance with this Addendum, within five days of
the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that you will not be liable for any
Excise Tax, it shall furnish you with a written opinion that your
failure to report the Excise Tax on the applicable federal income
tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall
be binding upon you and the Company.
2. If there is uncertainty about how Section 4999 is to be
applied when the Accounting Firm makes its initial determination,
and as a result the Gross-Up Payment made to you by the Company
is determined (after following the procedures set forth in this
Addendum) to be less than it should have been made (an
"Underpayment"), and you are thereafter required to pay any
Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment and any such Underpayment shall be promptly paid by
the Company to you or for your benefit.
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3. You shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require
the Company to pay you the Gross-Up Payment. Your notice shall
be given as soon as practicable but no later than ten business
days after you have been informed in writing of such claim and
shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. You shall not
pay such claim prior to the expiration of the 30 day period
following the date on which you gave such notice to the Company
(or any shorter period, if the taxes claimed are due sooner). If
the Company notifies you in writing prior to the expiration of
such period that it desires to contest such claim, you shall:
(a) give the Company any information reasonably requested by it
relating to such claim, (b) 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, (c) cooperate with
the Company in good faith in order effectively to contest such
claim, and (d) permit the Company to participate in any
proceedings relating to such claim.
4. The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue
or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in connection
with the claim and may, at its sole option, either direct you to
pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and you agree to prosecute the contest to
a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts as the
Company shall determine.
5. Any extension by the Company of the statute of
limitations relating to payment of taxes for the taxable year for
which such contested amount is claimed to be due shall be limited
solely to such contested amount. The Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable under this Agreement and you
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.
22
6. If the Company directs you to pay such claim and xxx
for a refund, the Company shall advance the amount of such
payment to you, on an interest-free basis, and shall indemnify
and hold you harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance.
7. If you receive a refund of any amount advanced to you
by the Company, you will promptly pay to the Company the amount
of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If the Company advanced
to you any amounts and a determination is made that you will not
be entitled to any refund with respect to such claim and the
Company does not notify you in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and you
will not be required to be repay it. The amount of such advance
shall offset the amount of the Gross-Up Payment required to be
paid.
8. The Company shall pay all fees and expenses of the
Accounting Firm. 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 you harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment
of costs and expenses.
