EXHIBIT 10.9
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, entered into effective as of the 1st day of January
2001 ("Effective Date"), by and between Rural Cellular Corporation (the
"Company") and Xxxxx X. Del Xxxxx (the "Employee").
WHEREAS, the Company recognizes the valuable services that the Employee
has rendered to the Company and desires to be assured that the Employee will
continue to actively participate in the business of the Company;
WHEREAS, the Employee is willing to continue to serve the Company, but
desires assurance that, in the event of a change in control, the Employee will
continue to have the responsibility and status the Employee has earned; and
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Employee, to their assigned
duties without distraction in potentially disturbing circumstances arising from
the possibility of a change in control;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Company and the Employee hereby agree as
follows:
17. TERM.
(c) The Term of this Agreement shall commence on the Effective Date
and shall terminate upon the earliest to occur of:
(v) the "Expiration Date";
(vi) the termination of the Employee's employment under
circumstances that do not entitle the Employee to a payment under
paragraph 3;
(vii) the Employee's death; or
(viii) the second anniversary of the occurrence of a Change in
Control, if the Employee is still employed by the Company on such
date;
PROVIDED, that the expiration of the Term shall not relieve the Company of its
obligations to make any payments or provide any benefits which are or become due
to the Employee subsequent to the expiration of the Term. Nothing in this
Agreement shall be construed as limiting or reducing the Employee's rights to
benefits or payments under any other agreement with, or plan, program, policy or
practice of, the Company, except to the extent otherwise specifically provided
herein.
(d) For purposes of this paragraph, the "Expiration Date" is the first
anniversary of the Effective Date; PROVIDED, that on each day after the
Effective Date, the Expiration Date shall automatically extend for an additional
day, so that the remaining Term shall always be one year, unless the Company
gives written notice to the Employee that the Term shall not be so extended,
whereupon the Expiration Date shall be the date which is one year after the date
of such notice; PROVIDED FURTHER, that upon the occurrence of a Change in
Control during the Term of this Agreement, the Expiration Date shall
automatically be extended to the second anniversary of the date on which the
Change in Control occurs.
18. QUALIFICATION FOR BENEFITS. The Employee will be entitled to the
payments and benefits described in paragraph 3 if, during the Term of this
Agreement:
(c) the Employee's employment is terminated:
(iii) by the Company, other than for Just Cause, in connection
with or within 24 months after the occurrence of a Change in
Control; or
(iv) by the Employee, for Good Reason, within 24 months after the
occurrence of a Change in Control; and
(d) the Employee executes an effective general release, in a form
prescribed by the Company, of all claims against the Company and
its affiliated organizations and their respective employees,
officers and directors, other than claims for benefits under this
Agreement or under any other plan or agreement of the Company
that become payable upon, or as a result of, the Employee's
termination of employment and any amounts due to the Employee for
unused leave time, reimbursement of expenses, or other
compensation earned or due but not yet paid as of the date of
termination.
19. BENEFITS. If the Employee satisfies the requirements set forth in
paragraph 2, the Employee shall be paid an amount equal to the sum of:
(c) 100% of the Employee's annual base salary at the highest rate in
effect during the period beginning 12 months prior to the occurrence of the
Change in Control and ending on the date of the Employee's termination of
employment; plus
(d) 100% of the largest bonus and/or incentive payment (excluding "pay
to stay" or similar bonuses) that was payable to the Employee for any
fiscal year of the Company that ended during the period beginning 12 months
prior to the occurrence of the Change in Control and ending on the date of
the Employee's termination of employment.
Said amount shall be paid to the Employee in one lump sum, within five days
after the Employee's termination of employment.
20. LIMITATION; GROSS-UP PAYMENT.
(e) If any payments or benefits due to the Employee under this
Agreement and/or under any other plan or program of the Company would be subject
to an Excise Tax, and if the amount of the Employee's Parachute Payments taken
into account for the purposes of such Excise Tax does not exceed 330% of the
Employee's Base Amount, then the payments or benefits which are subject to the
Excise Tax shall be adjusted until the amount of such Parachute Payments equals
299% of the Employee's Base Amount. The adjustments shall be made in such
manner, and to such payments or other benefits, as the Employee and the Company
shall mutually agree.
(f) If any payments or other benefits due to the Employee under this
Agreement and/or under any other plan or program of the Company would be subject
to the Excise Tax, and if the amount of the Employee's Parachute Payments taken
into account for the purposes of such Excise Tax exceeds 330% of the Employee's
Base Amount, the Company shall pay to the Employee an additional amount (the
"Gross-Up Payment") so that the net amount that is retained by the Employee,
after the deduction of the Excise Tax and any other taxes (including Excise
Taxes) that are imposed on the Gross-Up Payment (other than interest and
penalties imposed by reason of the Employee's failure to file timely a tax
return or pay taxes shown as due on his or her tax return), is equal to the
payments and other benefits the Employee would have retained in the absence of
the Excise Tax. For the purpose of calculating the Gross-Up Payment, the
Employee's individual income tax rate will be deemed to be the Highest Marginal
Tax Rate.
(g) An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made at the Company's expense by an accounting firm selected by the
Company and reasonably acceptable to the Employee which is designated as one of
the five largest accounting firms in the United States (the "Accounting Firm").
The Accounting Firm shall provide its determination (the "Determination"),
together with detailed supporting calculations and documentation, to the Company
and the Employee within five days of the date of termination of the Employee's
employment, if applicable, or at such other time as may be requested by the
Company or the Employee (provided the Employee reasonably believes that [s]he
may be subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall furnish the Employee with an
opinion to that effect which is reasonably acceptable to the Employee. Within
ten days of the delivery of the Determination to the Employee, the Employee
shall have the right to dispute the Determination (the "Dispute"). The Gross-Up
Payment, if any, as determined pursuant to this paragraph 4, shall be paid by
the Company to the Employee within five days of the receipt of the
Determination. The existence of the Dispute shall not in any way affect the
Employee's right to receive the Gross-Up Payment in accordance with the
Determination. Upon the final resolution of a Dispute, the Company shall
promptly pay to the Employee any additional amount required by such resolution,
or, if it is determined that the Excise Tax is lower than originally determined,
the Employee shall repay to the Company the excess amount of the Gross-Up
Payment. If there is no Dispute, the Determination shall be binding, final and
conclusive upon the Company and the Employee, subject to the application of
paragraph 4(d) below.
(h) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination, an Excise Tax will
be imposed on any payment or benefit, the Company shall pay to the applicable
government taxing authorities as Excise Tax withholding, the amount of the
Excise Tax that the Company has actually withheld from the payment or benefit.
21. DEFINITIONS. For the purposes of this Agreement:
(k) "Base Amount" means the base amount as defined in Section
280G(b)(3) of the Code.
(l) "Board" means the Board of Directors of the Company.
(m) "Change in Control" means the happening of any of the following:
(iv) A majority of the directors of the Company shall be persons
other than persons:
(C) for whose election proxies shall have been solicited by
the Board; or
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(D) who are then serving as directors appointed by the Board
to fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships.
(v) 30% or more of the outstanding voting stock of the Company is
acquired or beneficially owned (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, or any successor rule thereto) by any
person (other than the Company or a subsidiary of the Company) or group of
persons acting in concert (other than the acquisition and beneficial
ownership by a parent corporation or its wholly-owned subsidiaries, as long
as they remain wholly-owned subsidiaries, of 100% of the outstanding voting
stock of the Company as a result of a merger which complies with
subparagraph (iii)(A)(2) hereof in all respects).
(vi) The shareholders of the Company approve a definitive
agreement or plan to:
(E) merge or consolidate the Company with or into another
corporation other than:
(3) a merger or consolidation with a subsidiary of the
Company; or
(4) a merger in which:
e. the Company is the surviving corporation;
f. no outstanding voting stock of the Company
(other than fractional shares) held by shareholders
immediately prior to the merger is converted into cash,
securities, or other property (except: (i) voting stock
of a parent corporation owning directly, or indirectly
through wholly owned subsidiaries, both beneficially
and of record 100% of the voting stock of the Company
immediately after the merger; and (ii) cash upon the
exercise by holders of voting stock of the Company of
statutory dissenters' rights);
g. the persons who were the beneficial owners,
respectively, of the outstanding common stock and
outstanding voting stock of the Company immediately
prior to such merger beneficially own, directly or
indirectly, immediately after the merger, more than 70%
of, respectively, the then outstanding common stock and
the then outstanding voting stock of the surviving
corporation or its parent corporation; and
h. if voting stock of the parent corporation is
exchanged for voting stock of the Company in the
merger, all holders of any class or series of voting
stock of the Company immediately prior to the merger
have the right to receive substantially the same per
share consideration in exchange for their voting stock
of the Company as all other holders of such class or
series;
(F) exchange, pursuant to a statutory exchange of shares of
voting stock of the Company held by shareholders of the Company
immediately prior to the exchange, shares of one or more classes
or series of voting stock of the Company for cash, securities, or
other property;
(G) sell or otherwise dispose of all or substantially all of
the assets of the Company (in one transaction or a series of
transactions), or
(H) liquidate or dissolve the Company.
(n) "Code" means the Internal Revenue Code of 1986, as amended.
(o) "Company" means the Company as hereinbefore defined and any
successor or assign to its business and/or assets which executes and delivers
the agreement provided for in paragraph 9 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. If at any
time during the term of this Agreement the Employee is employed by a subsidiary
of the Company, the term "Company" as used in this Agreement (other than in
paragraphs 5(c) and 9(a) hereof) shall in addition include such subsidiary. In
such event, the Company agrees that it shall pay or provide, or shall cause such
subsidiary to pay or provide, any amounts or benefits due the Employee pursuant
to this Agreement.
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(p) "Excise Tax" means the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties incurred by the Employee with
respect to such excise tax.
(q) "Good Reason" means the occurrence of any of the following events,
which have not been consented to in advance by the Employee in writing:
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(ix) If the Employee is employed at the Company's principal
executive offices at the time of a Change in Control, a relocation of
such principal executive offices to a location more than 50 miles from
such location, or a requirement that the Employee be based anywhere
other than the Company's principal executive offices at the time of
the Change in Control.
(x) If the Employee is not employed at the Company's principal
executive offices at the time of a Change in Control, the Employee's
relocation to any place other than the location at which the Employee
principally performed his or her duties prior to the Change in
Control.
(xi) Required travel by the Employee on the Company's business to
an extent substantially greater than the Employee's business travel
obligations at the time of the Change in Control.
(xii) A requirement that the Employee report to a person or
persons holding an office in the organizational structure of the
Company other than the highest ranking position (or functional
equivalent thereof) to which the Employee reported during the 12-month
period immediately preceding the occurrence of the Change in Control.
(xiii) A failure by the Company to maintain the Employee's base
compensation in effect as of the date of the Change in Control and
material fringe benefit, performance incentive and employee benefit
plans substantially equivalent to those in effect as of the date of
Change in Control.
(xiv) An assignment to the Employee of duties and
responsibilities other than those normally associated with the highest
position held by the Employee during the 12-month period immediately
preceding the occurrence of the Change in Control.
(xv) A material diminution or reduction of the Employee's
responsibilities or authority.
(xvi) A failure by the Company to comply with the requirements of
paragraph 9 hereof.
(r) "Highest Marginal Tax Rate" means:
(i) the highest marginal rate of federal individual income tax;
plus
(ii) the highest marginal rates of state, local and/or foreign
individual income taxes in the state and locality or foreign
jurisdiction of the Employee's residence, net of the reduction in
federal income taxes which could be obtained from any deduction or
credit attributable to the state, local or foreign taxes;
that are in effect for the calendar year in which the Gross-Up Payment is to be
made.
(s) "Just Cause" means:
(iii) the Employee has been convicted of a felony; or
(iv) the Employee has intentionally engaged in conduct that is
demonstrably and materially injurious to the Company, monetarily or
otherwise;
PROVIDED, HOWEVER, that no termination of the Employee's employment shall be for
Just Cause as set forth in subparagraph (ii) above until:
(D) there shall have been delivered to the Employee a copy
of a written notice setting forth that the Employee was guilty of
the conduct set forth in subparagraph (ii) and specifying the
particulars thereof in detail;
(E) the Employee shall have been provided an opportunity to
be heard by the Board of Directors (with the assistance of the
Employee's counsel if the Employee so desires); and
(F) such conduct is not discontinued within a reasonable
period of time after receipt of the written notice provided in
clause (A).
No act or failure to act on the Employee's part shall be considered
"intentional" unless the Employee has acted or failed to act with an absence of
good faith and without a reasonable belief that the Employee's action or failure
to act was in the best interest of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by the
Employee after notice of termination has been given by the Employee will
constitute Just Cause for purposes of this Agreement.
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(t) "Parachute Payment" means a parachute payment as defined in
Section 280G(b)(2) of the Code.
22. NO MITIGATION. The Employee's benefits hereunder shall be in
consideration of the Employee's past service and the Employee's continued
service from the date of this Agreement, and the Employee's entitlement thereto
shall not be governed by any duty to mitigate damages by seeking further
employment nor offset by any compensation which the Employee may receive from
future employment.
23. NO RIGHT TO EMPLOYMENT. It is understood and agreed that this
Agreement does not impose any additional obligations on the Company prior to the
occurrence of a Change in Control, nor does it impair the Company's rights to
terminate the Employee's employment, prior to or after a Change in Control, with
or without Just Cause.
24. OTHER BENEFITS. The specific arrangements referred to in this
Agreement are not intended to exclude Employee's participation in other benefits
available to executive personnel generally, or to preclude other compensation or
benefits as may be authorized by the Company from time to time; PROVIDED, that
if the Employee is entitled to severance payments which would be made in the
absence of a Change in Control under any plan or program of the Company, the
amounts payable to the Employee pursuant to this Agreement shall be reduced by
the value of such other severance payments.
25. SUCCESSORS.
(c) The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement
and shall entitle the Employee to terminate the Employee's employment for Good
Reason, whereupon the Employee shall be entitled to receive the payments and
other benefits described in this Agreement as though such termination had
occurred upon or after the occurrence of a Change in Control.
(d) This Agreement shall inure to the benefit of and be enforceable by
the Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts are still payable to the Employee hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee or other designee or,
if there be no such designee, to the Employee's estate.
26. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail (or its equivalent for overseas delivery), return
receipt requested, postage prepaid, and addressed as follows:
If to the Company:
Rural Cellular Corporation
0000 Xxxxxx Xxxxxx XX
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
If to the Employee:
Xxxxx X. Del Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
27. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
28. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
29. MODIFICATIONS; WAIVER. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Employee and the Company. No waiver by either party
hereto at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
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30. APPLICABLE LAW. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of Minnesota, except to the extent that Federal law shall be
deemed to apply.
31. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the commercial arbitration rules then in effect of the district
office of the American Arbitration Association ("AAA") nearest to the home
office of the Company, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof, except to the extent that the parties may
otherwise reach a mutual settlement of such issue. If the parties cannot
mutually agree on an arbitrator, each party shall select an arbitrator and those
two arbitrators shall select a third arbitrator and the third arbitrator shall
conduct the arbitration. The Company shall incur the cost of all fees and
expenses associated with filing a request for arbitration with the AAA, whether
such filing is made on behalf of the Company or the Employee, and the costs and
administrative fees associated with employing the arbitrator and related
administrative expenses assessed by the AAA. Otherwise, each party shall pay its
own costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, notwithstanding the ultimate outcome thereof,
upon delivery of a final judgment or settlement of the dispute.
32. ENTIRE AGREEMENT. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto and shall supersede all prior
understandings in writing or otherwise between the parties.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST
RURAL CELLULAR CORPORATION
By /S/ XXX X. XXXXXXX By /S/ XXXXXXX X. XXXXXXXX
--------------------------------- ---------------------------------------
Xxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
Secretary President and Chief Executive Officer
WITNESS
/S/ XXXXXX X. XXXXXXX /S/ XXXXX X. DEL XXXXX
------------------------------------- -------------------------------------
Xxxxxx X. Xxxxxxx Xxxxx X. Del Xxxxx
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