EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into this 1st day of December, 1995 ("Effective
Date"), by and between Rural Cellular Corporation ("RCC" or "Company") and Xxxxx
Xxxxxx (the "Employee").
WHEREAS, the Employee has heretofore been employed by RCC in the position
described in the job description attached as Exhibit A and is experienced in the
business of RCC; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of RCC and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Employee is employed in the capacity of Vice
President of Sales and Marketing for RCC as described in the attached Exhibit A
and as are customarily performed by persons situated in a similar executive
capacity. The Employee shall also promote, by entertainment or otherwise, as
and to the extent permitted by law, the business of RCC. The Employee's other
duties shall be such as the President/CEO, or his designee, may from time to
time reasonably direct. The Board of Directors may change Employee's reporting
relationship at any time.
2. BASE COMPENSATION. RCC agrees to pay the Employee during the term of
this Agreement a salary which shall be at the 1995 rate for December 1995 and
continue at the rate of $84,100 per annum beginning January 1, 1996, payable not
less frequently than every two weeks; provided, that the rate of such salary
shall be reviewed by the Board of Directors not less often than annually, and
Employee shall be entitled to receive an increase at such percentage or in such
an amount, if any, as the Board of Directors in its sole discretion may decide
at such time.
3. DISCRETIONARY AND INCENTIVE BONUS. The Employee shall be entitled to
participate in an equitable manner with all other senior management employees of
RCC in discretionary and incentive bonuses, including, but not limited to stock
option and restricted stock awards and other cash and non-cash compensation
plans that may be authorized and declared by the Board of Directors to its
senior management employees from time to time.
4. OTHER BENEFITS.
(a) PARTICIPATION IN RETIREMENT AND MEDICAL PLANS. The
Employee shall be entitled to participate in any plan of RCC
relating to compensation, profit sharing, or other retirement
benefits and medical coverage or reimbursement plans as RCC may
adopt for the benefit of its employees,
(b) EMPLOYEE BENEFITS; EXPENSES. The Employee shall be
eligible to participate in any fringe benefits which may be or
may become applicable to RCC's senior management employees,
including by example, participation in any stock option or
incentive plans adopted by the Board of Directors, and any other
benefits adopted by the Board of Directors. RCC shall reimburse
Employee for all reasonable out-of-pocket expenses which Employee
shall incur in connection with his service for RCC which are
documented with RCC's policies as set forth from time to time.
5. TERM. The term of employment of Employee under this Agreement shall
be for the period commencing on the Effective Date and ending December 31,
1998. Additionally, the term of employment under this Agreement may be
extended for one or more additional one year periods beyond the then
effective expiration date upon a determination and resolution of the Board of
Directors, in its sole discretion, that the performance of the Employee has
met the requirements and standards of the Board in the current term, and that
the term of such Agreement shall be extended for an additional one year term
and the acceptance by Employee of such extended term.
6. LOYALTY; NONCOMPETITION.
(a) The Employee shall devote his full time and attention
to the performance of his employment under this Agreement.
During the term of Employee's employment under this Agreement,
the Employee shall not engage in any business or activity
contrary to the business affairs or interests of RCC.
(b) Nothing contained in this Paragraph 6 shall be deemed
to prevent or limit the right of Employee to invest in the
capital stock or other securities of any business dissimilar from
that of RCC, or, solely as a passive or minority investor, in any
business.
7. STANDARDS. The Employee shall perform his duties under this Agreement
in accordance with such reasonable standards expected of employees with
comparable positions in comparable organizations and as may be established from
time to time by thePresident/CEO.
8. VACATION AND SICK LEAVE. At such reasonable times as RCC shall in its
sole discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance under this Agreement, with all
such voluntary absences to count as vacation time; provided that:
(a) The Employee shall be entitled to annual vacation leave
in accordance with the policies as are periodically established
by the Board of Directors for senior management of RCC but in no
event less than three calendar weeks per calendar year.
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(b) The Employee shall take at least five consecutive
business days of vacation in each calendar year.
(c) The Employee shall not be entitled to receive any
additional compensation from RCC on account of his failure to
take vacation leave and Employee shall not be entitled to
accumulate unused vacation from one fiscal year to the next,
except in either case to the extent authorized by the Board of
Directors for senior management employees of RCC.
(d) In addition to the aforesaid paid vacations, the
Employee shall be entitled without loss of pay, to absent himself
voluntarily from the performance of his employment with RCC for
such additional periods of time and for such valid and legitimate
reasons as the Board of Directors in its discretion may
determine. Further, the Board of Directors shall be entitled to
grant to the Employee a leave or leaves of absence with or
without pay at such time or times and upon such terms and
conditions as the Board of Directors in its discretion may
determine.
(e) In addition, the Employee shall be entitled to an
annual sick leave benefit as established by the Board of
Directors for senior management employees of RCC. In the event
that any sick leave benefit shall not have been used during any
year, such leave shall accrue to subsequent years only to the
extent authorized by the Board of Directors for employees of RCC.
(f) The Employee is encouraged to participate in related
industry organizations and activities provided that the
assumption of any significant responsibilities for such outside
activities or organizational participation shall be approved in
advance by the President/CEO.
9. TERMINATION AND TERMINATION PAY. The Employee's employment under this
Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Employee during the term of this Agreement,
in which event the Employee's estate shall be entitled to receive
the compensation due the Employee through the last day of the
calendar month in which Employee's death shall have occurred,
plus all accrued but unused vacation for such calendar year, and
PRO RATA payment of all bonuses or incentive payments earned or
to be awarded for such calendar year.
(b) The Board of Directors may terminate the Employee's
employment at any time, but any termination by the Board of
Directors other than termination for Just Cause, as defined
below, shall not prejudice the Employee's right to compensation
or other benefits under the Agreement. The Employee shall have
no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for "Just Cause"
shall include termination because of the Employee's personal
dishonesty, incompetence,
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willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of the Agreement.
(c) Except as provided pursuant to Section 11 herein, in
the event Employee's employment under this Agreement is
terminated by the Board of Directors without Just Cause, RCC
shall be obligated to continue to pay the Employee the salary
provided pursuant to Section 2 herein, up to the date of
termination of the term (including any extension of the term
pursuant to Section 5 above) of this Agreement. Notwithstanding
the foregoing, in no event shall payments to be made in
accordance with this Section 9(c) be for a period of less than 12
months following the date of termination of employment.
(d) The voluntary termination by the Employee during the
term of this Agreement with the delivery of no less than 60 days
written notice to the Board of Directors (other than pursuant to
Section 11(b)) in which case the Employee shall be entitled to
receive only the compensation, vested rights, and all employee
benefits up to the date of such termination except as
specifically provided below.
10. DISABILITY. If the Employee shall become disabled or incapacitated to
the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Employee shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of six (6)
months, but not exceeding the remaining term of the Agreement, and 65%
thereafter for the remainder of the term of the Agreement. Such benefits noted
herein shall be reduced by any benefits otherwise provided to the Employee
during such period under the provisions of disability insurance coverage in
effect for RCC employees. Thereafter, Employee shall be eligible to receive
benefits provided by RCC under the provisions of disability insurance coverage
in effect for RCC employees. Upon returning to active full-time employment, the
Employee's full compensation as set forth in this Agreement shall be reinstated
as of the date of commencement of such activities. In the event that the
Employee returns to active employment on other than a full-time basis, then his
compensation (as set forth in Paragraph 2 of this Agreement) shall be reduced in
proportion to the time spent in said employment, or as shall otherwise be agreed
to by the parties.
11. CHANGE IN CONTROL.
(a) Notwithstanding any provision herein to the contrary,
in the event of the involuntary termination of Employee's
employment under this Agreement, absent Just Cause, in connection
with, or within twelve (12) months after, any change in control
of RCC, Employee shall be paid an amount equal to the
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product of 2.99 times the Employee's "base amount" as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code") and regulations promulgated thereunder. Said sum shall
be paid, at the option of Employee, either in one (1) lump sum
within thirty (30) days of such termination discounted to the
present value of such payment using as the discount rate the
"prime rate" as published in the WALL STREET JOURNAL EASTERN
EDITION as of the date of such payment, or in periodic payments
over the next 36 months or the remaining term of this Agreement
whichever is less, as if Employee's employment had not been
terminated, and such payments shall be in lieu of any other
future payments which the Employee would be otherwise entitled to
receive under Section 9 of this Agreement. Notwithstanding the
forgoing, all sums payable hereunder shall be reduced in such
manner and to such extent so that no such payments made hereunder
when aggregated with all other payments to be made to the
Employee by RCC shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Code, or any successor
provision, and be subject to the excise tax provided at Section
4999(a) of the Code. The term "change in control" shall be
defined as set forth in the 1995 Stock Compensation Plan, which
is incorporated herein by reference.
(b) Notwithstanding any other provision of this Agreement
to the contrary, Employee may voluntarily terminate his
employment under this Agreement within twelve (12) months
following a change in control of RCC, and Employee shall
thereupon be entitled to receive the payment described in Section
11(a) of this Agreement, upon the occurrence, or within ninety
(90) days thereafter, of any of the following events, which have
not been consented to in advance by the Employee in writing: (i)
if Employee would be required to move his personal residence or
perform his principal executive functions more than fifty miles
from the Employee's primary office immediately prior to the
change in control; (ii) if in the organizational structure of RCC
Employee would be required to report to a person or persons other
than the Chief Executive Officer; (iii) if RCC should fail to
maintain Employee's base compensation in effect as of the date of
the Change in Control and the existing material fringe benefit,
stock option, performance incentive and retirement plans; (iv) if
Employee would be assigned duties and responsibilities other than
those normally associated with his position as referenced at
Section 1, herein; or (v) if Employee's responsibilities or
authority have in any way been materially diminished or reduced.
12. NON-COMPETITION AGREEMENT.
(a) TERM. During the term of the Agreement and for the period
ending one (1) year after the voluntary or involuntary
termination of this Agreement, Employee agrees that he will not,
without RCC's prior written consent, directly or indirectly,
within the service areas served by RCC at the time of
termination, lend his credit, advice or assistance, or engage in
any activity or act in any manner, including but not limited to,
as an individual, owner, sole proprietor, founder, associate,
promoter, partner, joint venturer,
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shareholder other than as a less than five percent (5%) shareholder of
a publicly traded corporation, officer, director, trustee, manager,
employer, employee, licensor, licensee, licensor, licensee, principal,
agent, salesman, broker, representative, consultant, advisor,
investor or otherwise, for the purpose of establishing, operating
or managing any business or entity that is engaged in activities
competitive with the business of the Company as carried on as of
the date of termination.
(b) NON-SOLICITATION AGREEMENT. As used in this Agreement,
the term "Person" means any individual, corporation, joint
venture, general or limited partnership, association or other
entity. During the period of one (1) year from and after the
date of termination, Employee agrees that he will not, whether
for his own account or for the account of any other Person,
directly or indirectly interfere with the Company's relationship
with or endeavor to divert or entice away from the Company any
Person who or which at any time during the term of Employee's
employment by RCC is or was an employee or customer of or in the
habit of dealing with RCC.
(c) REASONABLENESS OF COVENANTS. Employee acknowledges and
agrees that the geographic scope and period of duration of the
restrictive covenants contained in this Agreement are both fair
and reasonable and that the interests sought to be protected by
the Company are legitimate business interests entitled to be
protected.
(d) INJUNCTIVE RELIEF; ATTORNEYS' FEES. The parties agree that
the remedy of damages at law for the breach by Employee of any of
the covenants contained in this Section 12 is an inadequate
remedy. In recognition of the irreparable harm that a violation
by Employee of any of the covenants, agreements or obligations
arising under this Agreement would cause RCC, Employee agrees
that in addition to any other remedies or relief afforded by law,
an injunction against an actual or threatened violation or
violations may be issued against him and every other Person
concerned thereby, it being the understanding of the parties that
both damages and an injunction shall be proper modes of relief
and are not to be considered alternative remedies. In the event
of any such an actual or threatened violation, Employee agrees to
pay the costs, expenses and reasonable attorneys' fees incurred
by the Company in pursuing any of its rights with respect to such
actual or threatened violation, in addition to the actual damages
sustained by the Company as a result thereof.
(e) COMPENSATION. In the event that Employee's employment
has terminated and Employee is not entitled to receive payment
under Sections 10 or 11 of this Agreement, to compensate Employee
for the restrictive covenants contained in this Agreement, RCC
agrees to pay Employee the sum of Sixty Thousand and 00/100
Dollars ($60,000.00). One-half of this amount is payable in
equal monthly payments commencing on the last day of the month
following termination and continuing thereafter on the last day
of each and every month
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until the end of the period stated in Section 12(a) and one-half at
the end of the period stated in Section 12(a).
In the event that Employee shall breach any of his
covenants, agreements or obligations arising under this
Agreement, RCC shall have the right to discontinue making the
payments to Employee provided for herein unless and until
Employee has cured any such existing breaches.
(f) RCC may waive the restrictions on employee imposed in
Section 12. In the event of such waiver, RCC shall not be
obligated to make the payments set forth in Section 12(e)
provided that, in the event of a voluntary termination by
Employee, RCC shall give notice of such waiver to Employee within
twenty (20) days of the receipt of the notice of termination by
Employee.
13. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be
binding upon any corporation or other successor of RCC which
shall acquire, directly or indirectly, by merger, consolidation,
purchase or otherwise, all or substantially all of the assets or
stock of RCC.
(b) Since RCC is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without
first obtaining the written consent of RCC.
14. AMENDMENTS. No amendments or additions to this Agreement shall be
binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.
15. APPLICABLE LAW. This Agreement shall be governed by 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.
16. 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.
17. 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 rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of RCC, 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. RCC 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 RCC or the Employee, and the costs and administrative fees associated
with employing the arbitrator and related administrative
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expenses assessed by the AAA. 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. 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.
18. 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.
RURAL CELLULAR CORPORATION
ATTEST: /s/ Xxxxxxx X. Xxxxxxxx
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By: Xxxxxxx X. Xxxxxxxx
President/Chief Executive Officer
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Secretary
WITNESS:
/s/ Xxxxx X. Xxxxxxxxxx /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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