EXHIBIT 10.1
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EMPLOYMENT SECURITY AGREEMENT
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THIS EMPLOYMENT SECURITY AGREEMENT (the "Agreement") is entered
into this _____ day of ____________, 2007, between Consolidated
Communications Holdings, Inc., a Delaware corporation (the "Company"),
and _____________________________________ ("Executive").
Executive is employed by the Company or one of its wholly-owned
subsidiaries (referred to collectively as the "Company") and the
Company desires to provide certain security to Executive in connection
with any potential change in control of the Company. Accordingly, the
Company and Executive, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby agree
as follows:
1. PAYMENTS AND BENEFITS UPON A CHANGE IN CONTROL. If within two
(2) years after a Change in Control (as defined below), (i) the
Company shall terminate Executive's employment with the Company
without Cause (as defined below), or (ii) Executive shall
voluntarily terminate such employment with Good Reason (as
defined below), the Company shall provide the benefits and,
within thirty (30) days of Executive's Employment Termination (as
defined below), make the payments, described below.
(a) Cash Payment. The Company shall make a lump sum cash
payment to Executive equal to the Executive's Annual
Compensation (as defined below).
(b) Short-Year Bonus. The Company shall make a lump sum cash
payment to Executive equal to a pro rata portion (based on
the date on which Executive's Employment Termination occurs)
of the average of the annual amounts paid to Executive under
all cash-based incentive or bonus plans or arrangements of
the Company, with respect to the last three full fiscal
years of Executive's participation in such plans or
arrangements prior to Employment Termination or, if higher,
prior to the Change in Control. For purposes of the
preceding sentence, if Executive's number of full fiscal
years of participation in any such plan or arrangement prior
to the Change in Control is less than three, the average
amount shall be calculated as the average of the annual
amounts paid to Executive over the number of full fiscal
years of Executive's participation in the plan or
arrangement prior to the Change in Control, or the number of
full fiscal years of Executive's participation in the plan
or arrangement prior to Employment Termination, whichever
produces a higher average annual amount.
(c) Welfare Benefit Plans. With respect to each Welfare Benefit
Plan (as defined below), for the period beginning on
Executive's Employment Termination and ending on the earlier
of (i) one year following Executive's Employment
Termination, or (ii) the date Executive becomes covered by a
welfare benefit plan or program maintained by an entity
other than the Company which provides coverage or benefits
at least equal, in all respects, to such Welfare Benefit
Plan, Executive shall continue to participate in such
Welfare Benefit Plan on the same basis and at the same cost
to Executive as was the case immediately prior to the Change
in Control (or, if more favorable to Executive, as was the
case at any time hereafter), or, if any benefit or coverage
cannot be provided under a Welfare Benefit Plan because of
applicable law or contractual provisions, Executive shall be
provided with substantially similar benefits and coverage
for such period. Immediately following the expiration of
the continuation period required by the preceding sentence,
Executive shall be entitled to continued group health
benefit plan coverage (so-called "COBRA coverage") in
accordance with Section 4980B of the Internal Revenue Code
of 1986, as amended (the "Code"), it being intended that
COBRA coverage shall be consecutive to the benefits and
coverage provided for in the preceding sentence.
(d) Salary to Date of Employment Termination. The Company shall
pay to Executive any unpaid salary or other compensation of
any kind earned with respect to any period prior to
Executive's Employment Termination and a lump sum cash
payment for accumulated but unused vacation earned through
such Employment Termination.
2. DEFINITIONS. For purposes of this Agreement:
(a) "Cause" shall mean: (i) the conviction of, pleading guilty
to, or confessing or otherwise admitting to any felony or any
act of fraud, misappropriation or embezzlement; (ii) the act
or omission by Executive involving malfeasance or gross
negligence in the performance of Executive's duties and
responsibilities to the material detriment of the Company;
or (iii) the breach of any provision of any code of conduct
adopted by the Company which applies to the Company if the
consequence to such violation for any Executive subject to
such code of conduct ordinarily would be a termination of
his or her employment by the Company; provided however, no
such act or omission or event shall be treated as "Cause"
under this Agreement unless (a) Executive has been provided
a detailed, written statement of the basis for belief that
such act or omission or event constitutes "Cause" and an
opportunity to meet with the Compensation Committee of the
Board of Directors of the Company (the "Committee")
(together with Executive's counsel if Executive chooses to
have counsel present at such meeting) after Executive has
had a reasonable period in which to review such statement
and, if the act or omission or event is one which can be
cured by Executive, Executive has had at least a thirty (30)
day period to take corrective action and (b) a majority of
the Committee after such meeting (if Executive exercises
Executive's right to have a meeting) and after the end of
such thirty (30) day correction period (if applicable)
determines reasonably and in good faith that "Cause" does
exist under this Agreement.
(b) (i) "Good Reason" shall exist if:
a. there is any reduction after the Change Effective
Date (as defined below) in Executive's base salary
and/or bonus opportunity without Executive's
express written consent;
b. there is any reduction after the Change Effective
Date in the scope, importance or prestige of
Executive's duties, responsibilities or powers at
the Company without Executive's express written
consent; or
c. the Company transfers Executive's primary work
site to a new primary work site which is more than
30 miles (measured along a straight line) from
Executive's then current primary work site unless
such new primary work site is closer (measured
along a straight line) to Executive's primary
residence than Executive's then current primary
work site.
(ii) Notwithstanding the foregoing, no such act or omission
shall be treated as "Good Reason" under this Agreement
unless:
a. (1) Executive delivers to the Committee a
detailed, written statement of the basis for the
Executive's belief that such act or omission
constitutes Good Reason, (2) Executive delivers
such statement before the later of (A) the end of
the ninety (90) day period which starts on the
date there is an act or omission which forms the
basis for Executive's belief that Good Reason
exists or (B) the end of the period mutually
agreed upon for purposes of this paragraph in
writing by Executive and the Committee, (3)
Executive gives the Committee a thirty (30) day
period after the delivery of such statement to
cure the basis for such belief and (4) Executive
actually submits his or her written resignation to
the Committee during the sixty (60) day period
which begins immediately after the end of such
thirty (30) day period if Executive reasonably and
in good faith determines that Good Reason
continues to exist after the end of such thirty
(30) day period; or
b. The Company states in writing to Executive that
Executive has the right to treat any such act or
omission as Good Reason under this Agreement and
Executive resigns during the sixty (60) day period
which starts on date such statement is actually
delivered to Executive.
(c) "Change in Control" shall mean a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the 1934 Act as in effect at the time of
such "change in control", provided that such a change in
control shall be deemed to have occurred on the earliest to
occur of any of the following:
(i) any "person" (as that term is used in Sections 13(d)
and 14(d)(2) of the 1934 Act), other than an
"affiliate" (as that term is defined in Section 5 of
Article IV of the Company's amended and restated
certificate of incorporation) of Xxxxxxx X. Xxxxxxx, is
or becomes the beneficial owner (as defined in Rule
13d-3 under the 0000 Xxx) directly or indirectly, of
securities representing a majority of the combined
voting power for election of directors of the then
outstanding securities of the Company or any successor
to the Company;
(ii) during any period of two consecutive years or less,
individuals who at the beginning of such period
constitute the Board cease, for any reason, to
constitute at least a majority of the Board, unless the
election or nomination for election of each new
director 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;
(iii) the shareholders of the Company approve any
reorganization, merger, consolidation or share exchange
as a result of which the common stock of the Company
shall be changed, converted or exchanged into or for
securities of another corporation (other than a merger
with a wholly-owned subsidiary of the Company) or any
dissolution or liquidation of the Company or any sale
or the disposition of 50% or more of the assets or
business of the Company; or
(iv) shareholders of the Company approve any reorganization,
merger, consolidation or share exchange unless (A) the
persons who were the beneficial owners of the
outstanding shares of the common stock of the Company
immediately before the consummation of such transaction
beneficially own at least a majority of the outstanding
shares of the common stock of the successor or survivor
corporation in such transaction immediately following
the consummation of such transaction and (B) the number
of shares of the common stock of such successor or
survivor corporation beneficially owned by the persons
described in Section 2(c)(iv)(A) immediately following
the consummation of such transaction is beneficially
owned by each such person in substantially the same
proportion that each such person had beneficially owned
shares of the Company common stock immediately before
the consummation of such transaction, provided (C) the
percentage described in Section 2(c)(iv)(A) of the
beneficially owned shares of the successor or survivor
corporation and the number described in Section
2(c)(iv)(B) of the beneficially owned shares of the
successor or survivor corporation shall be determined
exclusively by reference to the shares of the successor
or survivor corporation which result from the
beneficial ownership of shares of common stock of the
Company by the persons described in Section 2(c)(iv)(A)
immediately before the consummation of such
transaction.
(d) "Change Effective Date" shall mean either the date which
includes the "closing" of the transaction which makes a
Change in Control effective if the Change in Control is made
effective through a transaction which has a "closing" or the
date a Change in Control is reported in accordance with
applicable law as effective to the Securities and Exchange
Commission if the Change in Control is made effective other
than through a transaction which has a "closing".
(e) "Annual Compensation" shall mean the sum of: (i) Executive's
salary for one year at the greater of (A) Executive's salary
rate in effect immediately prior to the date of the Change
in Control, or (B) Executive's salary rate in effect on
Executive's Employment Termination; and (ii) the Amounts
Payable Under Any Cash Bonus Plans (as defined below) in
which Executive participates.
(f) "Employment Termination" shall mean the effective date of:
(i) Executive's voluntary termination of employment with the
Company with Good Reason; or (ii) the termination of
Executive's employment by the Company without Good Cause.
(g) "Welfare Benefit Plan" shall mean each welfare benefit plan
maintained or contributed to by the Company, including, but
not limited to a plan that provides health (including
medical and dental), life, accident or disability benefits
or insurance, or similar coverage, in which Executive was
participating immediately prior to the date of the Change in
Control.
(h) "Amounts Payable Under Any Cash Bonus Plans" shall mean the
average of the annual amounts paid to Executive under any
cash-based incentive or bonus plans or arrangements in which
Executive participates with respect to the last three full
fiscal years of Executive's participation in such plans or
arrangements prior to Employment Termination or, if higher,
prior to the Change in Control. For purposes of the
preceding sentence, if Executive's number of full fiscal
years of participation in any such plan prior to the Change
in Control is less than three, the amount under this
paragraph shall be calculated as the average of the annual
amounts paid to Executive over the number of full fiscal
years of Executive's participation in the plan or
arrangement prior to the Change in Control, or the number of
full fiscal years of Executive's participation in the plan
or arrangement prior to Employment Termination, whichever
produces a higher average annual amount.
3. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Gross-Up. Anything in this Agreement to the contrary
notwithstanding, in the event that any payment or
distribution by or on behalf of the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional
payments required under this Section 3) (the "Payments") is
determined to be an "excess parachute payment" pursuant to
Code Section 280G or any successor or substitute provision
of the Code, with the effect that Executive is liable for
the payment of the excise tax described in Code Section 4999
or any successor or substitute provision of the Code, or any
interest or penalties are incurred by Executive with respect
to such Payments (such excise tax, together with any such
interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be
entitled to receive an additional payment (the "Gross-Up
Payment") in an amount such that after payment by Executive
of all taxes imposed upon the Gross-Up Payment, including,
without limitation, federal, state, local or other income
taxes, FICA taxes, and additional Excise Tax (and any
interest and penalties imposed with respect to such taxes),
Executive retains a portion of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Determination of Gross-Up. Subject to the provisions of
Section 3(c), all determinations required to be made under
this Section 3, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally-recognized
public accounting firm designated by Executive, other than
the firm that serves as the Company's auditors (the
"Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Executive within 15
business days of the receipt of notice from the Company or
Executive that there have been Payments, or such earlier
time as is requested by the Company. All fees and expenses
of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section
3, shall be paid by the Company to Executive within five
days after the receipt by the Company and Executive of the
Accounting firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion that failure
to report the Excise Tax on Executive's 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 the Company and
Executive, except as provided in paragraph (c) below.
(c) IRS Claims. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that the Internal Revenue Service or other
agency will claim that a greater Excise Tax is due, and thus
a greater amount of Gross-Up Payment should have been made
by the Company than that determined pursuant to paragraph
(b) above (an "Underpayment"). In the event that Executive
is required to make a payment of any such Excise Tax, the
Accounting Firm shall determine the amount of the
Underpayment that has occurred, if any, and such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive. Executive shall notify the
Company in writing of any claim by the Internal Revenue
Service or other agency that, if successful, would require
the payment by the Company of the Gross-Up Payment or an
Underpayment.
4. PAYMENT DELAYED IN CERTAIN CIRCUMSTANCES. Notwithstanding
anything in this Agreement to the contrary, if at Executive's
Employment Termination Executive is a "Key Employee" as defined
in Section 416(i) of the Internal Revenue Code (without reference
to paragraph 5 thereof), to the extent any amounts payable to
Executive pursuant to this Agreement are subject to Section 409A
of the Internal Revenue Code ("Section 409A"), payment of such
amounts shall not be made until six months following Executive's
Employment Termination.
5. MITIGATION AND SET-OFF. Executive shall not be required to
mitigate Executive's damages by seeking other employment or
otherwise. Except as provided in Section 1(c) of this Agreement,
the Company's obligations under this Agreement shall not be
reduced in any way by reason of any compensation or benefits
received (or foregone) by Executive from sources other than the
Company after Executive's Employment Termination, or any amounts
that might have been received by Executive in other employment
had Executive sought such other employment. Executive's
entitlement to benefits and coverage under this Agreement shall
continue after, and shall not be affected by, Executive's
obtaining other employment after his Employment Termination,
provided that any such benefit or coverage shall not be furnished
if Executive expressly waives the specific benefit or coverage by
giving written notice of waiver to the Company.
6. LITIGATION EXPENSES. The Company shall pay to Executive all out-
of-pocket expenses, including attorneys' fees, incurred by
Executive in the event Executive successfully enforces any
provision of this Agreement in any action, arbitration or
lawsuit.
7. RESTRICTIVE COVENANTS. While Executive is employed by the
Company and for one year following any Employment Termination,
Executive shall not be associated, directly or indirectly, as an
employee, proprietor, stockholder, partner, agent,
representative, officer, or otherwise, with the operation of any
business that is competitive with any line of business of the
Company for which Executive has provided substantial services, in
any geographic area in which such line of business was active at
the time of Executive's Employment Termination, without the prior
written consent of the Company, which shall not unreasonably be
withheld, except that Executive's ownership (or that of his wife
and children) of less than 1% of any class of publicly-traded
securities of any such business shall not be considered a
violation of this Section. For purposes of the preceding
sentence, Executive shall be considered as the "stockholder" of
any equity securities owned by his spouse and all relatives and
children residing in Executive's principal residence.
8. NO SOLICITATION OF CUSTOMERS, REPRESENTATIVES, AGENTS OR
EMPLOYEES. Executive agrees that he shall not, while Executive
is employed by the Company and for one year following any
Employment Termination, directly or indirectly, in his individual
capacity or otherwise, induce, cause, persuade, or attempt to do
any of the foregoing in order to cause, any customer,
representative, agent or employee of the Company to terminate
such person's relationship with the Company or to violate the
terms of any agreement between said customer, representative,
agent or employee and the Company.
9. CONFIDENTIALITY. Executive acknowledges that preservation of a
continuing business relationship between the Company and its
customers, representative, and employees is of critical
importance to the continued business success of the Company and
that it is the active policy of the Company to guard as
confidential the identity of its customers, trade secrets,
pricing policies, business affairs, representatives and
employees. In view of the foregoing, Executive agrees that he
shall not, while employed by the Company and thereafter, without
the prior written consent of the Company (which consent shall not
be withheld unreasonably), disclose to any person or entity any
information concerning the business of, or any customer,
representative, agent or employee of, the Company which was
obtained by Executive in the course of his employment by the
Company. This section shall not be applicable if and to the
extent Executive is required to testify in a legislative,
judicial or regulatory proceeding pursuant to an order of
Congress, any state or local legislature, a judge, or an
administrative law judge.
10. ASSIGNMENT; SUCCESSORS. This Agreement may not be assigned by
the Company without the written consent of Executive but the
obligations of the Company under this Agreement shall be the
binding legal obligations of any successor to the Company by
merger, consolidation or otherwise, and in the event of any
business combination or transaction that results in the transfer
or substantially all of the assets or business of the Company,
the Company will cause the transferee to assume the obligations
of the Company under this Agreement. This Agreement may not be
assigned by Executive during Executive's life, and upon
Executive's death will inure to the benefit of Executive's heirs,
legatees and legal representatives of Executive's estate.
11. WITHHOLDING. The Company may withhold from any payment that it
is required to make under this Agreement amounts sufficient to
satisfy applicable withholding requirements under any federal,
state or local law.
12. AMENDMENT OR TERMINATION. This Agreement may be amended at any
time by written agreement between the Company and Executive. The
Company may terminate this Agreement by written notice given to
Executive at least two years prior to the effective date of such
termination, provided that, if a Change in Control occurs prior
to the effective date of such termination, the termination of
this Agreement shall not be effective and Executive shall be
entitled to the full benefits of this Agreement. Any such
amendment or termination shall be made pursuant to a resolution
of the Board.
13. FINANCING. Cash and benefit payments under this Agreement shall
constitute general obligations of the Company. Executive shall
have only an unsecured right to payment thereof out of the
general assets of the Company. Notwithstanding the foregoing,
the Company may, by agreement with one or more trustees to be
selected by the Company, create a trust on such terms as the
Company shall determine to make payments to Executive in
accordance with the terms of this Agreement.
14. INTERPRETATION. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Illinois, without regard to the conflict of law
principles thereof.
15. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect.
16. OTHER AGREEMENTS. This Agreement supersedes and cancels any
prior written or oral agreements and understandings relating to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
Consolidated Communications
Holdings, Inc.
By: ________________________
____________________________
Executive
Its: ________________________
