EXHIBIT 10.7
May 1, 1999
Xx. Xxxxxx X. Xxxxxxx
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxxx:
As you know, Frontier Corporation (the "Company") has entered into an
agreement which would constitute a Change of Control pursuant to the agreement
between yourself and the Company dated March 25, 1996 (the "COC Agreement"). In
contemplation of a Change of Control, the Company and you agree to amend your
COC Agreement as follows:
1. Section 4.2.3(b) is amended to read as follows:
(b) The period of your employment by the Company (whether
under this Agreement or otherwise) and 24 months thereafter,
if your employment is terminated, prior to a Change of Control
(i) because of your Retirement, or (ii) by the Company for
Cause or without Cause;
2. Section 4.2.3(d) is amended to read as follows:
(d) On and after a Change of Control has occurred, or if your
employment is terminated for Good Reason, the period of your
employment by the Company under this Agreement.
3. The third sentence of Section 6.1.5 is amended to read as
follows:
The term "Bonus Amount" means the greatest of: (i) your annual
cash performance bonus under the Company's bonus program at
the premier target level for the year in which the Termination
Date occurs, but no lower than the premier target level
established and in effect prior to March 16, 1999; (ii) the
bonus paid or payable to you with respect to the fiscal year
preceding the year in which the Termination Date occurs; or
(iii) following a Change of Control, the bonus paid to you
with respect to the fiscal year preceding the year in which
the Change of Control occurred.
4. Section 6.2 is amended to read as follows:
6.2 Termination Without Cause. If the Company terminates your
employment without Cause (as defined later in this Agreement)
prior to a Change of Control, the Company shall pay you:
6.2.1 All Accrued Compensation;
6.2.2 A Pro Rata Bonus (as defined in Section 6.1.5 above);
and
6.2.3 Severance ("Severance") equal to twice 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) $25,000, or if greater, the
1999 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 for the year of your termination
plus (v) the Company allocation which would have been made to
your account in the Company's Supplemental Retirement Savings
Plan (or any successor thereto) for the year of your
termination. 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, disability, medical,
dental, vision and hospitalization benefits provided to you
and (other than for disability) your family immediately prior
to the Termination Date.
Except as otherwise provided in this Section 6.2, 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.
5. The first phrase of the introductory sentence of Section 6.4
is amended to read as follows:
6.4 Termination by Company Following Change of Control or
Termination for Good Reason. If the Company terminates your
employment on and after a Change of Control, or you terminate
your employment for Good Reason (whether or not you elect to
retire, if eligible), the Company shall pay you:
6. The first paragraph of Section 6.4.3 is amended to read as
follows:
6.4.3 Severance equal to three 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) $25,000, or if greater, the 1999 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 for the year of your termination plus (v) the
Company allocation which would have been made to your account
in the Company's Supplemental Retirement Savings Plan (or any
successor thereto) for the year of your termination. 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.
7. The paragraph immediately following Section 6.4.3 shall be
amended to read as follows:
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, disability, medical,
dental, vision and hospitalization benefits provided to you
and (other than for disability) your family immediately prior
to the Termination Date.
8. The following proviso is added to the end of Section 8:
; provided, however, that on and after a Change of Control
neither the Company nor any other person shall
be permitted to terminate any payments or benefits under the
terms of this section.
9. Section 11.1.3 is amended to read as follows:
11.1.3 You have willfully engaged in conduct which is illegal
or in violation of the Company's Code of Ethics; provided,
however, that on and after a Change of Control this Section
11.1.3 shall be of no force and effect; or
10. Section 11.4.7 is renumbered to be Section 11.4.8 and the
following Section 11.4.7 is added:
11.4.7 Without your express written consent, after a Change of
Control, any requirement that you relocate your principal
place of business more than 50 miles from your principal place
of business immediately prior to such Change of Control or any
substantial increase in business related travel over the level
of travel required immediately prior to the Change of Control;
or
11. The term "Retirement" above is used in the event you are or
are currently entitled to become retirement eligible, and does
not create new retirement eligibility. In the absence of a
definition in your existing agreement, for purposes of this
COC Amendment, the following definition applies:
"Retirement" shall, for each affected plan or agreement
involving you and the Company, have the meaning established in
the applicable plan or agreement, or in the absence of a
definition or consistently applied interpretation, shall mean
a voluntary or involuntary termination of your employment
after age 65, or at age 65 or earlier, with age and service
credits that would, in such case, entitle you to receive a
normal or early retirement service pension under the Frontier
Management Pension Plan (or any successor or substitute plan
or plans of Frontier instituted prior to March 16, 1999.)
Three signed copies of this amendment have been enclosed. The
amendments being made herein are being made pursuant to authorization of the
board of directors of the Company. Your agreement and this COC Amendment will
not adversely impact the validity or treatment of any separate agreement that
you have with the Company with respect to options, loan forgiveness or the like
that was in place as of March 16, 1999.
If you agree to the above mentioned changes to your COC Agreement,
please sign all copies below and return two of the signed original agreements to
Xx. XxXxx.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
Agreed and Accepted:
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
