EXECUTIVE EMPLOYMENT AGREEMENT
FIRST AMENDMENT AND RESTATEMENT
This Amendment and Restatement dated as of the Effective Date (as such
term is defined in the First Amended Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code for the Companies (as defined below) and their
domestic subsidiaries, (Case No. 01-47330-HJB, as confirmed on May 15, 2002 by
order of the United States Bankruptcy Court for the District of Massachusetts
Western Division) (the "Plan") to the Executive Employment Agreement originally
dated March 13, 2001(the "Agreement"), and most recently amended and restated in
a document dated November 14th, 2001, is entered by Arch Wireless, Inc., a
Delaware corporation ("AWI") and its wholly-owned subsidiary Arch Wireless
Holdings, Inc., a Delaware corporation ("AWHI"), each with its principal place
of business at 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, XX, 00000
(sometimes collectively referred to as the "Companies"), and Xxxxxxxx Xxx
Xxxxxx, an individual residing at 000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the
"Executive").
WHEREAS, Section 11.6 of the Agreement provides that it may be amended
or modified by a written instrument executed by AWI, AWHI and the Executive.
NOW, THEREFORE, the parties to the Agreement, acting in accordance with
the above-described provision, hereby amend and restate the Agreement in its
entirety, to read as follows:
1. Term of Employment. The Companies hereby agree to employ the
Executive, and the Executive hereby accepts employment with the Companies, upon
the terms set forth in this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (such
term, as it may be extended or terminated, constitutes the
"Employment Period"), unless sooner terminated in accordance with the provisions
of Section 4. The Employment Period shall be extended for successive terms of
one (1) year unless the Companies or the Executive terminate the Agreement by
written notice to the others within at least ninety (90) days prior to the
expiration of the initial or extended term as applicable, or unless sooner
terminated in accordance with the provisions of Section 4.
2. Position and Responsibilities. The Executive shall serve as the
Executive Vice President and Chief Financial Officer of AWI and AWHI. The
Executive shall be based in Westborough, Massachusetts, or at such location as
the Boards of Directors of the Companies (the "Boards") shall determine in their
discretion. The Executive shall be subject to the supervision of, and shall have
such authority as is delegated to him by, the Boards or such officer of the
Companies as may be designated by the Boards, and shall report to the Chief
Executive Officer.
The Executive agrees to undertake the duties, authority and
responsibilities as are normally associated with and appropriate for the
positions held, as well as such other duties and responsibilities as the Boards
or their designee shall reasonably assign from time to time (including the time,
manner, details and method of performing such duties and responsibilities).
The Executive agrees that, during the Employment Period, he will devote
his entire business time, attention, and energies to the diligent, faithful, and
competent discharge of such duties and responsibilities for the successful
operation of the Companies and their business interests; provided, however, the
Executive may actively participate in charitable activities, subject to approval
by the Boards, so long as they do not interfere or conflict with his duties and
responsibilities under this Agreement. The Executive agrees to abide by the
rules, regulations,
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instructions, personnel practices, and policies of the Companies and any
reasonable changes therein which may be adopted from time to time by the
Companies. The Executive acknowledges receipt of copies of all such rules and
policies committed to writing as of the date of this Agreement.
3. Compensation and Benefits.
3.1 Salary. In consideration of the services to be rendered by
the Executive, AWHI shall pay the Executive during the period of his employment
a base salary at the annualized rate of $305,000, payable in accordance with the
payroll practices generally adopted by AWHI. The Executive will also be eligible
to participate in AWHI's annual bonus program during the Employment Period. This
base salary may be reviewed and adjusted from time to time after 2002 by the
Board of Directors of AWHI (which, as so adjusted, shall be the "Base Salary").
3.2 Fringe Benefits. The Executive shall be entitled to
participate in all bonus, retention and benefit programs that AWI or AWHI
establishes and makes available generally to its executives or employees, if
any, on terms consistent with the Executive's position, tenure, salary, health
and other applicable qualifications. Such participation in bonus, retention and
benefit programs shall be subject to: (a) the terms of the applicable plan
documents; and (b) generally applicable AWI and AWHI policies. AWHI may alter,
modify, add to or delete its employee benefit plans at any time as the Board of
Directors of AWHI, in its sole judgment, determines to be appropriate.
Notwithstanding the foregoing, the Executive is a participant in the
Arch Wireless Holdings, Inc. Retention Plan which has been approved by the
United States Bankruptcy Court
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for the District of Massachusetts, Western Division ("Retention Plan") and is
entitled under the terms of the Retention Plan to certain cash payments
thereunder. The amount of such benefit and the manner of the payment shall be
governed exclusively by the terms of the Retention Plan.
(a) Vacation and Holidays. The Executive shall be entitled to
four (4) weeks paid vacation per year, to be taken at such times as may be
approved by the Companies or their Boards. The Executive shall also be entitled
to all paid holidays given by the Companies to their other executives.
(b) Reimbursement of Expenses. AWHI shall reimburse the
Executive for all reasonable business-related expenses incurred or paid by the
Executive in connection with, or related to, the performance of his duties under
this Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as AWHI may
reasonably request, provided, however, that the amount available for such
business-related expenses may be fixed in advance by the Boards.
(c) Stock Options and Stock Grants. Any stock options or
shares of restricted stock granted to the Executive by the Companies or
successors to the Companies ("Incentive Options" and "Incentive Stock") shall be
governed by the particular stock incentive plan or individual stock option
agreement or restricted stock agreement under which such Incentive Options or
Incentive Stock was granted. Notwithstanding the foregoing, if a Change in
Control Date occurs during the Employment Period but after the Effective Date,
then, effective upon the Change in Control Date, each outstanding Incentive
Option or each share of Incentive Stock held by the Executive shall become (to
the extent it is not already) immediately exercisable or vested in full. Solely
for purposes of this subsection 3.2(c) "Cause" shall mean
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willful engagement in illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Companies.
(d) Compensation following a Change in Control Date. If,
during the period following a Change in Control Date through December 31, 2003,
the Executive's Base Salary or any targeted bonus for the Executive under any
annual bonus arrangement (each a "Bonus Plan") for which he is eligible
("Targeted Bonus") is reduced or the basis on which such Targeted Bonus will be
paid is changed, the Companies will make the payments to the Executive described
in this paragraph. In the case of any reduction in Base Salary, the Executive
will be paid on each payroll date following such reduction though the payroll
date for the period ending December 31, 2003 (the "Guarantee Period") the
difference between (A) the amount, prior to any withholding, the Executive would
have received based on the Executive's Base Salary in effect prior to the Change
in Control Date and, (B) the amount, prior to any withholding, of the
Executive's Base Salary that is actually paid to the Executive on each such
payroll date. In the case of one or more reductions or changes in the Targeted
Bonus the Executive will be paid within 30 days after the bonus is paid, a lump
sum, in cash, equal to the difference between (A) the Targeted Bonus the
Executive would have received for the fiscal year in which the reduction or
change was made prior to any reduction or change, and (B) the amount he actually
receives under the Bonus Plan with respect to which the Targeted Bonus was
reduced or with respect to which the basis for determination of the bonus was
changed.
3.3 Definitions.
(a) "Change in Control" shall mean:
(1) With respect to AWI:
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(i) the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership of
any capital stock of AWI if, after such acquisition, such Person beneficially
owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50%
or more of either (A) the then-outstanding shares of common stock of AWI (the
"AWI Common Stock"), or (B) the combined voting power of the then-outstanding
securities of AWI entitled to vote generally in the election of directors ("AWI
Voting Securities"); provided, however, that for purposes of this subsection 3.3
(a)(1)(i), the following acquisitions shall not constitute a Change in Control:
(i) any acquisition of AWI Common Stock or AWI Voting Securities directly from
AWI (excluding an acquisition pursuant to the exercise, conversion or exchange
of any security exercisable for, convertible into or exchangeable for common
stock or voting securities of AWI, unless the Person exercising, converting or
exchanging such security acquired such security directly from AWI or an
underwriter or agent of AWI), (ii) any acquisition by AWI or any employee
benefit plan (or related trust) sponsored or maintained by AWI or any
corporation controlled by AWI, or (iii) any acquisition by any corporation
pursuant to an AWI Merger Combination (as defined in subsection 3.3(a)(1)(iii)
below) that meets the AWI Ownership Requirement (as defined in subsection
3.3(a)(1)(iii) below); or
(ii) individuals who, as of the date hereof, constitute the
members of the AWI Board of Directors (the " AWI Incumbent Directors") cease for
any reason to constitute at least a majority of the AWI Board of Directors (or,
if applicable, the Board of Directors of a successor corporation to AWI);
provided, however, that any individual becoming a
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director of AWI subsequent to the date hereof who was nominated or elected by at
least a majority of the AWI Incumbent Directors at the time of such nomination
or election or whose election to the AWI Board of Directors was recommended or
endorsed by at least a majority of the directors who were AWI Incumbent
Directors at the time of such nomination or election shall be deemed to be AWI
Incumbent Directors (except that this proviso shall not apply to any individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the AWI Board of Directors); or
(iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving AWI or a sale or
other disposition of all or substantially all of the assets of AWI (an " AWI
Merger Combination"), unless immediately following such AWI Merger Combination,
all or substantially all of the individuals and entities who were the beneficial
owners of the AWI Common Stock and AWI Voting Securities immediately prior to
such AWI Merger Combination beneficially own, directly or indirectly, more than
50% of the shares of common stock and the combined voting power of the
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such AWI Merger
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns AWI or substantially all of AWI's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such AWI Merger Combination
(the "AWI Ownership Requirement"), or
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(iv) approval by the stockholders of AWI of a complete
liquidation or dissolution of AWI; and
(2) With respect to AWHI:
(i) the acquisition by any Person of beneficial ownership of
any capital stock of AWHI if, after such acquisition, such Person beneficially
owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50%
or more of either (A) the then-outstanding shares of common stock of AWHI (the
"AWHI Common Stock"), or (B) the combined voting power of the then-outstanding
securities of AWI entitled to vote generally in the election of directors ("AWHI
Voting Securities"); provided, however, that for purposes of this subsection 3.3
(a)(2)(i), the following acquisitions shall not constitute a Change in Control:
(i) any acquisition of AWHI Common Stock or AWHI Voting Securities directly from
AWHI (excluding an acquisition pursuant to the exercise, conversion or exchange
of any security exercisable for, convertible into or exchangeable for common
stock or voting securities of AWHI, unless the Person exercising, converting or
exchanging such security acquired such security directly from AWHI or an
underwriter or agent of AWHI), (ii) any acquisition by AWI or AWHI or any
employee benefit plan (or related trust) sponsored or maintained by AWI or AWHI
or any corporation controlled by AWI or AWHI, (iii) any acquisition by any
corporation pursuant to an AWHI Merger Combination (as defined in subsection 3.3
(a)(2)(iii) below) that meets the AWHI Ownership Requirement (as defined in
subsection 3.3(a)(2)(iii) below), or (iv) any acquisition by any Subsidiary of
AWI (as defined in subsection 3.3(a)(4) below; or
(ii) individuals who, as of the date hereof, constitute the
members of the AWHI Board of Directors (the " AWHI Incumbent Directors") cease
for any
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reason to constitute at least a majority of the AWHI Board of Directors (or, if
applicable, the Board of Directors of a successor corporation to AWHI);
provided, however, that any individual becoming a director of AWHI subsequent to
the date hereof who was nominated or elected by at least a majority of the AWHI
Incumbent Directors at the time of such nomination or election or whose election
to the AWHI Board of Directors was recommended or endorsed by at least a
majority of the directors who were AWHI Incumbent Directors at the time of such
nomination or election shall be deemed to be AWHI Incumbent Directors (except
that this proviso shall not apply to any individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
AWHI Board of Directors); or
(iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving AWHI or a sale or
other disposition of all or substantially all of the assets of AWHI (an " AWHI
Merger Combination"), unless immediately following such AWI Merger Combination,
all or substantially all of the individuals and entities who were the beneficial
owners of the AWHI Common Stock and AWHI Voting Securities immediately prior to
such AWHI Merger Combination beneficially own, directly or indirectly, more than
50% of the shares of common stock and the combined voting power of the
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such AWHI Merger
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns AWHI or substantially all of AWHI's assets
either directly or through one or more subsidiaries) in substantially the same
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proportions as their ownership, immediately prior to such AWHI Merger
Combination (the "AWHI Ownership Requirement"); or
(iv) approval by the stockholders of AWHI of a complete
liquidation or dissolution of AWHI.
(3) Notwithstanding the foregoing, (i) no merger of AWHI into
AWI in which the separate existence of AWHI ceases and no issuance, conversion,
exchange or reclassification of AWI capital stock resulting in the increased
ownership of AWHI Common Stock or AWHI Voting Securities by any Person other
than AWI or any Subsidiary of AWI occurs as a result of or in connection with
such merger, and (ii) no merger of AWI into AWHI or liquidation of AWI in which
the separate existence of AWI ceases and the individuals and entities who were
the beneficial owners of the AWI Common Stock and AWI Voting Securities
outstanding immediately prior to such merger or consolidation beneficially own,
directly or indirectly, the shares of AWHI Common Stock and AWHI Voting
Securities, respectively, in substantially the same proportions as their
ownership of the AWI Common Stock and AWI Voting Securities, respectively,
immediately prior to such merger, shall be deemed a Change in Control hereunder.
(4) Subsidiary of AWI means any entity of which a majority of
the combined voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors are owned, directly or indirectly,
by AWI.
(b) Change in Control Date. Change in Control Date means, the
date, within the Employment Period, immediately prior to the earliest of the
following events: (i) a Change in Control, or (ii) the termination of the
Executive's employment by the Companies
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within 90 days prior to a Change in Control or the announcement of a Change in
Control, or (iii) the termination of the Executive's employment by the Companies
more than 90 days prior to a Change in Control or the announcement of a Change
in Control if the Executive reasonably demonstrates that such termination was in
connection with or in anticipation of a Change in Control, or (iv) the
employment of the Executive is terminated without Cause following the
announcement of a Change in Control.
(c) "Cause" as used in this agreement other than for purposes
of subsection 3.2(c) means the Executive's continued failure to substantially
perform his reasonable assigned duties in the capacity employed (other than as a
result of incapacity due to physical or mental condition) or the Executive's
willful engagement in illegal conduct or gross misconduct which is materially
and demonstrably injurious to the Companies, or conviction of a felony.
(d) "Termination Date" means the date on which the first event
constituting a termination of the Executive's employment occurs under the terms
of this Agreement.
(e) "Good Reason" means, except as otherwise provided herein:
(i) AWI (so long as it has corporate existence) or AWHI materially diminishes
the nature or status of the Executive's position or responsibilities, (ii) the
Executive fails to perform the duties under the Agreement as a result of his
Disability, or (iii) the Companies require the Executive to relocate more than
fifty (50) miles from his regular place of business.
(f) "Disability" means eligibility for long term disability
benefits under any program of disability benefits maintained by the Companies in
which the Executive participates.
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4. Termination Payments.
4.1 Benefits to Executive.
(a) Termination Without Cause Prior to a Change in Control
Date. If, prior to a Change in Control Date, the Executive's employment with the
Companies is terminated by the Companies other than for Cause, the Executive
shall be entitled to receive from AWHI: (i) a lump sum payment of Base Salary
for a period of twelve (12) months, plus continuation of Base Salary for up to
an additional nine (9) months subject to mitigation as described in subsection
4.2; (ii) a lump sum equal in value to a fraction of his Targeted Bonus for the
fiscal year in which the Participant is terminated determined by multiplying his
Targeted Bonus under any Company bonus plan in which Executive participates, by
a fraction, the numerator of which is the total number of weeks in the fiscal
year in which the Executive is terminated prior to the Termination Date, and the
denominator of which is 52 (the "Prorated Bonus"); (iii) continuation of
Executive's participation in the medical, dental and vision care plans or
programs sponsored by the Companies (the "Medical Plans") for the period with
respect to which the benefits in subsection 4.1(a) are paid, with the Executive
continuing to make the same contribution, as a percentage of the cost of
providing such benefits as contributed prior to the Executive's termination of
employment or as it is adjusted for Executives actively employed; and (iv) a
lump sum, in cash, paid within 30 days of the Termination Date, equal to the sum
of the Executive's Accrued Obligations and Other Benefits (as both are defined
in subsection 4.1(c)). The benefits under this subsection 4.1(a) shall be
provided in lieu of and not in addition to those benefits that would otherwise
be provided for the Executive under the Arch Severance
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Benefits Plan, which has been approved by the United States Bankruptcy Court for
the District of Massachusetts Western Division (the "Arch Severance Benefits
Plan").
If the Executive begins new employment while the continuation payments
are being made under subsection 4.1(a), the Executive must promptly notify the
AWHI Vice President of Human Resources in writing of benefits being received in
connection with such employment and said Vice President of Human Resources shall
terminate the Executive's participation in all Medical Plans with respect to any
benefits being received in connection with the new employment which are
comparable to any of the Medical Plans. The period during which the Executive's
participation in Medical Plans is continued under this subsection 4.1(a) shall
be concurrent with his continuation coverage under Section 4980B of the Code and
related sections of the law ("COBRA"). Whenever such participation terminates
under this subsection 4.1(a), any continuing coverage under COBRA shall be
governed solely by COBRA and no further contributions to the cost of such
continuation will be made by the Companies.
(b) Termination for Good Reason prior to a Change in Control
Date. If the Executive terminates his employment with the Companies for Good
Reason prior to a Change in Control Date, the Executive shall be entitled to
receive from AWHI the benefits described in Section 4.1(a).
(c) Resignation Without Good Reason, Termination for Cause or
by Death. If the Executive voluntarily terminates his employment with the
Companies without Good Reason, or if the Executive's employment is terminated by
the Companies for Cause, or the Executive dies, whether before or after a Change
in Control Date, AWHI shall pay or provide to the Executive or his estate, in a
lump sum in cash within 30 days after the Termination Date, the
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sum of his Accrued Obligations and Other Benefits. Accrued Obligations shall
mean the sum of: (i) the Executive's Base Salary through the Termination Date
(to the extent not previously paid), (ii) the amount of any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the extent not
previously paid. Other Benefits means that to the extent not previously paid or
provided any other amounts or benefits required to be paid or provided or which
the Executive or his estate is eligible to receive following the Executive's
termination of employment or death, as applicable, under any plan, program,
policy, practice, contract or agreement of the Companies and their affiliated
companies.
(d) Termination On or Following a Change in Control Date. If
on or following any Change in Control Date but prior to January 1, 2004, the
Executive's employment is terminated by the Companies without Cause, or by the
Executive for Good Reason, the Executive shall be entitled to the following
benefits:
(i) AWHI shall pay to the Executive in a lump sum in cash,
within 30 days after the Termination Date, the aggregate of the following
amounts: (A) the Accrued Obligations, (B) the Other Benefits, and (C) a cash
payment equal to (i) twenty-one months of the Executive's monthly Base Salary at
the highest monthly rate paid during the Employment Period, and (ii) the
Prorated Bonus; and
(ii) for 21 months after the Termination Date, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Companies shall continue to provide employee welfare
benefits to the Executive and the Executive's family at least equal to those
which would have been provided to them if the
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Executive's employment had not been terminated, in accordance with the
applicable employee welfare benefit plans (as defined in the Employee Retirement
Income Security Act of 1974, as amended) maintained by the Companies in effect
on the Termination Date or, if more favorable to the Executive and his family,
in effect generally at any time thereafter with respect to other peer executives
of AWI and AWHI and their affiliated companies; provided, however, that neither
AWI nor AWHI shall be obligated to continue any such employee welfare benefits
which cannot be continued for terminated employees of the Companies; and
provided, further, however, that if the Executive becomes reemployed with
another employer and is eligible to receive substantially equivalent benefits
under another employer-provided plan, on terms at least as favorable to the
Executive and his family, then the Companies shall no longer be required to
provide the benefits described in this clause (ii).
4.2 Mitigation. With respect to the nine (9) months of
continuation payments described in subsection 4.1(a), such payments shall
commence on the twelve (12) month anniversary of the Executive's Termination
Date. During each such month following such anniversary, the Executive shall
receive the amount by which the Executive's Base Salary immediately prior to his
Termination Date exceeds the Executive's new salary or other cash compensation
which is a substitute for salary (which does not include incentive payments or
payments which are compensation for lost benefits or relocation costs) which is
accrued for such month (the "New Salary"); provided that such payments shall
terminate whenever during such period the Executive's New Salary equals nine (9)
months of Base Salary. The Executive shall not be required to mitigate the
amount of any payment or benefits provided for in this Section 4 by seeking
other employment or otherwise and except as provided in the previous sentence of
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this subsection 4.2, and in subsections 4.1(a) and 4.1(d)(ii), the amount of any
benefits provided for in Section 4.1 shall not be reduced as a result of
benefits received by the Executive as a result of employment by another
employer. No retirement benefits or amount claimed to be owed by the Executive
to AWI or AWHI shall be offset against the amount due under this Section 4.
4.3 Release. AWI and AWHI shall not be obligated under Section
4 of this Agreement, until and unless the Executive shall execute a severance
agreement and release reasonably satisfactory to the Executive and the
Companies.
4.4 Return of Company Property Upon Termination. The Executive
shall deliver to the Companies or their designees at the termination of his
employment all of the Companies' property and equipment in his possession and
control, including, without limitation: computers, cellular phones, automobiles
and other property of the Companies provided to the Executive for his use during
his employment. In addition, the Executive shall return to the Companies all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, other documents, and all copies thereof, including
those developed in whole or in part by the Executive, that are in the
Executive's possession, custody, or control. The Executive further agrees to
cancel all accounts, if any, in the name of the Companies including, without
limitation, all credit cards, telephone charge cards, cellular phone and pager
accounts and computer accounts.
4.5 Joint and Several Liability. AWI and AWHI shall be jointly
and severally liable for all payments whether as compensation or otherwise, and
provision of all benefits due under this Agreement.
4.6 Survival. The provisions of Sections 5, 6 and 7 of this
Agreement shall
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survive the expiration or termination of the Employment Period and the term of
this Agreement, as provided herein, to give full effect to such provisions.
4.7 Maximization.
(a) Notwithstanding any other provision of this Agreement,
except as set forth in Section 4.7(b), in the event that AWI or AWHI undergoes a
"Change in Ownership or Control" (as defined below), AWI or AWHI shall not be
obligated to provide to the Executive a portion of any "Contingent Compensation
Payments" (as defined below) that the Executive would otherwise be entitled to
receive to the extent necessary to eliminate any "excess parachute payments" (as
defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended
(the "Code")) for the Executive. For purposes of this Section 4.7, the
Contingent Compensation Payments so eliminated shall be referred to as the
"Eliminated Payments" and the aggregate amount (determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any successor
provision) of the Contingent Compensation Payments so eliminated shall be
referred to as the "Eliminated Amount."
(b) Notwithstanding the provisions of Section 4.7(a), no such
reduction in Contingent Compensation Payments shall be made if (i) the
Eliminated Amount (computed without regard to this sentence) exceeds (ii) 100%
of the amount of any additional taxes that would be incurred or borne by the
Executive if the Eliminated Payments (determined without regard to this
sentence) were paid to him (including, state and federal income taxes on the
Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable
with respect to all of the Contingent Compensation Payments in excess of the
Executive's "base amount" (as defined in Section 280G(b)(3) of the Code), and
any employment taxes). The
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override of such reduction in Contingent Compensation Payments pursuant to this
Section 4.7(b) shall be referred to as a "Section 4.7(b) Override." For purpose
of this paragraph, if any taxes would be attributable to the receipt of any
Eliminated Payment, the amount of such taxes shall be computed assuming the
application of the maximum tax rates provided by law.
(c) For purposes of this Section 4.7 the following terms shall
have the following respective meanings:
(i) "Change in Ownership or Control" shall mean a change in
the ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of AWI or AWHI determined in accordance with
Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean any payment
(or benefit) in the nature of compensation that is made or made available (under
this Agreement or otherwise) to a "disqualified individual" (as defined in
Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of AWI
or AWHI.
(d) Any payments or other benefits otherwise due to the
Executive following a Change in Ownership or Control that could reasonably be
characterized (as determined by the Company) as Contingent Compensation Payments
(the "Potential Payments") shall not be made until the dates provided for in
this Section 4.7(d). Within 30 days after each date on which the Executive first
becomes entitled to receive (whether or not then due) a Contingent Compensation
Payment relating to such Change in Ownership or Control, AWI or AWHI shall
determine and notify the Executive (with reasonable detail regarding the basis
for its determinations) (i) which Potential Payments constitute Contingent
Compensation Payments, (ii)
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the Eliminated Amount and (iii) whether the Section 4.7(b) Override is
applicable. Within 30 days after delivery of such notice to the Executive, the
Executive shall deliver a response to the sender (the "Executive Response")
stating either (A) that he agrees with the determination pursuant to the
preceding sentence, in which case he shall indicate, if applicable, which
Contingent Compensation Payments, or portions thereof (the aggregate amount of
which, determined in accordance with Proposed Treasury Regulation Section
1.280G-1, Q/A-30 or any successor provision, shall be equal to the Eliminated
Amount), shall be treated as Eliminated Payments or (B) that he disagrees with
such determination, in which case he shall set forth (i) which Potential
Payments should be characterized as Contingent Compensation Payments, (ii) the
Eliminated Amount, (iii) whether the Section 4.7(b) Override is applicable, and
(iv) which (if any) Contingent Compensation Payments, or portions thereof (the
aggregate amount of which, determined in accordance with Proposed Treasury
Regulation Section 1.280G-1, Q/A-30 or any successor provision, shall be equal
to the Eliminated Amount, if any), shall be treated as Eliminated Payments. In
the event that the Executive fails to deliver an Executive Response on or before
the required date, the initial determination shall be final and the Contingent
Compensation Payments that shall be treated as Eliminated Payments shall be
determined by AWI or AWHI in its absolute discretion. If the Executive states in
the Executive Response that he agrees with the determination, AWI or AWHI shall
make the Potential Payments to the Executive within three business days
following delivery of the Executive Response (except for any Potential Payments
which are not due to be made until after such date, which Potential Payments
shall be made on the date on which they are due). If the Executive states in the
Executive Response that he disagrees with the determination, then, for a period
of 60 days
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following delivery of the Executive Response, the Executive and AWI or AWHI
shall use good faith efforts to resolve such dispute. If such dispute is not
resolved within such 60-day period, such dispute shall be settled exclusively by
arbitration in Boston, Massachusetts, in accordance with the rules of the
JAMS/Endispute then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. AWI or AWHI shall, within three business days
following delivery of the Executive Response, make to the Executive those
Potential Payments as to which there is no dispute with the Executive regarding
whether they should be made (except for any such Potential Payments which are
not due to be made until after such date, which Potential Payments shall be made
on the date on which they are due). The balance of the Potential Payments shall
be made within three business days following the resolution of such dispute.
Subject to the limitations contained in Sections 4.7(a) and (b) hereof, the
amount of any payments to be made to the Executive following the resolution of
such dispute shall be increased by amount of the accrued interest thereon
computed at the prime rate announced from time to time by Fleet Bank or any
successor, compounded monthly from the date that such payments originally were
due.
(e) Upon the written request of the Executive (which request
must specify the Executive's actual tax circumstances) delivered to AWI or AWHI
within 90 days following the timely filing of all relevant tax returns for the
Executive for the year or other taxable period in which the Eliminated Payments
would have been made, the Eliminated Payments shall be recomputed based upon the
Executive's actual tax circumstances. If, as a result of such recomputation,
there are no Eliminated Payments, the Executive shall become entitled to receive
Contingent Compensation Payments previously treated as Eliminated
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Payments within 10 days of the delivery of the aforementioned request together
with interest thereon computed at the prime rate announced from time to time by
Fleet Bank or any successor, compounded monthly from the date that such payments
originally were due.
(f) The provisions of this Section 4.7 are intended to apply
to any and all payments or benefits available to the Executive under this
Agreement or any other agreement or plan of the Company under which the
Executive receives Contingent Compensation Payments.
5. Non-Compete. During the Executive's employment and for a period of
one (1) year after the termination or expiration of the Employment Period (the
"Non-Competition Period"), the Executive will not, directly or indirectly:
(a) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one percent (1%)
of the total outstanding stock of a publicly held company), engage in the
business of marketing or selling paging/messaging products of the kind or type
being marketed or sold by AWI or AWHI while the Executive was employed by AWI or
AWHI; or
(b) recruit, solicit or induce, or attempt to induce, any
employee or employees of AWI or AWHI to terminate their employment with, or
otherwise cease their relationship with, AWI or AWHI; or
(c) solicit, divert, with the intention to take away, or
attempt to divert with the intention to take away, the business or patronage of
any of the clients, customers or
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accounts, or prospective clients, customers or accounts, of AWI or AWHI which
were contacted, solicited or served by the Executive while employed by AWI or
AWHI.
The geographic scope of this Section 5 shall extend to any area AWI or
AWHI has done business, is doing business or has taken substantial steps to do
business. If any restriction set forth in this Section 5 is found by any court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time, or over too great a range of activities, or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be legally
enforceable.
The restrictions contained in this Section 5 are necessary for the
protection of the business and goodwill of the Companies and are considered by
the Executive to be reasonable for such purpose. The Executive agrees that any
breach of this Section 5 will cause the Companies substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Companies shall have the right to seek
specific performance and injunctive relief.
This Section 5 shall not be enforceable if the Executive terminates his
employment for Good Reason or if the Executive is terminated without Cause as
such terms are defined in this Agreement regardless of whether benefits are paid
under this Agreement or under the Arch Severance Benefits Plan.
6. Proprietary Information and Developments.
6.1 Proprietary Information.
(a) The Executive agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Companies' business
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or financial affairs (collectively, "Proprietary Information") is and shall be
the exclusive property of the Companies. By way of illustration, but not
limitation, Proprietary Information may include inventions, products, processes,
methods, techniques, formulas, compositions, compounds, projects, developments,
plans, research data, clinical data, financial data, personnel data, computer
programs, and customer and supplier lists.
The Executive will not disclose any Proprietary Information to others
outside the Companies or use the same for any unauthorized purposes without
written approval by an officer of one of the Companies, either during or after
his employment, unless and until such Proprietary Information has become public
knowledge without fault by the Executive. Except as may be required or
appropriate in connection with him carrying out his duties under this Agreement,
the Executive shall not, without the prior written consent of the Companies or
as may otherwise be required by law or any legal process, or as is necessary in
connection with any adversarial proceeding against the Companies (in which case
the Executive shall cooperate with the Companies in obtaining a protective order
at the Companies' expense against disclosure by a court of competent
jurisdiction), communicate, to anyone other than the Companies and those
designated by the Companies or on behalf of the Companies in the furtherance of
its business or to perform his duties hereunder, any trade secrets, confidential
information, knowledge or data relating to the Companies and their businesses
and investments, obtained by the Executive during the Executive's employment by
the Companies that is not generally available public knowledge (other than by
acts by the Executive in violation of this Agreement).
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, or other written, photographic, or
other tangible material
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containing Proprietary Information, whether created by the Executive or others,
which shall come into his custody or possession, shall be and are the exclusive
property of the Companies to be used by the Executive only in the performance of
his duties for the Companies.
(c) The Executive agrees that his obligation not to disclose
or use information, know-how and records of the types set forth in paragraphs
(a) and (b) above, also extends to such types of information, know-how, records
and tangible property of customers of the Companies or suppliers to the
Companies or other third parties who may have disclosed or entrusted the same to
the Companies or to the Executive in the course of the Companies' business.
6.2 Developments.
(a) The Executive will make full and prompt disclosure to the
Companies of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not, which are created,
made, conceived or reduced to practice by the Executive or under his direction
or jointly with others during his employment by the Companies, whether or not
during normal working hours or on the premises of the Companies (all of which
are collectively referred to in this Agreement as "Developments").
(b) The Executive agrees to assign and does hereby assign to
the Companies (or any person or entity designated by the Companies) all his
right, title and interest in and to all Developments and all related patents,
patent applications, copyrights and copyright applications developed during his
employment with the Companies. However, this subsection 6.2(b) shall not apply
to Developments which do not relate to the present or planned business or
research and development of the Companies and which are made and conceived by
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the Executive not during normal working hours, not on the Companies' premises
and not using the Companies' tools, devices, equipment or Proprietary
Information.
(c) The Executive agrees to cooperate fully with the
Companies, both during and after his employment with the Companies, with respect
to the procurement, maintenance and enforcement of copyrights and patents (both
in the United States and foreign countries) relating to Developments. Executive
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Companies may deem necessary
or desirable in order to protect its rights and interests in any Development.
6.3 Other Agreements. The Executive hereby represents that,
except as he has disclosed in writing to the Companies prior to the execution of
this Agreement, he is not bound by the terms of any agreement with any previous
employer or other party to refrain from using or disclosing any trade secret or
confidential or proprietary information in the course of his employment with the
Companies, or to refrain from competing, directly or indirectly, with the
business of such previous employer or any other party. The Executive further
represents that his performance of all the terms of this Agreement and as an
employee of the Companies does not and will not breach any agreement to keep in
confidence proprietary information, knowledge or data acquired by him in
confidence or in trust prior to his employment with the Companies.
7. Litigation Cooperation. The Executive agrees to continue to serve
the Companies as a litigation consultant, in connection therewith, to cooperate
with the Companies in: (i) the defense or prosecution of any claims or actions
which already have been brought or which may be brought in the future against or
on behalf of the Companies and (ii) responding to,
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cooperating with, or contesting any governmental audit, inspection, inquiry,
proceeding or investigation, which relate to events or occurrences that
transpired during his employment with the Companies.
The Executive's full cooperation in connection with such claims or
actions shall include, without implication of limitation: promptly notifying the
Companies in writing of any subpoena, interview, investigation, request for
information, or other contact concerning events or occurrences that transpired
during his employment with the Companies; being available to meet with counsel
for the Companies to prepare for discovery or trial; to testify truthfully as a
witness when reasonably requested and at reasonable times designated by the
Companies; and to meet with counsel or other delegated representatives of the
Companies; to prepare responses to and to cooperate with the Companies'
processing of governmental audits, inspections, inquiries, proceedings or
investigations.
The Companies agree to reimburse the Executive for any reasonable
out-of-pocket expenses, including reasonable attorneys' fees, that he incurs in
connection with such cooperation, subject to reasonable documentation. The
Companies will exercise their rights under this Section 7 so as not to interfere
unreasonably with the Executive's personal schedule or ability to engage in
gainful employment.
In furtherance of the Executive's obligations under this Agreement, he
agrees that he shall not disclose, provide or reveal, directly or indirectly,
any information concerning the Companies, including without implication of
limitation, its operations, plans, strategies or administration, to any other
person or entity unless compelled to do so (a) pursuant to a valid subpoena or
(b) as otherwise required by law; but in either case only after providing the
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Companies with prior written notice and opportunity to contest such subpoena or
other requirement. Written notice shall be provided to the AWHI Chairman of the
Compensation Committee, if any, or if none, to the Secretary of the Companies,
as soon as practicable, but in no event less than five (5) business days before
any such disclosure is compelled.
8. Arbitration. All claims by the Executive arising under or in
connection with the terms and provisions of this Agreement shall be settled
exclusively by arbitration in Boston, Massachusetts, in accordance with the
rules of JAMS/Endispute. The arbitrator's determination shall be final and
binding upon all parties and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction over such claims. The arbitrator
shall have no authority to add to, subtract from or modify in any way the terms
or provisions of this Agreement. The Executive shall be entitled to payment by
the Companies of his attorneys' fees and costs.
Nothing in this section prevents the Companies from proceeding in a
court of competent jurisdiction in accordance with the provisions of Sections 5
and 6 of this Agreement.
9. Miscellaneous.
9.1 Continued Employment. For purposes of this Agreement, the
Executive's employment with the Companies shall not be deemed to have terminated
solely as a result of the Executive failing to be employed by AWI or AWHI so
long as Executive continues to be employed by the ultimate parent entity of the
organization that is the successor to the Companies in the position and with the
responsibilities and compensation set forth in Section 2 hereof. However,
notwithstanding the foregoing, if either AWI or AWHI or the successor to either
of them terminates the Executive's employment without Cause or takes action
which would entitle
- 27 -
the Executive to terminate for Good Reason under the terms of this Agreement,
the Executive may elect to receive either the benefits provided for on such
termination under this Agreement or ongoing compensation under this Agreement
with respect to his remaining employment relationship, but not both.
9.2 Tax Withholding. Any payments provided for under this
Agreement shall be paid net of any tax withholding required under federal, state
or local law.
9.3 Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon: personal
delivery; deposit in the United States Post Office, by registered or certified
mail, return receipt requested and postage prepaid; or prepaid via a reputable
nationwide overnight courier service. Notices, demands and all other
communications provided for in this Agreement shall, in each case, be addressed
to AWI and AWHI at 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, XX, 00000,
Attention: Chairman of the Compensation Committee, if any, and if none, to the
Secretary of the Companies, and with a copy to the General Counsel, and to the
Executive at 000 Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 (or to such other address as
any party may have furnished to the others in writing, except that notices of
change of address shall be effective only upon receipt).
9.4 Entire Agreement. This Agreement sets forth the entire
agreement of the parties with respect to the Companies' employment of the
Executive, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party regarding such
subject matter including, without limitation, the Executive Retention Agreement
by and between the Companies and the Executive, most recently amended and
restated, in an instrument dated
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November 1, 2000, except for the terms of the Retention Plan described in
Section 3.2 and the Arch Severance Benefits Plan, described in Section 4.1(a).
9.5 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions, or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so
modified.
9.6 Amendment. This Agreement may be amended or modified only
by a written instrument executed by AWI, AWHI and the Executive.
9.7 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts without giving effect to any choice or conflict of
law provision or rule (whether of the Commonwealth of Massachusetts or any other
jurisdiction) that would cause the application of laws of any jurisdictions
other than those of the Commonwealth of Massachusetts. The Executive hereby
irrevocably submits to the jurisdiction of the Commonwealth of Massachusetts in
any action or proceeding to enforce the provisions of this Agreement, and waives
the defense of inconvenient forum to the maintenance of any such action or
proceedings.
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9.8 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns. The Companies shall each require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Companies to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Companies would be required to perform it if no such succession
had taken place. Without limiting the foregoing, in accordance with the Plan the
Executive will cease to be employed by AWHI and will immediately thereafter
become employed by MobileMedia Communications, Inc. ("MMCI") which may
subsequently transfer the Executive's employment to Mobile Communications
Corporation of America ("MCCA"). At the time of such transfer of the Executive's
employment this Agreement will be assumed by MMCI and, if the Executive's
employment is subsequently transferred to MCCA then this Agreement will then be
assumed by MCCA. For purposes of this Agreement, such transfer alone will not be
deemed a termination of Executive's employment and following any such transfer
and assumption all references to AWHI in this Agreement will be deemed to be
references to MMCI or MCCA and all responsibilities of AWHI under this agreement
shall become responsibilities of MMCI or MCCA during the period Executive is
employed by each of MMCI or MCCA. MMCI and MCCA are parties to this Agreement in
order to evidence without any further action their assumption of such
responsibilities in connection with such transfer.
The obligations of the Executive under this Agreement are personal and
shall not be assigned or transferred by him, other than his right to payments or
benefits, which may be transferred only by will or the laws of descent and
distribution. Upon the Executive's death, all
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rights of the Executive shall inure to the benefit of and be enforceable by the
Executive's beneficiary or beneficiaries or his estate. If the Executive should
die following the Termination Date while amounts would still be payable to him
had he continued to live, all such amounts, unless otherwise provided, shall be
paid to his beneficiary or beneficiaries or his estate in accordance with the
terms of this Agreement.
9.9 No Waiver. No delay or omission by the Companies in
exercising any right under this Agreement shall operate as a waiver of that or
any other right. A waiver or consent given by the Companies on any one occasion
shall be effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
9.10 Counterparts; Facsimile Signature. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
9.11 Pronouns. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
9.12 Headings. The section headings contained in this
Agreement are used for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.13 Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
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9.14 Acknowledgment. The Executive states and represents that
he has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Executive further states and represents that he
has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of its terms and conditions, and signs his name of
his own free act.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
ARCH WIRELESS, INC.
By: /s/ C. XXXXXX XXXXX, XX.
----------------------------------------
C. Xxxxxx Xxxxx, Xx.
Chairman and Chief Executive Officer
ARCH WIRELESS HOLDINGS, INC.
By: /s/ C. XXXXXX XXXXX, XX.
----------------------------------------
C. Xxxxxx Xxxxx, Xx.
Chairman and Chief Executive Officer
MOBILEMEDIA COMMUNICATIONS, INC.
By: /s/ C. XXXXXX XXXXX, XX.
----------------------------------------
C. Xxxxxx Xxxxx, Xx.
Chairman and Chief Executive Officer
MOBILE COMMUNICATIONS CORPORATION OF AMERICA
By: /s/ C. XXXXXX XXXXX, XX.
----------------------------------------
C. Xxxxxx Xxxxx, Xx.
Chairman and Chief Executive Officer
EXECUTIVE
/s/ XXXXXXXX XXX XXXXXX
--------------------------------------------
Xxxxxxxx Xxx Xxxxxx
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