EXHIBIT 10-3
SALARY CONTINUATION AND DEFERRED COMPENSATION AGREEMENT
AGREEMENT made by and between ACC CORP., 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 and XXXXXXX X. AAB, residing at 00 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX
00000 ("Employee").
R E C I T A L S:
WHEREAS, Employee has served as the Chairman and Chief Executive Officer
of ACC Corp. (the "Company") for more than twelve years; and
WHEREAS, Employee is stepping down as ACC Corp.'s Chief Executive
Officer, but plans to remain as its Chairman of the Board and as an employee of
the Company, with the concurrence of the Company's Board of Directors; and
WHEREAS, in view of the valuable contributions that the Employee has made
and will continue to make to the business of the Company, ACC Corp. desires,
through this Agreement, to provide both some recognition to the Employee for
his many years of tireless leadership and service in his role as the Company's
Chief Executive Officer and as an incentive to the Employee to continue to
labor diligently on its behalf in his continuing role as a Company employee and
its Chairman of the Board;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
in this Agreement:
(a) "ACQUIRING ENTITY" shall mean any entity, whether a corporation,
partnership, joint venture, etc., that, as a result of a Change In Control,
either directly or indirectly has effective control over the business plans,
direction and operations of ACC Corp. This term shall also include any
subsidiaries or related entities over which the Acquiring Entity has control.
(b) "CHANGE IN CONTROL" shall mean a change in control of ACC Corp. 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 Securities Exchange Act of
1934 as in effect on the date of this Agreement or, if in the future Item 6(e)
is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 which serve similar
purposes; provided that, without limitation, a Change In Control shall be
deemed to have occurred if and when: (x) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than
the Employee, is or becomes a beneficial owner, directly or indirectly, of
securities of ACC Corp. representing a majority of the combined voting power of
ACC Corp.'s then outstanding securities (excluding, however, the transfer of
any shares beneficially owned by the Employee); or (y) individuals who were
members of the Board of Directors of ACC Corp. immediately prior to a meeting
of the shareholders of ACC Corp. involving a contest for the election of
Directors shall not constitute a majority of the Board of Directors following
such election.
(c) "COMPANY" shall mean ACC Corp. and/or any of its subsidiaries
and/or affiliates as the same may exist from time to time anywhere in the
world, regardless of the laws under which incorporated.
(d) "DISABILITY" shall mean the Employee's total inability, due to a
mental or physical illness, incapacity or injury, to render his services to the
Company for any period of 60 consecutive days or if the Employee shall be
deemed "totally disabled" or the equivalent thereof within the meaning of any
long-term disability insurance policy provided by the Company and covering the
Employee.
(e) "EVENT OF TERMINATION" shall mean the termination of the Employee's
employment and his status as the Chairman of the Board of ACC Corp. for
whatever reason, except if due to a Termination For Cause, including but not
limited to his termination without cause, his termination as the result of a
Change in Control, or his voluntarily termination of employment, such that the
Employee is no longer employed by the Company nor serving as the Chairman of
the Board of ACC Corp.
This definition shall also include a termination of Employee's employment
that occurs if, as a condition precedent to, as a result of, or within one year
following, a Change In Control of ACC Corp.: (i) the Employee's employment
with the Company is terminated for cause or without cause by the Company or the
Acquiring Entity; or (ii) the Employee resigns his employment with the Company
or with the Acquiring Entity upon the occurrence of either of the following
events:
(1) A reduction in Employee's total compensation as the same
existed immediately prior to the Change In Control; or
(2) Employee is no longer serving as the Chairman of the ACC
Corp. Board of Directors.
(f) "TERMINATION FOR CAUSE" shall mean that the Company, in its sole
discretion, terminates the Employee's employment for any of the following
reasons: Employee fails to perform his assigned duties as an officer and/or
employee of the Company in a satisfactory manner due to dishonesty, fraud,
gross neglect, or use of alcohol or drugs; or any breach of Paragraphs 5 or 6
of this Agreement. Employee shall not be deemed to be in breach of this
Agreement nor to have been Terminated For Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of a three-fourths majority of the entire Board of Directors
at a Board meeting duly called and held for that purpose (after reasonable
notice to Employee and an opportunity for Employee, together with his counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board, Employee was guilty of conduct set forth in this paragraph 1(f) and
specifying the particulars thereof in reasonable detail.
2. BASE SALARY AND BENEFITS.Upon the execution of this Agreement, for
so long as he serves as the Chairman of the Board of ACC Corp., the Employee
will be entitled to receive the following compensation and benefits:
(a) A base salary of $200,000 per year;
(b) A bonus payable annually in addition to the Employee's base salary,
the amount of which shall be determined by the Company's Board of Directors, on
the recommendation of its Executive Compensation Committee, based upon the
Company's Annual Incentive Plan; and
(c) The following benefits:
(i) Six weeks of paid vacation per year, or such greater period
as may be approved from time to time by the Executive Compensation
Committee of the Board of Directors;
(ii) paid holidays as customarily provided to the Company's other
employees;
(iii) coverage in accordance with their terms of any pension or
profit-sharing plans now existing or hereafter established by the
Company;
(iv) life insurance coverage in such amounts and on such terms as
is currently provided;
(v) reimbursement of miscellaneous medical, legal, and financial
planning expenses, up to $12,000 per year;
(vi) payment of Employee's business, professional and club dues
and initiation fees as reasonably requested by Employee, specifically
including membership dues and expenses related to membership at both the
Genesee Valley Club and Locust Hill Country Club; and
(vii) other fringe benefits as are made available from time to time
by the Company to its executive employees.
3. TERMINATION OF EMPLOYMENT FOR CAUSE. In the event that the
Employee's employment is Terminated For Cause, he shall not be entitled to
receive any payments hereunder. Under these circumstances, the Employee shall
only be entitled to receive his accrued but unpaid salary and any other
nonforfeitable payments or benefits accrued as of the effective date of such
Event of Termination.
4. SALARY CONTINUATION PAYMENTS UPON AN EVENT OF TERMINATION. Upon
the occurrence of an Event of Termination, Employee shall be entitled to
receive a payment of $1,000,000 within a three-year period beginning on the
date of such termination; PROVIDED, however, that the Employee shall at all
times hereunder remain in compliance with Paragraphs 5 and 6 hereof. This
amount shall be paid in three equal annual installments, with the first such
payment being made within five business days following the date of such Event
of Termination, and the second and third such payments being made on the first
and second anniversary dates of such Event of Termination; provided, however,
that the unpaid balance of such payments shall be accelerated and paid in full
within 30 days following a Change In Control of the Company before all such
payments have been made. In addition, for a period of ten years following the
date of such termination, the Employee's right to indemnification and
advancement of expenses as currently provided for in Article V of the Company's
Bylaws shall not be amended, modified or changed in any respect whatsoever, and
any directors' and officers' liability policy then in effect under which the
Employee is an insured shall be maintained; PROVIDED, however, that the
Employee shall at all times hereunder remain in compliance with Paragraphs 5
and 6 hereof.
5. COVENANT NOT TO COMPETE. As a condition to receiving the payments
provided for under this Agreement, the Employee must abide by the terms of his
Non-Competition Agreement with the Company, dated of even date herewith.
6. TRADE SECRETS; NON-DISPARAGEMENT. (a)Except as may be required by
his employment with the Company, the Employee will not ever, whether while an
Employee or at any time after he is no longer an Employee, at any time or in
any manner, directly or indirectly, divulge, disclose or communicate to any
person, firm, corporation, organization or entity any information concerning
matters affecting or relating to the services, marketing, contractual
relationships, long range plans, products, processes, formulas, inventions,
discoveries, devices or other business of the Company or of its customers. The
Employee will likewise hold inviolate and keep secret all knowledge or
information acquired by him concerning the names of the Company's customers,
their addresses, the prices the Company obtains or has obtained from them for
its goods or services, all knowledge or information acquired by him concerning
the products, formulas, processes, methods of manufacture and distribution and
all other trade secrets of such customers. In addition, the Employee shall
make no disclosure, directly or indirectly, of any financial information,
contractual relationships, policies, past or contemplated future actions or
policies of the Company, personnel matters, marketing or sales data, technical
data or specifications and written or oral communications of any sort of the
Company or any of its customers which have not previously been disclosed to the
general public with the Company's consent or without first obtaining the
consent of the Company for such disclosure. Upon the occurrence of any Event
of Termination or in the event of his Termination For Cause, the Employee or
his representatives shall immediately deliver to the Company all notes,
notebooks, letters, papers, drawings, memos, communications, blueprints or
other writings or data relating to the business of the Company or its
customers. However, nothing contained in this Agreement or in a certain Non-
Competition Agreement between the Employee and the Company of even date
herewith shall prohibit Employee from participating, alone or as an employee,
independent contractor, partner, officer, director, creditor, or substantial
(I.E. greater than 5%) owner (by reason of stock ownership or otherwise) in any
entity whose business is the design, development and/or market distribution of
computer systems software and/or applications software useful to any industry,
including the telecommunications industry, and such conduct shall not be deemed
to involve any trade secrets of the Company.
(b) Additionally, the Employee shall not in any way publicly disparage
the Company at any time or he shall not be entitled to receive payment of any
further amounts otherwise payable hereunder. Likewise, neither the Company nor
any Acquiring Entity shall in any way publicly disparage the Employee at any
time. (For purposes of this Agreement, however, the commencement of any legal
proceedings involving matters such as the Employee's performance, conduct,
etc., shall not constitute "disparagement.")
7. INJUNCTIVE RELIEF. Because the Employee currently possesses and
shall acquire by reason of his continued employment and association with the
Company an extensive knowledge of the Company's trade secrets, customers,
procedures, and other confidential information, the parties hereto recognize
that in the event of a breach or threat of breach by the Employee of the terms
and provisions contained in Paragraphs 5 or 6 hereof, compensation alone to the
Company would not be a adequate remedy for a breach of those terms and
provisions. Therefore, it is agreed that in the event of a breach or threat of
a breach of the provisions of Paragraphs 5 or 6 by the Employee, the Company
shall be entitled to an immediate injunction from any court of competent
jurisdiction restraining the Employee from committing or continuing to commit a
breach of such provisions without the showing or proving of actual damages.
8. SPECIAL PROVISIONS IN EVENT OF DISABILITY OR DEATH.
(a) If while employed by the Company the Employee becomes Disabled as
defined in this Agreement, then the Company agrees that it will not, except in
a situation constituting a Termination For Cause, terminate the Employee's
employment or otherwise act so as to deprive the Employee of his eligibility to
receive benefits under any Company-provided disability insurance policy. In
all such circumstances, however, the Company retains the right to Terminate the
Employee For Cause, at any time.
(b) If the Employee is terminated without cause after he begins
receiving disability insurance payments under any Company-provided disability
insurance policy, then he shall also be entitled to receive his compensation
and benefits payable in the event of a termination without cause, LIMITED,
HOWEVER, to the net amount, if any, by which such payments, on a monthly basis,
exceed the monthly benefits payable to the Employee under such disability
insurance policy.
(c) In addition to the salary continuation benefit provided for herein,
in the event that the Employee is terminated without cause while Disabled, or
in the event that the Employee dies during the term of this Agreement, then the
Employee or his estate, as the case may be, shall be entitled to the following
benefit. Upon the occurrence of either such event, all unexercised stock
options that the Employee may hold on that date under ACC Corp.'s Employee Long
Term Incentive Plan shall automatically be deemed fully exercisable for a
period of one year following the occurrence of such event, subject, however, to
the original term of the option grant(s), if shorter (the "Exercisability
Period"). If at any time or from time to time during this Exercisability
Period the Employee or his estate, as the case may be, desires to exercise any
of such stock options, then he or his estate shall so notify ACC Corp., stating
specifically the number of options being exercised, and shall comply with the
other requirements of such Plan in effecting such exercise(s).
(d) The provisions of this Paragraph 8 shall not apply, except as
provided above in this Paragraph 8, in the event that any Event of Termination
other than Employee's termination without cause under this Agreement shall
first occur. Additionally, the Employee shall only be entitled to receive the
benefits provided by this Paragraph 8 if he is and at all times hereunder
remains in compliance with Paragraphs 5 and 6 hereof.
9. AUTOMATIC RESIGNATION. By signing this Agreement, the Employee
specifically agrees that without further action on the part of either party
hereto, upon the occurrence of any Event of Termination hereunder or Employee's
being Terminated For Cause hereunder, he shall automatically be deemed to have
resigned as the Chairman of the Board of ACC Corp. (but NOT as a Director of
ACC Corp.) and as a director and officer of all of its subsidiaries and
affiliates.
10. BASE SALARY AND BENEFITS. While employed by the Company, the
Employee's base salary shall not be reduced, nor shall the Employee's Company-
provided benefits be reduced, except as part of a Company-wide reduction of
salaries or of such benefits for all Company executives, without the Employee's
consent, or the Employee may deem such reduction to constitute a termination
without cause hereunder.
11. SUPERSEDING OF OUTSTANDING SEVERANCE AGREEMENT. Upon its
execution, this Agreement shall be in full force and effect and shall
automatically supersede and terminate the current Severance Agreement between
the parties hereto, dated February 8, 1994, and each party hereto hereby waives
and releases any claims it may have against the other arising under that
Severance Agreement.
12. GENERAL TERMS.
(a) NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal
Service as certified mail, return receipt requested and postage prepaid, or
(iii) on the first day following delivery to a recognized overnight courier
service, fee prepaid, return receipt or other confirmation of delivery
requested. Any such notice shall be delivered or directed to a party at its
address previously set forth in this Agreement or to such other address as a
party may specify by notice given to the other party hereto in accordance with
the provisions of this paragraph.
(b) BENEFIT. This Agreement and the rights and obligations contained
herein shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and upon the Employee, his legal representatives, heirs
and distributees.
(c) WAIVER. The waiver of any party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach.
(d) ENTIRE AGREEMENT. This Agreement may not be altered, amended or
terminated except by an instrument in writing signed by the parties hereto.
(e) PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
(f) APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within New York State, without giving effect to
conflict of laws principles.
(g) HEADINGS. The headings contained in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in more than one
counterpart, each one of which will be deemed an original and all of which
shall constitute one and the same instrument.
(i) ASSIGNMENT. The Employee may not assign any of his rights, duties
or obligations hereunder without the prior written consent of ACC Corp.
Likewise, ACC Corp. may not assign any of its rights, duties or obligations
hereunder without the prior written consent of the Employee except
in the event of a merger or other acquisition of ACC Corp. in which ACC Corp.
is not the surviving entity or the purchase of all or substantially all its
assets, provided that such merger, acquisition or purchase is for a valid
business purpose not involving this Agreement.
(j) REMEDIES. All rights and remedies of the Company, whether provided
for herein or by operation of law, are cumulative and may be exercised
singularly or concurrently, and the exercise of any such remedy shall not be
deemed an election of remedies so as to preclude the election of any other
remedy.
(k) RESIDENCY. In no event shall the Company nor any Acquiring Entity
require the Employee to take up permanent residence outside of the Rochester,
New York metropolitan area as a condition of employment or as a condition for
receiving any benefits under this Agreement, nor shall the Employee's refusal
to so relocate be deemed sufficient cause to enable him to be Terminated For
Cause hereunder.
(l) JURISDICTION AND VENUE. In the event that any legal proceedings
are commenced in any court with respect to any matter arising under this
Agreement, the parties hereto specifically consent and agree that the courts of
the State of New York and/or the Federal Courts located in the State of New
York shall have jurisdiction over each of the parties hereto and over the
subject matter of any such proceedings, and the venue of any such action shall
be in Monroe County, New York and/or the U.S. District Court for the Western
District of New York.
(m) NAMED FIDUCIARY. The Board of Directors of ACC Corp. or of an
Acquiring Entity, as the case may be, is hereby designated as the named
fiduciary ("Named Fiduciary") under this Agreement. The Named Fiduciary shall
have authority to operate and administer this Agreement, and it shall be
responsible for establishing and carrying out a funding policy, if any, and
method consistent with the objectives of this Agreement.
(n) CLAIMS PROCEDURE. The Named Fiduciary shall make all
determinations regarding disputes between the Company or the Acquiring Entity,
as the case may be, and the Employee as to the Employee's rights under this
Agreement. Any such determination by the Named Fiduciary shall be stated in
writing and delivered or mailed to the Employee or his estate, as the case may
be, within 30 days following the Company or the Acquiring Entity becoming aware
of such dispute. This communication shall set forth the specific reason(s) for
the determination, written to the best of the Named Fiduciary's ability in a
manner that can be understood without legal or actuarial counsel. In addition,
the Named Fiduciary shall afford a reasonable opportunity to the Employee or
his estate, as the case may be, for a full and fair review of the
determination. If the Employee or his estate disagrees with the determination,
or any part thereof, or if a determination is not received by the Employee or
his estate within the 30 day period set forth above, then the Employee or his
estate may seek judicial relief.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of October 6, 1995.
EMPLOYEE: ACC CORP.
/s/ Xxxxxxx X. Aab By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Aab
Title: EVP & CFO
