EXHIBIT 10.27
RETENTION AGREEMENT
This Retention Agreement (the "Agreement") is made and entered into as
of the 13th day of September, 1999 by and between United States Cellular
Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the
"Executive").
W I T N E S S E T H
WHEREAS, the Executive currently serves as an officer, a director and a
key employee of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to reinforce and encourage the continued attention and dedication of the
Executive to his assigned duties without distraction in the face of potentially
disturbing circumstances arising from any possibility of the Executive's
termination of employment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the adequacy and sufficiency of which hereby are acknowledged,
the Company and the Executive hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Cause" shall mean (i) a material breach by the Executive of his
employment duties and responsibilities (other than as a result of incapacity due
to physical or mental illness) (A) which is the result of the Executive's
negligence or (B) which is demonstrably willful and deliberate on the
Executive's part and which is committed in bad faith or without reasonable
belief that such breach is in the best interests of the Company; (ii) the
commission by the Executive of a felony involving moral turpitude; or (iii)
competition by the Executive with the Company or any of its affiliates or
misappropriation of confidential information of the Company or any of its
affiliates (as defined in the Executive's 1998 Stock Option Award Agreement
evidencing a stock option grant under the United States Cellular Corporation
1998 Long-Term Incentive Program (the "Program")).
(b) "Good Reason" shall mean the occurrence of any of the following
events without the Executive's written consent and which is not remedied by the
Company within a reasonable period of time after receipt of written notice from
the Executive specifying such event:
(i) any of (A) a material and adverse change in the Executive's
duties with the Company at the time this Agreement is executed,
(B) a material and adverse change in the Executive's reporting
responsibilities, titles or offices with the Company as in effect
at the time this Agreement is executed or (C) any failure to
re-elect the Executive to any position with the Company held by
the Executive at the time this Agreement is executed; or
(ii) a reduction by the Company in the Executive's rate of annual
base salary as in effect at the time this Agreement is executed or
as the same may be increased from time to time thereafter.
(c) "Qualifying Termination" shall mean termination of the Executive's
employment with the Company by the Company without Cause or by the Executive for
Good Reason.
2. PAYMENTS UPON QUALIFYING TERMINATION. The Company agrees, under
the conditions described herein, to pay the Executive the payments described in
this Section 2 if the Executive's employment with the Company is terminated in a
Qualifying Termination.
(a) STOCK OPTIONS. The Company and the Executive hereby acknowledge
that options to purchase shares of common stock of the Company ("Common Stock")
have heretofore been granted to the Executive pursuant to the United States
Cellular Corporation 1994 Long-Term Incentive Plan (the "Plan") and the Program.
Under the terms of the award agreements with respect to such options, in certain
circumstances any such options that are unexercisable upon the Executive's
termination of employment shall be canceled. In recognition of the possibility
of such cancellation, the Company hereby agrees that if the Executive's
employment with the Company is terminated in a Qualifying Termination, and if as
a result of such termination any of the options identified in Exhibit A to this
Agreement are canceled (the "Canceled Options"), as soon as administratively
practicable after such Qualifying Termination the Company shall pay the
Executive a lump sum cash payment equal to the difference between (i) the Fair
Market Value (as defined in the Program) on the date of the Qualifying
Termination of the Common Stock subject to the Canceled Options and (ii) the
exercise price with respect to such Canceled Options provided in the award
agreement or agreements evidencing the option grant. Notwithstanding any other
provision herein, the calculation of any lump sum payable to the Executive
pursuant to this Section 2(a) shall be adjusted by the Company in good faith to
reflect any capital adjustment applicable to all holders of Common Stock that
occurs prior to the date of the Qualifying Termination.
(b) RESTRICTED STOCK. The Company and the Executive hereby acknowledge
that shares of Common Stock of the Company subject to a restriction period
("Restricted Stock") have heretofore been granted to the Executive pursuant to
the Program and other long-term incentive arrangements. Under the terms of the
award agreements with respect to such Restricted Stock, in certain circumstances
any such Restricted Stock that is unvested upon the Executive's termination of
employment shall be forfeited. In recognition of the possibility of such
forfeiture, the Company hereby agrees that if the Executive's employment with
the Company is terminated in a Qualifying Termination, and if as a result of
such termination any of the Restricted Stock identified in Exhibit B to this
Agreement is forfeited (the "Forfeited Restricted Stock"), as soon as
administratively practicable after each date any such Forfeited Restricted Stock
would have become vested had the Executive remained continuously in the employ
of the Company until such date (the "Vesting Date"), the Company shall pay the
Executive a lump sum cash payment equal to the Fair Market Value (as defined in
the Program) on the Vesting Date of the Common
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Stock that would have become vested on such date had the Restricted Stock not
been forfeited. Notwithstanding any other provision herein, (i) the calculation
of any lump sum payable to the Executive pursuant to this Section 2(b) shall be
adjusted by the Company in good faith to reflect any capital adjustment
applicable to all holders of Common Stock that occurs prior to the Vesting Date
and (ii) any lump sum payable to the Executive pursuant to this Section 2(b)
shall be increased by the value of any dividends that would have been paid with
respect to the Restricted Stock during the restriction period had the Executive
remained continuously in the employ of the Company until the Vesting Date.
3. WITHHOLDING TAXES. The Company may withhold from all payments due
to the Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
4. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise
with respect to this Agreement involving termination of the Executive's
employment with the Company or involving the failure or refusal of the Company
to perform fully in accordance with the terms hereof, the Company shall
reimburse the Executive, on a current basis, for all legal fees and expenses, if
any, incurred by the Executive in connection with such contest or dispute;
PROVIDED, HOWEVER, that in the event the resolution of any such contest or
dispute includes a finding denying, in total, the Executive's claims in such
contest or dispute, the Executive shall be required to reimburse the Company, no
later than 12 months from the date of such resolution, for all sums paid to the
Executive pursuant to this Section 4.
5. OPERATIVE EVENT. Notwithstanding any provision herein to the
contrary, no amounts shall be payable hereunder unless the Executive's
employment with the Company is terminated in a Qualifying Termination.
6. EFFECTIVE DATE. This Agreement shall be effective as of the day
and year first above written.
7. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
affiliates. The Company reserves all rights to terminate the Executive's
employment with or without Cause.
8. SUCCESSORS; BINDING AGREEMENT. (a) This Agreement shall not be
terminated by any merger or consolidation of the Company or as a result of any
transfer of all or substantially all of the assets of the Company.
(b) The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to in Section 8(a), it will cause
any successor or transferee unconditionally to assume, by written instrument
delivered to the Executive (or his beneficiary or estate), all of the
obligations of the Company hereunder. Failure of the Company to obtain such
assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled hereunder if the Executive's employment
was terminated in a Qualifying Termination. For purposes of
implementing the foregoing, the date on which any such merger, consolidation or
transfer becomes effective shall be deemed the date of the Executive's
Qualifying Termination.
(c) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amounts would be payable to the Executive hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no
person is so appointed, to the Executive's estate.
9. NOTICES. (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid,
addressed (i) if to the Executive, to Xxxxxxx X. Xxxxxx, 0000 Xxxxxxx Xxxxx,
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, and if to the Company, to United States
Cellular Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000-0000, attention Vice President - Human Resources, with a copy to the
Secretary of the Company, Xxxxxxx X. Xxxxxxx, Esq., Sidley & Austin, Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 or (ii) to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
(b) A written notice of the Executive's termination of employment by
the Company or by the Executive, as the case may be, shall be provided to the
other party and such notice shall specify the termination date (which date shall
be not less than 15 days after the giving of such notice). Any notice by the
Company to the Executive of termination for Cause, or notice by the Executive to
the Company of termination for Good Reason, additionally shall specify the
particular termination provision in this Agreement relied upon and set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination under the provision so indicated; PROVIDED, HOWEVER, that the
failure by the Company or the Executive to set forth in such notice any fact or
circumstance which contributes to a showing of Cause or Good Reason, as the case
may be, shall not waive any right of the Company or the Executive hereunder or
preclude the Company or the Executive from asserting such fact or circumstance
in enforcing the Company's or Executive's rights hereunder.
10. FULL SETTLEMENT; RESOLUTION OF DISPUTES. (a) The Company's
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment.
(b) If there shall be any dispute between the Company and the
Executive in the event of any termination of the Executive's employment, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such
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termination was not a Qualifying Termination or that the Company is not
otherwise obligated to pay any amount pursuant to this Agreement to the
Executive or his dependents or other beneficiaries, as the case may be, the
Company shall pay all such amounts to the Executive or his dependents or other
beneficiaries, as the case may be, as though such termination was a Qualifying
Termination; PROVIDED, HOWEVER, that the Company shall not be required to pay
any disputed amounts pursuant to this Section 10(b) except upon receipt of an
undertaking by or on behalf of the Executive, his dependents or other
beneficiaries to repay all such amounts to which the Executive, his dependents
or other beneficiaries are ultimately adjudged by such court not to be entitled.
11. GOVERNING LAW; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to the
principles of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which other provisions shall remain in
full force and effect.
12. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
the Executive and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by the
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right the Executive or the Company may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. The rights of, and amounts payable
to, the Executive, his estate or his beneficiaries pursuant to this Agreement
are in addition to any rights of, or amounts payable to, the Executive, his
estate or his beneficiaries under any other employee benefit plan or
compensation program of the Company.
13. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
UNITED STATES CELLULAR CORPORATION
By: /S/ XXXXX X. XXXXXXX, XX.
-------------------------------
XxXxx X. Xxxxxxx, Xx., Chairman
EXECUTIVE:
/S/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx
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EXHIBIT A: STOCK OPTIONS COVERED BY THE AGREEMENT
PLAN, PROGRAM OR NUMBER OF DATE OF
GRANT DATE ARRANGEMENT OPTIONS EXERCISABILITY
---------- ----------- ------- --------------
May 14, 1997 1994 Long-Term 9,600 (5,760 of which 1,920 become exercisable on each of the
Incentive Plan are unexercisable) following dates: March 31, 2000, March
31, 2001 and March 31, 2002
March 31, 1998 1998 Long-Term 9,600 (7,680 of which 1,920 become exercisable on each of the
Incentive Program are unexercisable) following dates: March 31, 2000, March
31, 2001, March 31, 2002 and March 31,
2003
March 31, 1999 1998 Long-Term 9,600 (9,600 of which 1,920 become exercisable on each of the
Incentive Program are unexercisable) following dates: March 31, 2000,
March 31, 2001, March 31, 2002, March
31, 2003 and March 31, 2004
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EXHIBIT B: RESTRICTED STOCK COVERED BY THE AGREEMENT
PLAN, PROGRAM NUMBER OF SHARES OF
GRANT DATE OR ARRANGEMENT RESTRICTED STOCK DATE OF VESTING
---------- -------------- ---------------- ---------------
February 28, 1997 Special Retention 5,000 (2,500 of which remaining 2,500 vest on January
Restricted Stock Award are unvested) 15, 2000
Agreement
March 31, 1998 1998 Long-Term Incentive 1,872 (1,872 of which all become vested on March 31,
Program are unvested) 2001
November 5, 1998 1998 Long-Term Incentive 10,696 (10,696 of which 5,329 become vested on December
Program are unvested) 15, 1999, 2,683 become vested
on December 15, 2000 and 2,684
become vested on December 15,
2001
March 15, 1999 (Special Award) 7,500 (7,500 of which 3,750 become vested on
are unvested) September 15, 2000 and 3,750
become vested on March 15, 2001
March 31, 1999 1998 Long-Term Incentive 2,938 (2,938 of which all become vested on March 31,
Program are unvested) 2002
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