EXHIBIT 10.1
RETIREMENT AND CONSULTING AGREEMENT
THIS RETIREMENT AND CONSULTING AGREEMENT (the "Agreement"), dated as March __,
1997 (the "Effective Date"), is between CommNet Cellular Inc., a Colorado
corporation (the "Company"), and Xxxxxx X. Xxxx (the "Executive").
WHEREAS, the Executive has been employed by the Company since January
5, 1986 and has been Chief Executive Officer of the Company since August 1989;
and
WHEREAS, the Executive will be retiring from the Company on a date
designated by the Executive (the "Retirement Date"); and
WHEREAS, the Company recognizes that the Executive's contribution to
the Company has been substantial and meritorious and, in consideration for the
Executive's dedicated service with the Company and his retirement from the
Company on his Retirement Date, the Executive and the Company have agreed to
enter into this Agreement; and
WHEREAS, the Executive possesses considerable experience and an
intimate knowledge of the business and affairs of the Company, its policies,
methods, personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's years of service
with the Company and his experience with the Company's business make him
uniquely qualified to act in a consulting capacity for the Company; and
WHEREAS, the Company is desirous of assuring the consulting services
of the Executive in the above stated capacity, and the Executive is desirous of
having such assurance.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. RETIREMENT BENEFITS. In consideration for the Executive's
dedicated service to the Company, the Executive shall receive the following upon
the Executive's retirement from the Company:
(a) A lump-sum payment, payable within thirty (30) days after the
Executive's Retirement Date, equal to the Executive's Supplemental Retirement
Benefits. For this purpose, Supplemental Retirement Benefits shall mean the
additional Employer Contributions and Matching Contribution under the CommNet
Cellular Inc. Retirement Savings Plan (the "Retirement Plan") and allocations of
Employer
Contributions under the CommNet Cellular Inc. Employee Stock Ownership
Plan (the "ESOP") the Executive would have been entitled to under such plans had
such contributions and allocations been determined without regard to the
statutory limits applicable to such contributions and allocations under the
Internal Revenue Code for the period beginning five years prior to the
Executive's Retirement Date and ending on the Executive's Retirement Date. For
purposes of calculating the Executive's Supplemental Retirement Benefits, no
additional Deferral Contributions shall be assumed to have been made under the
Retirement Plan except for purposes of determining the Company Matching
Contribution, in which case it shall be assumed that the Executive had made the
maximum allowable Deferral Contributions under such plan. In addition, such
Supplemental Retirement Benefits shall also include interest on such amounts
equal to the interest which would have been credited on such contributions and
allocations had such amounts been credited annually with the prime lending rate
as announced from time to time in the Wall Street Journal.
(b) A lump-sum payment equal to the present value of five (5) times
the annual premium cost with respect to the Executive's coverage level and plan
option immediately prior to the Executive's Retirement Date of the CommNet
Cellular Inc. health plan and the Exec-U-Care Medical Reimbursement Insurance.
Such amount shall be payable within thirty (30) days after the Executive's
Retirement Date. The discount rate used to determine the present value of this
benefit shall be the prime lending rate, on the Executive's Retirement Date.
Further, the Company shall procure for the Executive a suitable Medicare
supplement policy, which the Executive will pay for.
(c) Immediately prior to the Executive's Retirement Date, a grant of
50,000 shares of Restricted Stock under the CommNet Cellular Inc. Omnibus Stock
and Incentive Plan (the "Stock Plan"), or such other incentive plan applicable
to the Executive. Such shares shall vest and shall become immediately
transferable upon the earlier to occur of (i) the Executive's death, (ii) the
Executive's Disability (as defined in the Stock Plan), (iii) the occurrence of a
Change in Control of the Company as described in Section 3(b)(ii) hereof, or
(iv) the last day of the Consulting Term described in Section 2(a), without
regard to any extension of such term thereof, provided that the Executive has
continued to provide consulting services as required under this Agreement
throughout the entire Consulting Term or until the Executive's earlier death or
Disability or the Company's termination of this Agreement under Section 2(g). In
the event this Agreement is terminated by the Company pursuant to Section 2(g)
hereof, or the Executive voluntarily terminates this Agreement, all shares of
Restricted Stock which have not vested shall be immediately forfeited. Prior to
the date such shares become freely transferable, the Executive shall be entitled
to receive cash payment equal to any cash dividends or other distributions paid
with respect to any corresponding number of shares of Company stock from time to
time, as and when dividends or other distributions may be paid with respect to
the Company's stock. Any shares of stock distributed to the Executive with
respect to the Restricted Stock shall be subject to the same terms and
conditions which apply to the
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Restricted Stock. Except to the extent provided in this Agreement, the grant of
Restricted Stock provided hereunder will be subject to the provisions of the
Stock Plan.
2. CONSULTING SERVICES. The Company hereby retains the Executive to
consult with and advise the Company, effective as of the Executive's Retirement
Date, and the Executive hereby accepts such engagement and agrees to consult
with and advise the Company, in accordance with the terms and conditions
hereinafter set forth.
(a) TERM. The term of this consulting engagement shall commence on the
Executive's Retirement Date and shall continue until the sixth anniversary of
the Executive's Retirement Date (the "Consulting Term"). The Executive and the
Company may negotiate the extension of such term at any time. Any references to
such Consulting Term herein shall not include any extension thereof unless
explicitly so provided.
(b) DUTIES AND RESPONSIBILITIES. The Executive hereby agrees to
consult with and advise the Company on such matters as may be referred to him
from time to time by the Board of Directors of the Company (the "Board") or by
the Chairman and Chief Executive Officer of the Company. It is agreed that the
Company maintains no right of control as to the method or means of accomplishing
the work which is so referred to the Executive.
(c) STATUS AS INDEPENDENT CONTRACTOR. The Executive is, and shall be
deemed for all purposes of this Agreement to be, an independent contractor, and
nothing in this Agreement shall be deemed to create or imply an agency or
employment relationship between the Executive and the Company. The Executive
shall be responsible for all taxes, withholding, and other payments and filings
required as a result thereof.
(d) COMPENSATION. For all consulting services rendered by the
Executive under this Agreement, the Company shall pay to the Executive a
consulting fee equal to fifty percent (50%) of the Executive's final annualized
base salary plus final year's annualized bonus per year. The consulting fee
shall be payable in a manner mutually agreed upon by the Executive and the
Company.
(e) OFFICE SPACE AND SUPPORT. The Company shall furnish the Executive
with office space, secretarial assistance, and such other facilities and
services as shall be convenient and adequate for the performance of his duties
as set forth in this Agreement.
(f) EXPENSES. The Company shall reimburse the Executive for all
ordinary and reasonable out-of-pocket business expenses incurred by him in
connection with the discharge of his duties and responsibilities hereunder.
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(g) TERMINATION. Except in the event of the Executive's failure to
satisfactorily perform the consulting services required herein, this Agreement
shall continue in effect until the end of the Consulting Term established in
Section 2(a) hereof. Upon such a termination, no further obligations will exist
under this Agreement except for the payment of consulting fees accrued but
unpaid at the date of termination.
3. CHANGE IN CONTROL BENEFITS. Upon the occurrence of the first,
and no other, Change in Control (as defined in Section 5 hereof) of the Company
which occurs after the effective date of this Agreement, the Executive shall be
entitled to benefits under this Article 3 depending upon the time at which such
Change in Control occurs.
(a) CHANGE IN CONTROL AFTER EFFECTIVE DATE BUT BEFORE CONSULTING
SERVICES COMMENCE. Upon the occurrence of a Change in Control of the Company
after the Effective Date of this Agreement and prior to the commencement of the
Consulting Term, the Executive must elect either (i) to receive the benefits
provided to the Executive under the Change-in-Control Agreement entered by and
between the Executive and the Company on July 9, 1993, as amended (the "Change-
in-Control Agreement"), or (ii) to retire from the Company and receive the
benefits provided under this Section 3(a). If the Executive elects to retire
from the Company and receive the benefits provided under this Section 3(a), the
Executive shall receive:
(i) All benefits under Section 1 hereof determined as if the Executive
had retired immediately prior to the Change in Control; provided, however, that
in lieu of the shares of Restricted Stock to be granted pursuant to Section 1(c)
hereof, the Executive shall be granted an equal number of shares of stock of the
Company or an equivalent number of shares of any successor company, in either
case, with no such restrictions; and
(ii) A lump-sum payment within thirty (30) days after a Change in
Control of the Company equal to the Consulting fees not yet paid under the
Agreement for the entire Consulting Term.
The receipt of benefits pursuant to this Section 3(a) is contingent
upon the Executive's election to forego any benefits under the Change-in-Control
Agreement. As such, no benefits will be payable under this Section 3(a) if any
benefits are payable to the Executive under the Change-in-Control Agreement.
(b) CHANGE IN CONTROL AFTER CONSULTING SERVICES COMMENCE. Upon the
occurrence of a Change in Control of the Company after the commencement of the
Consulting Term, no benefits shall be payable to the Executive under the Change
in control Agreement and the Executive shall be entitled to:
(i) A lump-sum payment payable within thirty (30) days after a Change
in Control of the Company equal to the consulting fees not yet paid under the
remaining portion of the Consulting Term; and
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(ii) All restrictions with respect to the shares of Restricted Stock
granted pursuant to Section 1(c) hereof shall lapse upon the occurrence of the
Change in Control.
4. TAX GROSS-UP PAYMENT. If any of the payments under Article 3
hereof (the "Change-in-Control Payments") are at any time determined to be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or
any similar tax that may hereafter be imposed), the Company shall pay to the
Executive in cash an additional amount (the "Gross-up Payment") such that the
net amount retained by the Executive after deduction of any Excise Tax on
Change-in-Control Payments and any federal, state, and local income tax or
employment tax and Excise Tax upon the Gross-up Payment provided for by this
Section 4, shall be equal to the Change-in-Control Payment.
5. CHANGE IN CONTROL DEFINED. For the purposes of this Agreement, a
Change in Control will be deemed to have occurred if:
(a) Any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing thirty percent
(30%) or more of the combined voting power of the Company's then outstanding
securities;
(b) The shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which results in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least seventy
percent (70%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or
(c) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement) there ceases to be a majority
of the Board comprised as follows: individuals who at the beginning of such
period constitute the Board and any new director(s) whose election by the Board
or nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved.
6. NONSOLICITATION OF EMPLOYEES; CONFIDENTIALITY; NONCOMPETITION.
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(a) The Executive covenants and agrees that at no time during the
Consulting Term, or in the event of a Change in Control of the Company, the six
(6) year period beginning on the Executive's Retirement Date, will the Executive
directly or indirectly (i) employ or seek to employ any person or entity
employed at that time by the Company or otherwise encourage or entice any such
person or entity to leave such employment; (ii) become employed by, enter into a
consulting arrangement with or otherwise agree to perform personal services for
a Competitor (as defined below); (iii) acquire an ownership or interest in a
Competitor; or (iv) solicit any customers of the Company on behalf of or for the
benefit of a Competitor. Executive further covenants and agrees that at no time
following the Executive's retirement from the Company will the Executive
communicate, furnish, divulge or disclose in any manner to any person or entity
confidential business information or trade secrets of the Company, without the
prior express written consent of the Company. For purposes of this Section 6,
"Competitor" means any entity which, at any relevant time, engages in the
wireless telecommunications business or any other business in which the Company
is then engaged (or any business which, at the Retirement Date was anticipated
to be engaged in by the Company) or which is directly competitive with the
business (or anticipated business) of the Company within any state in the United
States or any foreign country in which the Company is doing business, attempting
to do business or anticipated to do business. For purposes of this Section 6,
all references to the Company include the subsidiaries and affiliates of the
Company.
(b) The Company and the Executive acknowledge and agree that damages
cannot adequately compensate the Company in the event of a violation of any of
the restrictive covenants in this Section 6 and that injunctive relief shall be
essential for the protection of the Company and its respective successors and
assigns. Accordingly, the Company and the Executive agree and consent that, in
the event of a violation or breach of any of the restrictive covenants herein,
the Company shall be entitled to obtain injunctive relief against the Executive,
without bond but upon due notice, in addition to such other relief as may
appertain at law or in equity. Obtaining an injunction by the Company shall not
be considered an election of remedies it may have at law or in equity.
(c) If it is determined by a court of competent jurisdiction in any
state that any restriction in this Section 6 is excessive in duration or scope
or is unreasonable or unenforceable under the laws of that state, it is the
intention of the parties that such restriction may be modified or amended by the
court to render it enforceable to the maximum extend permitted by the law of
that state.
7. CONTENTS OF AGREEMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC.
This Agreement sets forth the entire understanding of the parties hereto with
respect to the subject matter hereof. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, representatives, successors and assigns of the parties
hereto, except that the duties and responsibilities of the Executive hereunder
which are of a personal nature shall neither be assigned nor delegated in whole
or in part by the Executive. This
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Agreement shall not be amended except by a written instrument duly executed by
the Company and the Executive.
8. SEVERABILITY. If any term or provision of this Agreement shall
be held to be invalid or unenforceable for any reason, such term or provision
shall be ineffective to the extent of such invalidity or unenforceability
without invalidating the remaining terms and provisions hereof, and this
Agreement shall be construed as if such invalid or unenforceable term or
provision had not been contained herein.
9. GOVERNING LAW. This Agreement shall be construed and interpreted
in accordance with the laws of the state of Colorado.
10. NOTICES. All notices, and other communications hereunder shall
be given in writing and delivered personally or by registered or certified mail,
return receipt requested, postage prepaid, as follows (or to such other
addressee or address as shall be set forth in a notice given in the same
manner):
If to the Company:
CommNet Cellular Inc.
0000 Xxxx Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
If to the Executive:
Xxxxxx X. Xxxx
0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
All such notices shall be deemed to have been given on the date delivered or
mailed in the manner provided above.
11. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of March __,
1997.
COMMNET CELLULAR INC.
______________________________ By: ________________________
Xxxxxx X. Xxxx Its: _________________________
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