EXHIBIT 10.18
February 22, 1996
Frontier Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Dear Xx. Xxxxx:
With due regard to your recent increase in responsibility as
an executive officer of Frontier Corporation ("Frontier") and its
subsidiaries and affiliates (together, the "Company"), the Board
of Directors of Frontier (the "Board") has determined that it is
in the best interests of the Company and its shareowners to avail
itself of your continued dedication and service to the Company.
It is therefore the intent of this Agreement to encourage your
service to the Company by providing you with compensation and
benefit arrangements while you fulfill your duties, which provide
you with a measure of security commensurate with your importance
to the Company.
Upon your signature on a counterpart of this Agreement, the
following terms and conditions shall become effective as of
November 20, 1995 (the "Effective Date"), and shall supersede any
and all prior agreements between the Company and you related to
the subject matter hereof, except that this Agreement shall not
supersede any stock option agreements related to your prior
service with ALC Communications Corporation ("ALC"), which shall
each remain in full force and effect.
1. Employment
1.1 Employment term. The Company hereby employs Xxxxxx X.
Xxxxx (the "Employee") as Vice Chairman and Chief Financial
Officer of Frontier, and as Chief Financial Officer of ALC. The
Employee shall also serve as a director on the Board and a member
of the Board's Executive Committee as selected and elected by the
Board and the Company's shareowners. The term of the Employee's
employment (the "Employment Term") shall commence on the
Effective Date and shall continue until December 31, 1999 unless
sooner terminated in accordance with Section 7.
1.2 Duties and Responsibilities. The Employee shall
perform all duties incidental to his position with the Company,
or as may be assigned to him by the Chairman and CEO, and shall
cooperate fully with the executive officers of the Company.
Notwithstanding the foregoing or anything else contained in this
Agreement to the contrary, (i) Employee may from time to time
devote such time as he may determine reasonable to various
charitable and other community activities, and (ii) Employee may
from time to time devote a portion of his time to his own,
personal investments and projects (for which he may or may not
receive compensation), provided the amount of time he devotes
does not materially affect his duties under this Agreement. The
Company and the Employee agree that the Employee shall be able to
work from an office in a location that is mutually agreeable to
the Company and the Employee, and the Company and the Employee
shall determine together whether and when relocation is
appropriate. If the Company designates a work location other
than Xxxxxxx Farms, Michigan, the Employee agrees to spend an
amount of time reasonable under the circumstances working at such
designated work location.
1.3 Extent of Service. The Employee agrees to use his best
efforts in the business of the Company and to devote his full
time, attention and energy to the business of the Company. The
Employee shall not work, including on either a part-time or
independent contracting basis, for any other business or
enterprise during the Employment Term without the Company's prior
written consent.
1.4 Compensation. The Employee shall receive annual Base
Compensation, commencing as of the Effective Date until January
31, 1996, of $350,000, and thereafter of $450,000. Such annual
Base Compensation shall thereafter be adjusted consistent with
the performance of the Company and the Employee, but in no event
less than $450,000. The Employee shall participate in the
Company's short term incentive compensation program, with a bonus
potential at Standard rating of 60% and at Premier rating of 105%
of the Employee's Base Compensation for the calendar years 1995
(prorated from the Effective Date) and 1996 based on the
performance of the Company and the Employee relative to certain
Performance Goals established by the Chairman and CEO and
concurred in by the Board. The Employee's short term incentive
compensation for periods after 1996 shall be established by the
Chairman and CEO and concurred in by the Board, consistent with
the performance of the Company and the Employee. The Employee
shall be eligible to participate in the retirement and pension
plans currently maintained by the Company for its executive
employees (the "Plans"). The Employee's prior employment in the
telecommunications industry (the "Qualifying Service") shall be
bridged for all purposes under the Plans as follows: half of the
Employee's Qualifying Service shall be bridged effective on
September 1, 1997 and the remaining half of the Employee's
Qualifying Service shall be bridged effective on September 1,
1999. Notwithstanding the foregoing, however, the Plans may be
amended, modified or terminated by the shareowners of the Company
or by the Board or any committee thereof to which has been duly
delegated the authority to so amend, modify or terminate the
Plans.
1.5 Options. The Company acknowledges that the Employee
has received options in Frontier's stock under the Frontier
Management Stock Incentive Plan (the "Stock Option Plan") as set
forth below:
Grant Date and Amount Granted Vesting Schedule
----------------------------- ----------------
August 16, 1995: 100,000 1/3 on August 16, 1996
1/3 on August 16, 1997
1/3 on August 16, 1998
The Company agrees that the Employee shall hereinafter have
the right to earn, as described below, additional options,
according to the following schedule, so long as the Employee
meets the Performance Goals set for him by the Company on an
annual basis and so long as the Employee remains in the employ of
the Company:
Grant Date and Amount Granted Vesting Schedule
----------------------------- ----------------
August 16, 1996: 100,000 1/3 on August 16, 1997
1/3 on August 16, 1998
1/3 on August 16, 1999
August 16, 1997: 100,000 1/3 on August 16, 1998
1/3 on August 16, 1999
1/3 on August 16, 2000
To the extent permitted under the Stock Option Plan, the grants
provided for above shall be Incentive Stock Options.
Notwithstanding any other agreement by and between the Employee
and the Company, should the Employee's employment with the
Company be terminated under either Sections 7.4 or 7.5 hereunder,
the Employee shall have the right to exercise in full, for 30
days following the date of his termination, any options
previously granted to the Employee pursuant to this Section 1.5,
which have vested as of the date of his termination.
2. Expenses. The Company shall reimburse the Employee for
the reasonable expenses incurred by him in connection with his
performance of services hereunder during the Employment Term upon
presentation to the Company of any itemized account and written
proof of such expenses.
3. Developments. All developments, including trade
secrets, discoveries, improvements, ideas and writings which
either directly or indirectly relate to or may be useful in the
business of the Company (the "Developments") which the Employee,
either by himself or in conjunction with any other person or
persons, shall conceive, make, develop, acquire or acquire
knowledge of during the Employment Term, shall become and remain
the sole and exclusive property of the Company. The Employee
hereby assigns, transfers and conveys, and agrees to so assign,
transfer and convey, all of his right, title and interest in and
to any and all such Developments and to disclose fully as soon as
practicable, in writing, all Developments to the Chairman and
CEO. At any time and from time to time, upon the request of the
Company, the Employee will execute and deliver to the Company any
and all instruments, documents and papers, give evidence and do
any and all other acts which, in the opinion of counsel for the
Company, are or may be necessary or desirable to document such
transfer or to enable the Company to file and prosecute
applications for and to acquire, maintain and enforce any and all
patents, trademark registrations or copyrights under United
States or foreign law with respect to any such Developments or to
obtain any extension, validation, reissue, continuance or renewal
of any such patent, trademark or copyright. The Company will be
responsible for the preparation of any such instruments,
documents and papers and for the prosecution of any such
proceedings and will reimburse the Employee for all reasonable
expenses incurred by him in compliance with the provisions of
this Section 3.
4. Confidential Information. The Employee acknowledges
that by reason of his employment by and service to the Company he
will have access to confidential information of the Company
including, without limitation, its strategies and corporate
plans, information and knowledge pertaining to products and
services, methods of operation, sales and profit figures,
customer lists and relationships between the Company and its
customers, suppliers and others who have business dealings with
it. The Employee covenants that, either during or after the
Employment Term, he will not disclose any such information to any
person without the prior written authorization of the Board.
5. Non-Competition. The provisions of this Section 5
shall supersede any conflicting terms contained in any other
agreement, instrument, contract or arrangement by and between the
Employee and the Company, including, but not limited to, any
option award described in Section 1.5.
5.1 During the Employment Term The Employee shall not,
unless acting pursuant hereto or with the prior written consent
of the Board, directly or indirectly, (i) own, manage, operate,
finance, join, control or participate in the ownership,
management, operation, financing or control of, or be associated
as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit
his name to be used in connection with, any business or
enterprise that is engaged in any business that is competitive
with the business conducted during the Employment Term by the
Company, or, during the Employment Term and for six months
thereafter, (ii) offer or provide employment (whether such
employment is with the Employee or any other business or
enterprise), either on a full-time or part-time or consulting
basis, to any person who then currently is, or who within three
months prior thereto had been, employed by the Company; provided,
however, that this provision shall not be construed to prohibit
the ownership by the Employee of not more than 1% of any class of
securities of any corporation which is engaged in a business
competitive with the Company and has a class of securities
registered pursuant to the Securities Exchange Act of 1934.
5.2 Following the Employment Term Upon Employee's
termination of employment, for any reason, the Employee covenants
and agrees that on or prior to August 16, 1997, he shall not be a
full time consultant, agent, representative or employee of LCI
Communications, Inc., WorldCom Corporation, Cable & Wireless,
Inc. or AT & T (the "Competitors"). The foregoing
notwithstanding, however, the Employee shall not be deemed to be
in violation of this covenant if the Employee becomes a full time
consultant, agent, representative or employee of an entity which,
within such time period, is acquired by a Competitor pursuant to
a merger, consolidation, share exchange, business combination,
tender or exchange offer, purchase of all or substantially all
the assets of such entity or other similar transaction.
5.3 Savings Clause. In the event that the provisions of
this Section 5 should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in
any jurisdiction, then such provisions shall be deemed reformed
in such jurisdiction to the maximum time, geographic or other
limitations permitted by applicable law.
6. Indemnification
A. ALC and Employee agree to bind themselves to the
provisions of the Amended and Restated Bylaws of ALC,
attached hereto and made a part hereof as Exhibit 6.A., as a
contractual agreement between them.
B. Allnet Communication Services, Inc. and Employee
agree to bind themselves to the provisions of the Amended
and Restated Bylaws of Allnet Communication Services, Inc.,
attached hereto and made a part hereof as Exhibit 6.B., as a
contractual agreement between them.
C. Frontier and Employee agree to bind themselves to
the provisions of the Amended and Restated Bylaws of
Frontier, attached hereto and made a part hereof as Exhibit
6.C., as a contractual agreement between them.
7. Termination
7.1 Disability or Death. In the event that the Employee
shall die or is unable to perform his duties and responsibilities
hereunder to the full extent required by the Chairman and CEO by
reason of illness, injury or incapacity for six consecutive
months, during which time he shall continue to be compensated
hereunder, the Employee's employment hereunder shall be
terminated and the Company shall have no further liability or
obligation to the Employee, or to his executors, administrators,
heirs, assigns or any other person claiming under or through him
hereunder, except for unpaid salary, incentive compensation
(including for partial periods) and benefits including
unreimbursed expenses accrued to the date of termination. The
Employee agrees, in the event of any dispute under this Section
7.1 regarding his health, to submit to a physical examination by
a licensed physician selected by the Company, the cost of such
examination to be borne by the Company.
7.2 Cause by the Company. The Employee's employment
hereunder may be terminated by the Chairman and CEO at any time
for "cause." "Cause" shall mean the failure of the Employee to
observe or perform (other than by reason of illness, injury or
incapacity) any of the terms or provisions of this Agreement,
dishonesty, willful misconduct, conviction of a felony or other
crime involving moral turpitude, misappropriation of funds,
habitual insobriety, use of controlled substances (other than
under the supervision of a licensed physician), or other proper
cause. Except as otherwise specified, the Company shall have no
liability or obligation to the Employee hereunder upon
termination under this Section 7.2 except for: (i) unpaid salary,
(ii) incentive compensation in respect of full annual, but not
partial, periods ended prior to the date of termination, (iii)
benefits including unreimbursed expenses accrued to the date of
termination and which are payable upon termination and (iv) any
obligation arising under any of the Company's (and ALC's) stock
option plans and stock awards.
7.3 Failure to Meet Goals. The Chairman and CEO may
terminate the Employee's employment hereunder at any time for
material failure to meet the Performance Goals. The Company
shall have no liability or obligation to the Employee hereunder
upon termination under this Section 7.3 except for: (i) unpaid
salary, (ii) incentive compensation in respect of periods
(including partial periods) ended prior to the date of
termination, (iii) benefits including unreimbursed expenses
accrued to the date of termination and which are payable upon
termination, (iv) any obligation arising under any of the
Company's (and ALC's) stock option plans and stock awards and (v)
the salary to which the Employee would have been entitled for the
succeeding twelve months, payable in installments at the times
the same would have become due but for the termination, as well
as during such time period all employee benefits to which
Employee was entitled prior to such termination, other than any
officer perquisites and 401(k) plan participation, and upon
substantially the same terms and conditions including, but not
limited to, Life, Health and Long-Term Disability Insurance
coverage; provided, however, that if Employee obtains full-time
employment prior to the expiration of the twelve-month period,
the provision of these benefits shall terminate although the
salary shall continue for the remainder of the period.
7.4 Without Cause by the Company. The Company may
terminate the Employee's employment hereunder at any time,
without cause.
A. Upon such termination the Company shall not have
any liability or obligation to the Employee hereunder except
for (i) unpaid salary, (ii) incentive compensation in
respect of periods (including partial periods) prior to
termination, (iii) benefits including unreimbursed expenses
accrued to the date of termination and which are payable
upon termination, (iv) any obligation arising under any of
the Company's (and ALC's) stock option plans and stock
awards, (v) the salary to which the Employee would have been
entitled for the succeeding twenty-four months, payable in
installments at the time the same would have become due but
for the termination, as well as during such time period all
employee benefits to which Employee was entitled prior to
such termination, other than any officer perquisites and
401(k) plan participation, and upon substantially the same
terms and conditions including, but not limited to, Life,
Health and Long-term Disability Insurance coverage;
provided, however, that if Employee obtains full-time
employment prior to the expiration of the applicable period,
the provision of these benefits shall terminate, although
the salary shall continue for the remainder of the period,
and (vi) compensation equivalent to the sum of the prior
incentive compensation awards for the two fiscal years
immediately preceding said termination, payable pro rata
over the period during which the salary is to be paid to
Employee pursuant to Subsection 7.4(A)(v) herein.
B. Notwithstanding anything to the contrary in this
Section 7.4, if Employee's termination occurs prior to
August 16, 1996, the compensation payable to Employee under
Section 7.4(A)(vi) shall be reduced by $500,000, and an
identical sum (payable over the same period) shall be paid
to Employee as consideration for the noncompete described in
Section 5.2. For each month following August 15, 1996
during which no termination of employment occurs, the amount
of consideration reallocated under this Section 7.4(B) shall
be reduced by $41,666.67. Thus, for example, if the Company
terminates Employee on February 16, 1997, the amount of
consideration reallocated under this Section 7.4 shall be
$250,000, computed as [$500,000 - ($41,666.67 x 6)].
C. Upon termination under this Section 7.4 (or
Section 7.5 below), Employee shall be entitled to exercise
all stock options previously granted to him by ALC, for a
period of twelve months following such termination date, or
such period as specified under the terms of ALC's 1990 Stock
Option Plan, as amended, whichever is longer.
7.5 Termination by the Employee. With or without cause,
the Employee may terminate his employment hereunder by delivering
written notice of such termination to the Company (the "Notice"),
which notice shall specify an effective date of termination (the
"Termination Date") at least sixty (60) days following the
delivery date of the Notice.
A. If the Termination Date is prior to April 1, 1997,
the Employee shall receive, as an incentive for his
continued dedication to the Company, each of the benefits
described in Sections 7.4(A) and (C) above, subject to the
reallocation of benefits described in Subsection 7.4(A)(vi),
pursuant to Section 7.4(B).
B. If the Termination Date is after March 31, 1997,
and if Employee's termination is without cause, the
Company's liability to the Employee shall include only (i)
unpaid salary through the Termination Date, (ii) incentive
compensation in respect of full annual, but not partial,
periods ended prior to the date of termination, (iii)
benefits including unreimbursed expenses accrued to the date
of termination and which are payable upon termination and
(iv) any obligation arising under any of the Company's (and
ALC's) stock option plans and stock awards.
C. If the Termination Date is after March 31, 1997,
and if the Employee's termination is for cause against the
Company, the Company's liability to the Employee shall
include, in addition to the obligations described in Section
7.5(B) above, the obligation to pay the Employee incentive
compensation in respect of partial periods prior to the
Termination Date. For purposes of this Section 7.5(C) only,
cause shall include the Company's failure to comply with any
of its material obligations under this Agreement, after
Employee has given notice of such failure to the Company and
the Company has not cured such failure promptly after its
receipt of such notice.
7.6 Survival. Notwithstanding the expiration or
termination of the Agreement, the obligations of the Company with
respect to payment of compensation (Section 1.4), incentive
compensation (Section 1.5) and expenses (Section 2) earned or
otherwise owed to Employee prior to the expiration of the
Agreement as well as salary and benefit continuation with respect
to the applicable periods set forth in this Section 7 of the
Agreement shall survive and remain in full force and effect.
Notwithstanding either the expiration or termination of the
Agreement, or the termination of the Employee's employment under
this Section 7, the obligations of the Employee under Sections 3,
4 and 5 shall survive and remain in full force and effect, and
the Company shall be entitled to equitable relief against the
Employee pursuant to the provisions of Section 8. Further, upon
termination of the Employee's employment under this Section 7,
subject to Section 5.2, Employee shall have no restriction
hereunder from owning, managing, operating, financing, joining,
controlling or participating in the ownership, management,
operation, financing or control of, or be associated as an
officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit
his name to be used in connection with any business or enterprise
that is engaged in any business that is competitive with the
business conducted during the Employment Term by the Company.
The liability of the Company, if any, for payments to the
Employee by virtue of any wrongful termination of the Employee's
employment hereunder shall not exceed the amount that would be
payable to the Employee if the termination had been made under
Section 7.4.
8. Equitable Relief. The Employee acknowledges that the
restrictions contained in Sections 3, 4 and 5 are, in view of the
nature of the business of the Company, reasonable and necessary
to protect the legitimate interests of the Company, and that any
violation of the provisions of those Sections will result in
irreparable injury to the Company. The Employee also
acknowledges that the Company shall be entitled to preliminary
and permanent injunctive relief, without the necessity of proving
actual damages, and to an equitable accounting of all earnings,
profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. The Employee
hereby agrees that in the event of any such violation the Company
shall be entitled to commence an action for any such preliminary
and permanent injunctive relief and other equitable relief in any
court of competent jurisdiction and further irrevocably submits,
for himself and in respect of his property, generally and
unconditionally, to the jurisdiction of any Michigan state court
located in Xxxxx or Oakland Counties or the United States court
for the Eastern District of Michigan over any suit, action or
proceeding arising out of or relating to this Section 8. The
Employee hereby waives, to the fullest extent permitted by law,
any objection that he may now or hereafter have to such
jurisdiction or to the venue of any such suit, action or
proceeding brought in such a court and any claim that such suit,
action or proceeding has been brought in an inconvenient forum.
The Employee agrees that effective service of process may be made
upon him by mail under the notice provisions contained in Section
11.
9. Litigation Expenses. In the event of a lawsuit by
either party to enforce the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable costs,
expenses and attorneys' fees from the other party.
10. Life Insurance. The Company agrees to insure the life
of the Employee, and to pay the entire premium, under a term life
insurance policy continuing during the duration of the Employment
Term in an amount of at least $500,000, with the Employee having
the sole right to designate one or more beneficiaries under such
insurance policy.
11. Notice. All notices and other communications required
or permitted hereunder or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been
given when mailed by registered or certified mail, return receipt
requested, as follows (provided that notice of change of address
shall be deemed given only when received):
If to the Company, to:
Frontier Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chairman and CEO
If to the Employee, to his residence
as shown from time to time on the
records of the Company
or to such other name or address as the Company or the Employee,
as the case may be, shall designate by notice to the other party
hereto in the manner specified in this Section.
12. Contents of Agreement, Amendment and Assignment. This
Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be
changed, modified or terminated except upon written amendment.
all of the terms and provisions of this Agreement shall be
binding upon, 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 Employee hereunder are of a personal nature and shall not be
assignable in whole or in part by the Employee; provided,
however, that in the event that the Company effects a merger with
any corporation, or in the event that the business of the Company
is otherwise combined with the business of any corporation or
entity, then, notwithstanding anything herein to the contrary,
the provisions of Section 1 hereof shall be applicable only with
respect to the division or other unit of the Company or of such
other corporation or entity that conducts the business previously
conducted by the Company.
13. Severability. If any provision of this Agreement or
application thereof to anyone or under any circumstances is
adjudicated to be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or
application and shall not invalidate or render unenforceable such
provision in any other jurisdiction.
14. Remedies Cumulative; No Waiver. No remedy conferred
upon the Company by this Agreement is intended to be exclusive of
any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity. No
delay or omission by the Company in exercising any right, remedy
or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or
power may be exercised by the Company from time to time and as
often as may be deemed expedient or necessary by the Company in
its sole discretion.
15. Applicable Law. This Agreement shall be governed by
the laws of the State of New York, notwithstanding the provisions
contained herein regarding personal jurisdiction and venue.
16. Counterparts. This Agreement may be signed by the
parties in one or more counterparts, each of which shall be one
original but all of which together will constitute one and the
same instrument.
If this Agreement correctly sets forth our agreement on its
subject matter, please sign and return to me the enclosed copy of
this Agreement. Please keep the other copy for your records.
Sincerely,
FRONTIER CORPORATION
/s/ Xxxxxx X. Xxxxxxx
By:-------------------
Xxxxxx X. Xxxxxxx
Its: Chairman and CEO
Agreed to on February 22, 1996
/s/ Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx Xxxxx
