AMENDMENT NO. 2 TO CONSULTING AGREEMENT
This AMENDMENT NO. 2 TO CONSULTING AGREEMENT (this "Agreement"),
dated as of December __, 1996, is made and entered into by and between NATIONAL
WIRELESS HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and
XXXXXXX X. XXXXXXXX (the "Executive").
BACKGROUND
The Company and the Executive are parties to a Consulting Agreement
dated as of September 22, 1993, as amended by Amendment No. 1 to Consulting
Agreement dated January 1995 (as amended, the "Consulting Agreement").
The Company, on behalf of itself and its stockholders, desires to
continue to attract and retain well-qualified executives and key personnel who
are an integral part of the management of the Company, such as the Executive,
and to assure itself of continuity of management. The Company recognizes that,
as is the case with many publicly-held corporations, the possibility of a change
of control exists and that such possibility, and the uncertainty which it may
raise among management, may result in the distraction or departure of management
to the detriment of the Company and its shareholders.
For these reasons, the Company desires to further amend, modify and
supplement the Consulting Agreement to (i) extend the retainer period set forth
under the Consulting Agreement, (ii) protect the continued employment of the
Executive which would be at risk in the event of a change in control and (iii)
provide an incentive to the Executive, whose knowledge, expertise and level of
performance are critical to the current and future success of the Company, to
remain in the employ of the Company, notwithstanding the uncertainty and job
insecurity created by an actual or threatened change in control.
This Agreement sets forth the specific severance compensation which
the Company agrees that it will pay to the Executive if the Executive's
employment with the Company terminates as provided herein.
NOW THEREFORE, in order to induce the Executive to remain in the
employ of the Company in consideration of the foregoing recitals and the mutual
covenants and agreements contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. As used herein, the terms below shall have the
following meanings:
(a) Cash Compensation. "Cash Compensation" shall mean the sum
of (x) the higher of the Executive's annual base consulting fee at (i) the time
the Notice of Termination provided for in Section 3(b) of this Agreement is
given or (ii) immediately prior to a Change in Control, and (y) an amount equal
to the highest aggregate Cash Bonus Earned by the Executive under all cash bonus
plans of the Company for any of the three fiscal years immediately preceding the
year in which the Date of Termination occurs. "Cash Bonus Earned" shall mean all
amounts actually earned for performance in a specific fiscal year without regard
to voluntary or mandatory payment deferrals if so specified in the applicable
bonus plan.
(b) Change in Control. A "Change in Control" of the Company
shall mean the occurrence during the term of the Consulting Agreement of any one
of the following events:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any person (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), but not including Xxxxxxxx X. Xxxxxxx
or Xxxxxxx X. Xxxxxxxx) (each such person, a "Person"), immediately
after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifteen
percent (15%) or more of the combined voting power of the Company's
then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Company or (2) any corporation
or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (B) the Company or its Subsidiaries, or (C) any
Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date this Agreement
is approved by the Board of Directors are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however, that if
the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall
be considered a member of the Incumbent Board if
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless such merger, consolidation or
reorganization is a "NonControl Transaction". A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization of the Company where:
(1) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own directly or indirectly immediately
following such merger, consolidation or reorganization,
at least seventy percent (70%) of the combined voting
power of the outstanding voting securities of the
corporation resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization,
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or
indirectly owning a majority of the Voting Securities of
the Surviving Corporation, and
(3) no Person other than (a) the Company,
(b) any Subsidiary, (c) any employee benefit plan (or
any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary,
or (d) any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership
of fifteen percent (15%) or more of the then outstanding
Voting Securities), has Beneficial Ownership of
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fifteen percent (15%) or more of the combined voting
power of the Surviving Corporation's then outstanding
voting securities.
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(c) Effective Date. "Effective Date" shall mean the date on
which a Change in Control is effectuated.
(d) Good Reason. The Executive's termination of employment
with the Company shall be deemed for "Good Reason" if it occurs within six (6)
months of any of the following without the Executive's express written consent:
(i) the assignment to the Executive by the Company of
duties inconsistent with, or a substantial alteration in the nature
or status of, Executive's responsibilities immediately prior to a
Change in Control of the Company other than any such alteration
primarily attributable to the fact that the Company's securities are
no longer publicly traded;
(ii) a reduction by the Company in the Executive's Cash
Compensation (as defined in Section 1(a) above) as in effect on the
date of a Change in Control of the Company or as in effect
thereafter if such Cash Compensation has been increased during the
term of this Agreement;
(iii) any failure by the Company to continue in effect
without substantial change any compensation, incentive, welfare or
benefit plan or arrangement, as well as any plan or arrangement
whereby the Executive
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may acquire securities of the Company, in which the Executive is
participating at the time of a Change in Control of the Company (or
any other plans, currently in effect or hereafter adopted by the
Company, providing the Executive with substantially similar
benefits) (hereinafter referred to as "Benefit Plans"), or the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's
benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of a
Change in Control of the Company unless an equitable substitute
arrangement (embodied in an ongoing substitute or alternative
Benefit Plan) has been made for the benefit of the Executive with
respect to the Benefit Plan in question. For purposes of the
foregoing, Benefit Plans shall include, but not be limited to, the
1993 Stock Option Plan or any other plan or arrangement to receive
and exercise stock options or stock appreciation rights,
supplemental pension plan, insured medical reimbursement plan,
automobile benefits, executive financial planning, group life
insurance plan, personal catastrophe liability insurance, medical,
dental, accident and disability plans;
(iv) relocation to any place more than 100 miles from
the office regularly occupied by the Executive, except for required
travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel
obligations at the time of a Change in Control;
(v) any material breach by the Company of any provision
of this Agreement or the Consulting Agreement;
(vi) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company; or
(vii) any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice
of Termination satisfying the requirements of Section 3(b) below,
and for purposes of this Agreement, no such purported termination
shall be effective.
All terms not otherwise defined herein shall have the meanings
ascribed to them in the Consulting Agreement.
2. Extension of Term and Amendment to Consulting Agreement. The
Consulting Agreement is hereby amended as follows:
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(a) The term of the Consulting Agreement as set forth in
Paragraph 1 thereof is hereby amended to provide for an extension of three
additional years.
(b) Paragraph 13 of the Consulting Agreement is hereby amended
by adding after the word "other" contained on the third line thereof the
following: "; provided, however, that a notice in connection with the
termination of the Executive's employment shall be provided in accordance with
the terms set forth in Section 3(b) of Amendment No. 2 to Consulting Agreement
dated as of December __, 1996".
3. Termination Following Change in Control.
(a) Termination of Employment. If a Change in Control of the
Company as defined in Section 1(b) shall have occurred while the Executive is
still an employee of the Company, the Executive shall be entitled to the
compensation provided in Section 4 upon the subsequent termination of the
Executive's employment with the Company by the Company or by the Executive,
unless such termination is a result of (i) the Executive's death; (ii) the
Executive is permanently disabled (as more fully described in Paragraph 6(a)(1)
of the Consulting Agreement); (iii) the Executive's termination by the Company
for "cause" (as defined in the Consulting Agreement); or (iv) the Executive's
decision to terminate his employment with the Company other than for Good Reason
(as defined in Section 1(d) above). No compensation shall be payable and no
rights shall vest in the Executive under this Agreement except as specifically
set forth in this Section 3(a).
(b) Notice of Termination. Any purported termination of the
Executive's employment by the Company or the Executive hereunder shall be
communicated by a Notice of Termination to the other party as set forth herein.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(c) Date of Termination. "Date of Termination" shall mean (i)
if this Agreement is terminated by the Company pursuant to Section 3(a)(ii)
above, thirty (30) days after Notice of Termination is given to the Executive
(provided that the Executive shall not have returned to the performance of the
Executive's duties on a full-time basis during such thirty (30) day period),
(ii) if the Executive's employment is terminated by the Company for any other
reason, the date on which a Notice of Termination is given, provided that if
within thirty (30) days after any Notice of Termination is given to the
Executive by the Company, the Executive notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual
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written agreement of the parties, by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected), or (iii) if the Agreement is terminated by
the Executive, the date on which the Executive delivers Notice of Termination to
the Company.
4. Severance Compensation upon Termination of Employment. If the
Executive's employment with the Company shall be terminated as provided in
Section 3(a), then the Company shall:
(a) subject to Sections 5 and 6 below, pay to the Executive as
severance payment in a lump sum in cash, on the fifth day following the Date of
Termination, an amount equal to three times (the "multiple") the Executive's
Cash Compensation (the "Executive's Severance Cash Benefit").
(b) arrange to provide the Executive for two years (or such
shorter period as Executive may elect) with disability, life, accident and
health insurance substantially similar to those insurance benefits which
Executive is receiving immediately prior to the Notice of Termination (including
coverage for dependents at the same per person cost as the Executive is then
paying). Benefits otherwise receivable by Executive pursuant to this Section
4(b) shall be reduced to the extent comparable benefits are actually received by
the Executive during such two (2) year period following his termination (or such
shorter period elected by the Executive), and any such benefits actually
received by Executive shall be reported by him to the Company.
5. Reduction in Benefits for "Parachute Payment". Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
payments under Section 4 of this Agreement to the Executive, either alone or
together with other payments the Executive has a right to receive from the
Company, would not be deductible (in whole or in part) by the Company as a
result of such payments constituting a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code, as amended (the "Code")), such
payments shall be reduced to the largest amount as will result in no portion of
the payments under Section 4 not being fully deductible by the Company as the
result of Section 280G of the Code. The determination of any reduction in the
payments under Section 4 pursuant to the foregoing sentence shall be made
exclusively by Coopers & Xxxxxxx, LLP, or such other firm of certified
independent public accountants as may be serving as the Company's principal
auditors immediately prior to the Effective Date (the "Auditors") (whose fees
and expenses shall be borne by the Company), and such determination shall be
conclusive and binding on the Company and the Executive.
6. Reduction of Severance Cash Benefit in Certain Other
Circumstances. Notwithstanding anything contained in this Agreement to the
contrary, in the event that on the Effective
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Date the Company's Aggregate Severance Liability (as defined below) exceeds 5%
of the Company's Market Capitalization (as defined below), the Executive's
Severance Cash Benefit shall be reduced to the product of (a) 5% of the
Company's Market Capitalization and (b) a fraction (x) the numerator of which
shall be the Executive's Severance Cash Benefit as of the Effective Date and (y)
the denominator of which shall be the Company's Aggregate Severance Liability.
"The Company's Aggregate Severance Liability," as used herein, shall
mean an amount (determined by the Auditors) equal to the aggregate of the
Severance Cash Benefits payable to all employees of the Company party to written
Severance Benefit Agreements on the Effective Date, calculated as of the
Effective Date instead of as of the Dates of Termination of such employees and
in each case reduced by the applicable "parachute payment" reduction, if any,
described in Section 5 hereof. "The Company's Market Capitalization," as used
herein, shall mean the sum of: (i) the product of (a) the total number of shares
of common stock of the Company (the "Common Stock") outstanding as of the
Effective Date and (b) the last reported sale price on the Nasdaq SmallCap of
one share of Common Stock on the Effective Date; plus (ii) the product of (a)
the total number of shares of preferred stock of the Company (the "Preferred
Stock") outstanding on the Effective Date and (b) the liquidation value of one
share of Preferred Stock; plus (iii) the aggregate amount of outstanding
indebtedness for borrowed money of the Company on the Effective Date; plus (iv)
the aggregate amount of short and lone-term liabilities of the discontinued
operations of the Company as reflected on the Company's most recently prepared
quarterly balance sheet. "The Executive's Severance Cash Benefit as of the
Effective Date," as used herein, shall mean an amount (determined by the
Auditors) equal to the Executive's Severance Cash Benefit calculated as of the
Effective Date rather than as of the Date of Termination, which calculation
shall include the "parachute payment" reduction, if any, which would be made
pursuant to Section 5 hereof. The determination of any reduction in the
Executive's Severance Cash Benefits pursuant to this Section 6 shall be made
exclusively by the Auditors (whose fees and expenses shall be borne by the
Company), and such determination shall be conclusive and binding on the Company
and the Executive.
7. Mitigation of Damages. The Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination, or otherwise, except to the extent provided in Section 4 above.
8. Effect of Agreement on Other Contractual Rights. The provisions
of this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in
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any way diminish the Executive's existing rights, or rights which would accrue
solely as a result of the passage of time, under the Consulting Agreement, any
Benefit Plan or other contract, plan or arrangement.
9. Term. This Agreement shall terminate, except to the extent that
any obligation of the Company hereunder remains unpaid, upon the earliest of (i)
five years from the date hereof if a Change in Control has not occurred within
such five-year period; (ii) upon the termination of the Executive's employment
with the Company based on death, retirement, disability (as described in Section
3(a)(ii)) or cause or by the Executive other than for Good Reason; or (iii)
three years from the Effective Date of a Change in Control which was not
approved by the Board of Directors or two years from the Effective Date of a
Change in Control which was approved by the Board of Directors.
10. Successor to the Company.
(a) Assumption of Agreement. The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession 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 such
succession had not occurred, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination. For purposes of this Section 10, "Company" shall
mean the Company as defined above and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for herein or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) Heirs of the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts are still
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
11. Miscellaneous. No provisions of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver, or
discharge is agreed to in writing signed by the Executive and the Company. No
waiver by either party
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hereto at any time of any breach by the other party of 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. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Gender. In this Agreement (unless the context requires
otherwise), the use of any masculine term shall include the feminine.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NATIONAL WIRELESS HOLDINGS, INC.
By: ____________________________
Name: Xxxxxxxx X. Xxxxxxx
Title: President
________________________________
Xxxxxxx X. Xxxxxxxx
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