Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as
of January 1, 2005, between Alamosa Holdings, Inc., a Delaware corporation,
with its principal office located at 0000 X. Xxxx 000, Xxxxxxx, XX (together
with its successors and assigns permitted under this Agreement) ("Alamosa"),
and Xxxxxx Xxxxxxxxxx ("Employee").
W I T N E S S E T H:
WHEREAS, Alamosa and Employee entered into that certain Employment
Agreement effective as of December 1, 2002 (the "Original Agreement");
WHEREAS Alamosa has determined that it is in the best interests of
Alamosa and its stockholders to enter into this Agreement amending and
restating the obligations and duties of both Alamosa and Employee under the
Original Agreement; and
WHEREAS, Alamosa wishes to assure itself of the continued service of
Employee for the period hereinafter provided, and Employee is willing to be
employed by Alamosa for said period, upon the terms and conditions provided in
this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, Alamosa and Employee (individually a "Party"
and together the "Parties") agree as follows:
1. DEFINITIONS.
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(b) "Base Salary" shall mean the annual salary provided for in Section
3 below, as adjusted from time to time by the Board.
(c) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(d) "Beneficiary" shall mean the person or persons named by Employee
pursuant to Section 22 below or, in the event that no such person is named and
survives Employee, his estate.
(e) "Board" shall mean the Board of Directors of Alamosa.
(f) "Cause" shall mean:
(i) Employee's conviction in a court of law of, or guilty
plea or no contest plea to, a felony charge,
(ii) willful, substantial and continued failure by Employee
to perform his duties under this Agreement,
(iii) willful engagement by Employee in conduct that is
demonstrably and materially injurious to Alamosa,
(iv) a breach by Employee of Section 11 or Section 12 below.
For the purposes of clauses (ii) and (iii) of this definition, no act
or failure to act on the part of Employee shall be deemed "willful"
(x) if caused by Disability or (y) unless done, or omitted to be done,
by him not in good faith or without reasonable belief that his act or
omission was in the best interests of Alamosa.
(g) "Change of Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of Alamosa (not including in the
securities beneficially owned by such Person any securities acquired
directly from Alamosa or its Affiliates) representing 25% or more of
the combined voting power of Alamosa's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection
with a transaction described in clause (A) of paragraph (iii) below;
or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of Alamosa) whose appointment or election by the Board or
nomination for election by Alamosa's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously
so approved or recommended; or
(iii) there is consummated a merger or consolidation of
Alamosa or any direct or indirect subsidiary of Alamosa with any other
corporation or other entity, other than (A) a merger or consolidation
(1) which results in the voting securities of Alamosa outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at
least 60% of the combined voting power of the securities of Alamosa or
such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation and (2) after which the individuals
who comprise the Board immediately prior thereto constitute at least a
majority of the board of directors of Alamosa, the entity surviving
such merger or consolidation or, if Alamosa or the entity surviving
such merger is then a subsidiary, the ultimate parent thereof, or (B)
a merger or consolidation effected to implement a recapitalization of
Alamosa (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of Alamosa
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from Alamosa or its Affiliates)
representing 25% or more of the combined voting power of Alamosa 's
then outstanding securities; or
(iv) the stockholders of Alamosa approve a plan of complete
liquidation or dissolution of Alamosa or there is consummated an
agreement for the sale or disposition by Alamosa of all or
substantially all of Alamosa 's assets, other than a sale or
disposition by Alamosa of all or substantially all of Alamosa's assets
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board
of directors of the entity to which such assets are sold or disposed
or any parent thereof.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of Alamosa immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of
Alamosa immediately following such transaction or series of transactions.
(h) "Code" shall mean the Internal Revenue Code of 1986, as from time
to time amended.
(i) "Committee" shall mean the Compensation Committee of the Board.
(j) "Date of Termination" shall mean, with respect to any purported
termination of Employee's employment during the Term, (i) if Employee's
employment terminates due to Disability, 30 days after a good faith
determination of Disability by Alamosa (provided that Employee shall not have
returned to full-time performance of his duties during such 30-day period),
(ii) if Employee's employment terminates due to death, the date of death, and
(iii) if Employee's employment terminates for any other reason, the date
specified in the Notice of Termination (which shall be not less than 30 days
after the date of such Notice of Termination).
(k) "Disability" shall have the meaning set forth in Alamosa's
long-term disability policy as in effect from time to time.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Excise Tax" shall mean any excise tax imposed under Section 4999
of the Code.
(n) "Good Reason" shall mean the occurrence (without Employee's
express written consent) of any one of the following acts or omissions by
Alamosa unless, in the case of any act or omission described in this Section
1(n), such act or omission is corrected prior to the Date of Termination
specified in the Notice of Termination in respect thereof:
(i) the assignment to Employee of any duties, which taken as
a whole, are inconsistent with the duties of an officer, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by Alamosa promptly after
receipt of notice thereof given by Employee;
(ii) a reduction by Alamosa in Employee's base salary and/or
annual bonus opportunity as in effect on the date hereof or as the
same may be increased from time to time, except for across-the-board
reductions similarly affecting all senior executives of Alamosa;
(iii) the failure by Alamosa to pay to Employee any portion
of Employee's current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all senior
executives of Alamosa;
(iv) the failure by Alamosa to continue to provide Employee
with benefits substantially similar to those enjoyed by Employee under
any of Alamosa's savings/retirement, life insurance, medical, health
and accident, disability plans or other benefits (including, without
limitation, automobile, country club, and vacation benefits) in which
Employee was participating at the time, the taking of any action by
Alamosa which would directly or indirectly materially reduce any of
such benefits or deprive Employee of any material fringe benefit
enjoyed by Employee at the time, (including, without limitation,
automobile, country club, and vacation benefits);
(v) the relocation of Alamosa's principal offices to a
location more than 50 miles from the location of such offices on the
date of this Agreement or a requirement that Employee be based
anywhere other than at Alamosa's principal offices except for
necessary travel on Alamosa's business to an extent substantially
consistent with Employee's business travel obligations on the date of
this Agreement;
(vi) a dispute between Alamosa and Employee over material
accounting issues; provided, however, any such dispute shall not
constitute Good Reason if Alamosa, at its own expense, elects to have
a nationally recognized public accounting firm resolve the accounting
issue dispute and such accounting firm substantially agrees with
Alamosa's position regarding such accounting issue; or
(vii) any determination by Employee after the occurrence of a
Change of Control that Good Reason exists (which determination shall
be final and conclusive).
(o) "LSAR" means Employee's right to receive a cash payment in respect
of the mandatory cancellation of an option equal to the product of (1) the
excess, if any, of the then fair market value (as determined under the LTIP) of
a share of Alamosa common stock over the per share exercise price of the option
and (2) the number of shares of stock subject to the option.
(p) "LTIP" means Alamosa's Amended and Restated 1999 Long Term
Incentive Plan, or any successor plan thereto, or any amendment thereof.
(q) "Notice of Termination" shall mean delivery of written notice by
one Party and receipt thereof by the other Party in accordance with Section 26
below, which notice shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment hereunder.
(r) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) Alamosa or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
Alamosa or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of Alamosa in substantially
the same proportions as their ownership of stock of Alamosa.
(s) "Severance Payments" shall have the meaning set forth in Section
9(d)(ii) below.
(t) "Tax Counsel" shall have the meaning set forth in Section 10
below.
(u) "Term" shall mean the period specified in Section 2(b) below
during which Employee is employed by Alamosa or any of its Affiliates.
(v) "Total Payments" shall mean those payments so described in Section
10 below.
2. TERM OF EMPLOYMENT, POSITIONS AND DUTIES.
(a) Employment of Employee. Alamosa hereby employs Employee, and
Employee hereby accepts employment with Alamosa, in the position and with the
duties and responsibilities set forth below and upon such other terms and
conditions as are hereinafter stated.
(b) Term of Employment. The Term shall commence on the date of this
Agreement and shall terminate on December 31, 2006 unless it is sooner
terminated as provided in Section 9 below or extended by agreement of the
Parties. Notwithstanding the foregoing, this Agreement shall be automatically
renewed for one (1) year terms, unless a notice to terminate this Agreement is
given by either party. This notice to terminate must be given on or before
September 30th of the then current year. If such notice is not given by either
party on or before that date, this Agreement shall automatically be extended
until December 31st of the following year. This Agreement will govern any such
extension.
(c) Title, Duties and Authorities. Until termination of his employment
hereunder, Employee shall be employed as Chief Operating Officer of Alamosa,
with all the authorities and responsibilities that normally accrue to such
position of chief operating officer, and shall hold such other titles as the
Board may grant. Employee shall receive no additional compensation for serving
in any other capacity.
(d) Time and Effort.
(i) Employee agrees to devote his best efforts and abilities
and his full business time and attention to the affairs of Alamosa in
order to carry out his duties and responsibilities under this
Agreement.
(ii) Notwithstanding the foregoing, nothing shall preclude
Employee from
(A) serving on the boards of (x) a reasonable number
of trade associations and charitable organizations, and (y)
(as defined below) with the prior consent of the Board (which
shall not be unreasonably withheld), any other business not
in Competition with Alamosa,
(B) engaging in charitable activities and community
affairs, and
(C) managing his personal investments and affairs;
provided, however, that any such activities do not materially
interfere with the proper performance of his duties and
responsibilities specified in Section 2(c) above.
3 BASE SALARY.
Employee shall receive from Alamosa an initial Base Salary, payable in
accordance with the regular payroll practices of Alamosa, of $275,000. During
the Term, the Board shall review the Base Salary for increase no less often
than annually.
4. ANNUAL BONUS.
Employee shall be eligible to receive an annual bonus, which shall
have an initial target of $165,000. Payment of the annual bonus (which may, in
the Committee's discretion, be paid in whole or in part on a quarterly basis)
shall be based upon the achievement of such performance goals as the Committee
shall determine based on Alamosa's budget and business plan. No annual bonus
will be payable unless the Committee determines that at least 75% of the
performance goals have been achieved. The amount of the annual bonus payable
shall be determined in accordance with the terms of the applicable Alamosa
bonus plan, but in no case shall exceed 200% of the target for the annual
bonus.
5. LONG-TERM INCENTIVE COMPENSATION.
During the Term, Employee shall participate in any long-term incentive
plan or plans that may be established by Alamosa for members of Alamosa's
senior management generally.
6. EQUITY GRANTS.
(a) Annual Option Grants. On the first business day of January of each
year, the Committee shall grant Employee options according to the following
schedule: 2005 - 40,000 options, 2006 - 32,000 options (each an "Option"). With
respect to each Option, three percent (3%) of the total number of shares
subject to such Option shall become vested and fully exercisable each month
following the date of the grant of such Option. All shares subject to each
Option will vest and become vested and exercisable if Employee's employment
terminates pursuant to Section 9(d) below. Each Option shall have a per share
exercise price equal to the fair market value (as defined in the LTIP) of a
share of Alamosa common stock on the date of grant.
(b) Incentive Stock Options. All stock options to be granted to
Employee hereunder shall, to the maximum extent permitted by Section 422 of the
Code, be intended to qualify as "incentive stock options."
(c) Employment Required; Other Option Terms. In order to receive any
option grant pursuant to this Section 6, Employee must be employed by Alamosa
or one of its Affiliates on the date of grant and any option granted pursuant
to this Section 6 shall be subject to the terms and conditions of the form of
Alamosa Executive Stock Option Agreement under the LTIP to the extent such
agreement is not inconsistent with this Section 6. In addition, except as
otherwise provided herein or in the Executive Stock Option Agreement, option
vesting will be subject to Employee's continued employment hereunder.
(d) Restricted Stock Grant. On the first business date of January of
each year, the Committee shall grant (subject to the terms of the LTIP and the
specific terms of a restricted stock agreement substantially in the form
attached hereto as Exhibit A) Employee shares of restricted stock pursuant to
the following schedule: 2005- 30,000 shares; 2006 - 24,000 shares.
(e) LSAR Conversion. Employee acknowledges that immediately prior to
the occurrence of a "change in ownership or control" (as defined in Prop Reg
1.280G-1) of Alamosa, each stock option that has been granted to him pursuant
to this Section 6 that had not yet become vested and exercisable shall
automatically convert into an LSAR.
7. EXPENSE REIMBURSEMENT.
Employee shall be entitled to prompt reimbursement by Alamosa for all
reasonable out-of-pocket expenses incurred by him during the Term in performing
services under this Agreement, upon his submission of such accounts and records
as may be reasonably required by Alamosa.
8. EMPLOYEE BENEFIT PLANS AND PERQUISITES.
During the Term, Employee shall be entitled to participate in all life
insurance, short-term and long-term disability, accident, health insurance and
savings/retirement plans that are applicable to Alamosa employees generally or
to the senior executives of Alamosa. Alamosa will also reimburse Employee for
the cost of the Employee's annual physical exams performed during the Term by a
physician chosen by Employee. The cost of each such exam (including of any
tests performed in connection with the physical) shall not exceed $5,000.
During the Term, Employee shall be entitled to receive a car allowance
and other perquisites consistent with the Executive Benefit Policy approved by
the Committee.
9. TERMINATION OF EMPLOYMENT.
(a) General. Notwithstanding anything to the contrary herein, in the
event of termination of Employee's employment under this Agreement for any
reason whatsoever, he, his dependents or Beneficiary, as may be the case, shall
be entitled to receive (in addition to payments and benefits under, and except
as specifically provided in, subsections (b) through (e) below as applicable):
(i) his Base Salary through the Date of Termination;
(ii) payment in lieu of any unused vacation, in accordance
with Alamosa's vacation policy and applicable laws;
(iii) any earned annual bonus not yet paid to him;
(iv) any deferred compensation under any deferred
compensation agreement or plan then in effect;
(v) any other compensation or benefits, including without
limitation long-term incentive compensation described in Section 5
above, in accordance with Section 6 above and employee benefits under
plans described in Section 8 above, that have vested through the Date
of Termination or to which he may then be entitled in accordance with
the applicable terms of each award or plan; and
(vi) reimbursement in accordance with Section 7 above of any
business expenses incurred by Employee through the Date of Termination
but not yet paid to him and reimbursement of any unpaid expenses
incurred pursuant to Section 8 above.
(b) Termination due to Death or Disability. In the event that
Employee's employment terminates due to his death or disability, he or his
Beneficiary, as the case may be, shall be entitled, in addition to the
compensation and benefits specified in Section 9(a), to:
(i) his Base Salary, at the rate in effect on the Date of
Termination, through the end of the month in which the termination
occurs, and
(ii) an annual bonus under Alamosa's annual bonus plan. Such
annual bonus shall be prorated to the Date of Termination and shall be
paid based on the Board's determination (which shall be made in the
Board's sole and absolute discretion) of what annual bonus Employee
would likely have received in respect of the year in which the
termination occurred.
(c) Termination by Alamosa for Cause. In the event that Alamosa
terminates Employee's employment for Cause, he shall be entitled only to the
compensation and benefits specified in Section 9(a).
Notwithstanding the foregoing, termination for Cause may not occur
pursuant to clauses (ii) or (iii) of Section 1(f) above unless and until, with
the Board's prior approval, Alamosa has delivered to Employee Notice of
Termination, which shall contain in reasonable detail the facts purporting to
constitute such nonperformance, act, omission or breach, and afforded him 30
days thereafter to cure the same (if curable) and/or to respond in writing to
the Board setting forth his position that his termination for Cause should not
occur and requesting reconsideration by the Board, in which event (x) the
effective date of termination of employment shall be deferred until the Board
has had the opportunity to consider whether such nonperformance, act, omission
or breach has been cured and to consider any request by Employee for
reconsideration, and (y) the Board shall thereafter cause a written notice to
be delivered on its behalf to Employee stating either that it has rescinded its
determination that his employment is to be terminated for Cause or that affirms
its determination that his employment is to be terminated for Cause and that
contains an effective date of termination of employment, which shall be not
earlier than 15 days after such notice is given. Section 1(n)(i) to the
contrary notwithstanding, upon delivery to Employee of Notice of Termination
under this Section 9(c), Employee shall be suspended from all duties and
responsibilities unless and until the Board rescinds its determination that his
employment is to be terminated for Cause.
(d) Termination by Alamosa Without Cause or by Employee for Good
Reason.
(i) Alamosa shall provide Employee 30 days' Notice of
Termination of his employment without Cause, and Employee shall
provide 30 days' Notice of Termination of his employment for Good
Reason.
(ii) In the event of termination by Alamosa of Employee's
employment without Cause or of termination by Employee of his
employment for Good Reason, he shall be entitled, in addition to the
compensation and benefits specified in Section 9(a), to the following
compensation and benefits (the "Severance Payments"):
(A) his Base Salary, at the rate in effect
immediately before such termination (two times his Base
Salary if the Employee's employment terminates within twelve
months following a Change in Control),
(B) the higher of the Employee's target annual bonus
or average annual bonus earned over the two preceding fiscal
years (two times such amount if the Employee's employment
terminates within twelve months following a Change in
Control),
(C) a prorated amount of Employee's annual bonus for
the year during which his termination occurs, which bonus
shall not be less than the product of (A) the annual bonus
paid to Employee for the calendar year preceding the Date of
Termination that has most recently been paid to Employee and
(B) a fraction, the numerator of which is the number of days
in the current calendar year through the Date of Termination
and the denominator of which is 365;
(D) continuing coverage under the life, disability,
accident and health insurance programs for Alamosa employees
generally and under any supplemental programs covering
Alamosa executives, as from time to time in effect, for a
one-year period from such termination or until Employee
becomes eligible for substantially similar coverage under the
employee welfare plans of a new employer, whichever occurs
earlier (for a two year period if the Employee's employment
terminates within twelve months following a Change in
Control) (at the end of the foregoing coverage period,
Employee shall also be entitled to elect coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ); and
(E) continuation of all other benefits in effect on
the Date of Termination (including, without limitation,
automobile, country club, vacation and pension benefits, if
applicable) for a one-year period (a two year period if the
Employee's employment terminates within twelve months
following a Change in Control) following such termination or
until Employee becomes eligible for substantially similar
benefits from a new employer, whichever occurs earlier.
(iii) The payments specified in Sections 9(d)(ii)(A), (B) and
(C) shall be made by Alamosa to Employee in a lump sum in cash within
30 days of the Date of Termination.
(iv) Employee's right to terminate his employment for Good
Reason shall not be affected by his incapacity due to physical or
mental illness. Employee's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or omission
constituting Good Reason.
(v) As a condition to receiving the payments and benefits
pursuant to this Section 9(d), Employee shall be required to execute
(and not revoke) a general release of all claims against Alamosa and
its Affiliates. Such release shall be in a form substantially similar
to that attached as Exhibit B hereto.
(e) Voluntary Termination by Employee. Employee shall have the right
voluntarily to terminate his employment in accordance with Section 1(j) above.
If he does so, he shall be entitled only to the compensation and benefits
specified in Section 9(a).
(f) Cessation of Payments. If, during or after the Term, Employee
commits a breach of Section 11 or Section 12 below, Alamosa shall have no
further obligation to make payments to him under this Agreement except as may
be required in accordance with Section 9(a).
(g) Notice Requirements. Any purported termination of Employee's
employment that is not effected pursuant to Notice of Termination satisfying
the requirements of Sections 1(j) and 1(q) and Section 26 shall not be
effective for purposes of this Agreement.
10. 280G TREATMENT.
(a) Whether or not Employee becomes entitled to any payments pursuant
to Section 9(d) hereof, if any of the payments or benefits received or to be
received by Employee (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change of Control or any Person affiliated with Alamosa or such
Person) (all such payments and benefits, excluding the Gross-Up Payment, being
hereinafter referred to as the "Total Payments") will be subject to the Excise
Tax, Alamosa shall pay to Employee an additional amount (the "Gross-Up
Payment") such that the net amount retained by Employee, after deduction of any
Excise Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to
the Total Payments. The Gross-Up Payment shall be paid to Employee by Alamosa
within two business days of the day of its calculation.
(b) For purposes of determining whether any of the Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax
Counsel") reasonably acceptable to Employee, such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of Section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the base amount (as defined in Section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (iii) the value of any noncash benefits or any deferred payment
or benefit shall be determined in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, Employee shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Employee's
residence on the date Employee's employment hereunder terminates (or if there
is no such termination, then the date on which the Gross-Up Payment is
calculated for purposes of this Section 10), net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.
(c) In the event that the Excise Tax is finally determined to be less
than the amount taken into account hereunder in calculating the Gross-Up
Payment, Employee shall repay to Alamosa, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction plus that portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by Employee, to the extent that such repayment
results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
Employee's taxable income and wages for purposes of federal, state and local
income and employment taxes, plus interest on the amount of such repayment at
120% of the rate provided in Section 1274(b)(2)(B) of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), Alamosa shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by
Employee with respect to such excess) within five (5) business days following
the time that the amount of such excess is finally determined. Employee and
Alamosa shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments.
(d) Notwithstanding the foregoing provisions of this Section 10, if it
shall be determined that Employee is entitled to a Gross-Up Payment, but the
Total Payments do not exceed 115% of the greatest amount (the "Reduced Amount")
that could be paid to Employee such that the receipt of Total Payments would
not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
Employee and the Total Payments, in the aggregate, shall be reduced to the
Reduced Amount. If a reduction is required, Employee and Alamosa shall
determine, after consultation, which payments and or benefits shall be waived,
reduced or forfeited to accomplish the reduction.
(e) Upon Employee's request, Alamosa shall provide Employee with a
written statement setting forth the manner in which calculations were made
pursuant to this Section 10 including, without limitation, any opinions or
other advice Alamosa has received from Tax Counsel or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).
11. NON-COMPETITION/NON-SOLICITATION.
(a) During Employee's employment with Alamosa, Employee shall not
engage in "Competition" with Alamosa or any Affiliate (collectively, the
"Company Group"). For purposes of this Agreement, Competition by Employee shall
mean Employee's engaging in, or otherwise directly or indirectly being employed
by or acting as a consultant or lender to, or being an agent, principal, owner,
partner, corporate officer, director, shareholder, member, or investor of, or
permitting his name to be used in connection with the activities of any other
business or organization anywhere in the United States which competes with the
Business of any entity in the Company Group. For these purposes, the "Business"
is establishing and providing mobile wireless communications services,
including all aspects of the Business, within the "Service Area" as that term
is defined in the Schedule of Definitions referred to in and incorporated by
reference into the Sprint PCS Management Agreements dated as of July 10, 1998,
December 8, 1998, January 25, 1999, December 6, 1999 and December 23, 1999 (as
they may be amended from time to time) or any other similar Sprint Management
Agreement to which Alamosa or any of its Affiliates may be a party ("the Sprint
Agreement"); provided that; it shall not be a violation of this sub-paragraph
for Employee to become the registered or beneficial owner of up to five percent
(5%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided the Employee
does not actively participate in the business of such corporation until such
time as this covenant expires.
(b) For a period of one year following the termination of Employee's
employment (two years if Employee's employment terminates under Section 9(d)
during the Term and within twelve months following a Change of Control),
whether upon expiration of this Agreement or otherwise, Employee shall not
engage in Competition, as defined above, in the Service Area or in any area in
which Alamosa had, as of the date of the expiration of termination of this
Agreement, a bona fide intention to begin to operate its Business; provided
that, it shall not be a violation of this sub-paragraph for Employee to (1)
become the registered or beneficial owner of up to five percent (5%) of any
class of the capital stock of a competing corporation registered under the
Securities Exchange Act of 1934, as amended, provided Employee does not
actively participate in the business of such corporation until such time as
this covenant expires, (2) commence employment with an employer or provide
services to an entity who conducts the Business in one or more areas within the
Service Area so long as such areas do not contain more than 25% of Alamosa's
subscribers and Employee's services do not primarily relate to the Service Area
or (3) commence employment with or provide services to a national carrier of
the Business (e.g., Verizon or AT&T) if Employee's services do not primarily
relate to the Service Area. Notwithstanding anything to the foregoing, it shall
not be a violation of this sub-paragraph for an Employee to commence employment
or provide consulting services to an entity that derives more than 80% of its
revenues from cellular communications services.
(c) For a period of one year (two years if Employee's employment
terminates under Section 9(d) during the Term and within twelve months
following a Change of Control) after Employee ceases to be employed hereunder,
whether upon expiration of this Agreement or otherwise, Employee agrees that he
will not, directly or indirectly, for his benefit or for the benefit of any
other person, firm or entity, do any of the following:
(i) recruit or solicit (other than pursuant to general,
non-targeted advertisements) the employment or services of, or hire,
in any business enterprise or activity, any person who was employed by
an entity in the Company Group upon termination of Employee's
employment, or within six (6) months prior thereto;
(ii) solicit from any customer or client doing business with
an entity in the Company Group as of Employee's termination, business
of the same or a similar nature to the business of such entity of the
Company Group with such customer or client;
(iii) solicit from any potential customer of an entity in the
Company Group business of the same or a similar nature to that which
has been the subject of a written or oral bid, offer or proposal by
such entity of the Company Group, or of substantial preparation with a
view to making such a bid, offer or proposal, within six (6) months
prior to Employee's termination; or
(iv) otherwise knowingly interfere with the business or
accounts of any entity in the Company Group.
(d) Employee acknowledges that the services to be rendered by him
hereunder are of a special and unique character, which gives this Agreement a
peculiar value to Alamosa, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law, and that a breach or
threatened breach by his of any of the provisions contained in this Section 11
will cause the Company irreparable injury. Employee therefore agrees that in
the event of a violation or threatened violation of any of the provisions
contained in this Section 11, Alamosa or any of its Affiliates shall be
entitled, in addition to any other right or remedy, to a temporary, preliminary
and permanent injunction, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or
restraining Employee from any such violation or threatened violations.
(e) Employee further agrees that due to the confidential nature of the
information he will possess, the covenants set forth herein are reasonable and
necessary for the protection of the goodwill or other business interest of the
Company Group.
(f) Employee agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion
thereof, set forth in this Section 11 is overly restrictive and unenforceable,
the court may reduce or modify such restrictions to those which it deems
reasonable and enforceable under the circumstances, and as so reduced or
modified, the parties hereto agree that the restrictions of this Section 11
shall remain in full force and effect. Employee further agrees that if a court
of competent jurisdiction determines that any provision of this Section 11 is
invalid or against public policy, the remaining provisions of this Section 11
and the remainder of this Agreement shall not be affected thereby, and shall
remain in full force and effect.
12. CONFIDENTIAL INFORMATION.
Employee recognizes and acknowledges that he will have access to
certain information of members of the Company Group and that such information
is confidential and constitutes valuable, special and unique property of such
members of the Company Group. The Parties agree that Alamosa has a legitimate
interest in protecting the Confidential Information, as defined below, and is
entitled to protection of its interests in the Confidential Information.
Employee shall not at any time, either during or subsequent to the Term,
disclose to others, use, copy or permit to be copied, except in pursuance of
his duties for or on behalf of Alamosa, any Confidential Information of any
member of the Company Group (regardless of whether developed by Employee)
without the prior written consent of Alamosa. Employee acknowledges that the
use or disclosure of the Confidential Information to anyone or any third party
could cause monetary loss and damages to Alamosa. The Parties further agree
that in the event of a violation of this covenant against non-use and
non-disclosure of Confidential Information, Alamosa shall be entitled to a
recovery of damages from Employee and/or an injunction against Employee for the
breach or violation or continued breach or violation of this covenant.
The term "Confidential Information" with respect to any person means
any secret or confidential information or know-how and shall include, but shall
not be limited to, the plans, financial and operating information, customers,
supplier arrangements, contracts, costs, prices, uses, and applications of
products and services, results of investigations, studies or experiments owned
or used by such person, and all apparatus, products, processes, compositions,
samples, formulas, computer programs, computer hardware designs, computer
firmware designs, and servicing, marketing or manufacturing methods and
techniques at any time used, developed, investigated, made or sold by such
person, before or during the term of this Agreement, that are not readily
available to the public or that are maintained as confidential by such person.
The Employee shall maintain in confidence any Confidential Information of third
parties received as a result of his employment with the Company in accordance
with the Company's obligations to such third parties and the policies
established by the Company.
13. DELIVERY OF DOCUMENTS UPON TERMINATION.
Employee shall deliver to Alamosa or its designee at the termination
of his employment all correspondence, memoranda, notes, records, drawings,
sketches, plans, customer lists, product compositions, and other documents and
all copies thereof, made, composed or received by Employee, solely or jointly
with others, that are in Employee's possession, custody, or control at
termination and that are related in any manner to the past, present, or
anticipated business or any member of the Company Group. In this regard,
Employee hereby grants and conveys to Alamosa all right, title and interest in
and to, including without limitation, the right to possess, print, copy, and
sell or otherwise dispose of, any reports, records, papers, summaries,
photographs, drawings or other documents, and writings, and copies, abstracts
or summaries thereof, that may be prepared by the Employee or under his
direction or that may come into his possession in any way during the term of
employment with Alamosa that relate in any manner to the past, present or
anticipated business of any member of the Company Group.
14. DISPUTES.
The Parties agree to the following in regard to any disputes between
them arising under any of the provisions of this Agreement other than the
provisions of Sections 11 through 13 hereof. Nothing in this Section 14 applies
to or governs disputes arising under Sections 11 through 13 of this Agreement.
(a) MEDIATION. The Parties agree to mediate any dispute arising under
the applicable provisions of this Agreement. In the event of any such dispute,
the parties, within thirty (30) days of a written request for mediation, shall
attend, in good faith, a mediation in order to make a good faith reasonable
effort to resolve such dispute arising under this Agreement. The Parties shall
attempt, in good faith, to agree to a mediator. If unable to so agree, the
Parties, in that event, will move to arbitration as provided in this Agreement
and there will be no mediation. If this good faith mediation effort fails to
resolve any dispute arising under this Agreement, the Parties agree to
arbitrate any dispute arising under this Agreement. This arbitration shall
occur only after the mediation process described herein.
(b) ARBITRATION. The Parties agree, on the advice of their counsel,
and as evidenced by the signatures of the Parties and of their respective
attorneys, that all questions as to rights and obligations arising under the
terms of this Agreement are subject to arbitration and such arbitration shall
be governed by the provisions of the Texas General Arbitration Act (Texas Civil
Practice and Remedies Code Section 171.001 et seq as it may be amended from
time to time).
(c) DEMAND FOR ARBITRATION. If a dispute should arise under this
Agreement, either Party may within thirty (30) days make a demand for
arbitration by filing a demand in writing with the other.
(d) APPOINTMENT OF ARBITRATORS. The Parties to this Agreement may
agree on one arbitrator, but in the event that they cannot so agree, there
shall be three arbitrators, one named in writing by each of the Parties within
thirty (30) days after demand for arbitration is made, and a third to be chosen
by the two so named. The arbitrators among themselves shall appoint a presiding
arbitrator. Should either Party fail to timely join in the appointment of the
arbitrators, the arbitrators shall be appointed in accordance with the
provisions of Texas Civil Practice and Remedies Code Section 171.041.
(e) HEARING. All arbitration hearings conducted under the terms of
this Agreement, and all judicial proceedings to enforce any of the provisions
of this Agreement, shall take place in Lubbock County, Texas. The hearing
before the arbitrators of the matter to be arbitrated shall be at the time and
place within that County selected by the arbitrators or if deemed by the
arbitrators to be more convenient for the parties or more economically
feasible, may be conducted in any city within the Service Area or within the
State of Texas.
(f) ARBITRATION AWARD. If there is only one arbitrator, his or her
decision shall be binding and conclusive. Similarly, a decision by a panel of
arbitrators shall also be binding and conclusive. The submission of a dispute
to the arbitrators and the rendering of their decision shall be a condition
precedent to any right of legal action on the dispute. A judgment confirming
the award of the arbitrators may be rendered by any court having jurisdiction;
or the court may vacate, modify, or correct the award in accordance with the
provisions of the Texas General Arbitration Act (Texas Civil Practice and
Remedies Code ss. 171.087 et seq as it may be amended from time to time).
(g) COSTS OF ARBITRATION. The costs and expenses of arbitration,
including the fees of the arbitrators but excluding any attorneys' fees, shall
be advanced by Alamosa, but will ultimately be borne by the losing party or in
such proportions as the arbitrators shall determine.
(h) CONDUCT OF ARBITRATION. Any arbitration brought under the terms of
this Agreement shall be conducted in the following manner:
(i) Time Limitations. The Parties agree that the following
time limitations shall govern the arbitration proceedings conducted
under the terms of this Agreement:
(A) Any demand for arbitration must be filed within
thirty (30) days of the date the mediation is deemed
unsuccessful, or thirty (30) days after the date of the
written request for mediation, whichever is later.
(B) Each Party must select an arbitrator within
thirty (30) days of receipt of notice that an arbitration
proceeding has commenced. In the event that no such selection
is made, the arbitrator selected by the other party may
conduct the arbitration proceeding without selecting any
other arbitrator.
(C) The hearing must be held within sixty (60) days
of the date on which the third arbitrator is selected.
(D) Hearing briefs must be submitted no later than
ten (10) days after the hearing.
(E) The arbitration award must be made within thirty
(30) days of the receipt of hearing briefs.
(ii) Discovery in Arbitration Proceedings. The Parties agree
that discovery may be conducted in the course of the arbitration
proceeding in accordance with the following provisions:
(A) Each Party may notice no more than three (3)
depositions in total, including both witnesses adherent to
the adverse Party and third-party witnesses.
(B) Each Party may serve no more than twenty-five
(25) requests for admission on the other party. No requests
may be served within ten (10) days of the date of hearing,
unless the parties otherwise stipulate. All requests for
admission shall be responded to within ten (10) days of
service of the requests, unless the Parties otherwise
stipulate.
(C) Each Party may serve no more than fifty (50)
interrogatories on the other Party. No interrogatory shall
contain subparts, or concern more than one topic or subject
of inquiry. Interrogatories may not be phrased so as to
circumvent the effect of this clause. No interrogatories may
be served within ten (10) days of the date of hearing, unless
the parties otherwise stipulate. All interrogatories shall be
responded to within ten (10) days of service of the
interrogatories, unless the Parties otherwise stipulate.
(D) Each Party may serve no more than ten (10)
requests for production of documents on the other Party. No
request for production of documents shall contain subparts,
or seek more than one type of document. Requests for
production of documents may not be phrased so as to
circumvent the effect of this clause. Unless the Parties
otherwise stipulate, requests for production of documents may
not be served within ten (10) day of the date of hearing, and
all requests for production of documents shall be responded
to within ten (10) days of service of the requests.
(E) If any Party contends that the other Party has
served discovery requests in a manner not permitted by this
Section, or that the other Party's response to a discovery
request is unsatisfactory, the party may request the
presiding arbitrator to resolve such discovery disputes. The
presiding arbitrator shall prescribe the procedure by which
such disputes are resolved. Any discovery dispute may be
handled by telephone conference among the Parties and the
presiding arbitrator.
15. WITHHOLDING TAXES.
All payments to Employee or his Beneficiary shall be subject to
withholding on account of federal, state and local taxes as required by law. If
any payment under this Agreement is insufficient to provide the amount of such
taxes required to be withheld, Alamosa may withhold such taxes from any
subsequent payment due Employee or his Beneficiary. In the event that all
payments due are insufficient to provide the required amount of such
withholding taxes, Employee or his Beneficiary, within five days after written
notice from Alamosa, shall pay to Alamosa the amount of such withholding taxes
in excess of the payments due.
16. INDEMNIFICATION AND LIABILITY INSURANCE. Nothing herein is intended to
limit Alamosa's indemnification of Employee, and Alamosa shall indemnify him to
the fullest extent permitted by applicable law consistent with Alamosa's
Certificate of Incorporation and By-Laws as in effect on the date of this
Agreement, with respect to any action or failure to act on his part while he is
(x) an officer, director or employee of Alamosa or any Subsidiary or Affiliate
or (y) a director or officer of any trade association or business enterprise
that is not a subsidiary or Affiliate and in which capacity his service is at
Alamosa's request. To the extent that directors' and officers' liability
insurance is obtainable on commercially economic terms, Alamosa shall cause
Employee to be covered, during the Term and after the Term in respect of claims
arising from any such service during the Term, by such insurance on terms no
less favorable than the directors' and officers' liability insurance maintained
by Alamosa as in effect on the date of this Agreement in terms of coverage,
limits and reimbursement of defense costs. In any period during which such
insurance coverage is not obtainable on commercially economic terms, Alamosa
shall cause Employee to be covered by as much of such insurance as may be
obtained for the largest premium paid by Alamosa for such an insurance policy
in effect during the Term.
17. ASSIGNABILITY, SUCCESSORS, BINDING AGREEMENT.
(a) In addition to any obligations imposed by law upon any successor
to Alamosa, Alamosa will use its best efforts to persuade any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of Alamosa to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Alamosa would be required to perform it if no such
succession had taken place. Failure of Alamosa to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Employee to compensation from Alamosa in
the same amount and on the same terms as Employee would be entitled to
hereunder if he were to terminate his employment for Good Reason within twelve
months following a Change of Control, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee shall die
while any amount would still be payable to him hereunder (other than amounts
which, by their terms, terminate upon his death) if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of Employee's estate.
18. ENTIRE AGREEMENT.
Except to the extent otherwise provided herein, this Agreement
contains the entire understanding and agreement between the Parties concerning
the subject matter hereof and supersedes any prior agreements, whether written
or oral, between the Parties concerning the subject matter hereof. In the event
of a conflict between this Agreement and terms of any benefit plan, grant or
award, the provisions of this Agreement shall govern the determination of
Employee's rights.
19. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both Employee and an authorized officer of
Alamosa. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Party to be charged with the waiver.
20. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be valid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.
21. SURVIVAL.
The respective rights and obligations of the Parties under this
Agreement shall survive any termination of Employee's employment with Alamosa.
22. BENEFICIARIES/REFERENCES.
Employee shall be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or beneficiaries to receive
any compensation or benefit payable under this Agreement following Employee's
death by giving Alamosa written notice thereof. In the event of Employee's
death or of a judicial determination of his incompetence, reference in this
Agreement to Employee shall be deemed to refer, as appropriate, to his
beneficiary, estate or other legal representative.
23. MITIGATION.
Alamosa agrees that, if Employee's employment by Alamosa terminates
during the Term, Employee is not required to seek other employment or to
attempt in any way to reduce any amounts payable to him due under this
Agreement. Further, the amount of any payment shall not be reduced by any
compensation earned by Employee as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by Employee to Alamosa, or otherwise.
24. GOVERNING LAW AND PERFORMANCE.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Texas, without reference to principles
of conflict of laws. This Agreement shall be deemed to be executed in and
performance called for in Lubbock, Lubbock County, Texas.
25. LEGAL EXPENSES. Alamosa agrees to pay all reasonable out-of-pocket
costs and expenses, including all reasonable attorneys' fees and disbursements,
actually incurred by Employee in collecting or enforcing payments to which he
is ultimately determined to be entitled (whether by agreement among the
Parties, court order or otherwise) pursuant to this Agreement in accordance
with its terms.
26. NOTICES. Any notice given to either Party shall be in writing and
shall be deemed to have been given when delivered either personally, by fax, by
overnight delivery service (such as Federal Express) or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address
as the Party may subsequently give notice of.
If to Alamosa:
Alamosa Holdings, Inc.
0000 X. Xxxx 000,
Xxxxxxx, Xxxxx 00000
With a copy to:
Xxxx XxXxxxxxx
Xxxxxxxx, Xxxxxx & Miliam, LLP
P.O. Box 1499
0000 Xxxxxxxx
Xxxxxxx, XX 00000
and
Xxxx X. Xxxxx, III
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Employee:
At his address on file with Alamosa.
With a copy to:
Xxxx X. Xxxxx
Xxxxxx Xxxxxx & Xxxxxx, P.C.
00000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
27. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
28. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Alamosa Holdings, Inc.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
Employee:
/s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxxx
Approved as to the mediation and arbitration provisions in Section 14 above.
Xxxxxxxx, Xxxxxx & Xxxxx, LLP
By:
---------------------------------
Xxxx XxXxxxxxx, Xx.
Attorney for Alamosa
Dated this 3rd day of January 2005.
