Exhibit 10.16
SENIOR EXECUTIVE
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (the "Agreement") is made as of December 21, 1998
between BUSINESS TELECOM, INC., a North Carolina corporation (the "Company"),
and __________ ("Employee").
Recitals
A. Employee is employed by the Company as an executive officer, and as such,
the Company recognizes the valuable services performed by Employee for the
Company and wishes to encourage his continued employment.
B. Employee desires to be assured that he or his family will be entitled to a
certain amount of compensation and benefits for some definite period of
time upon the occurrence of various events.
C. The parties desire to enter into this agreement to provide the terms and
conditions upon which the Company will pay severance benefits to Employee
or his family upon the occurrence of various events.
Statement of Agreement
In consideration of the foregoing and the promises and covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. Whenever used in this Agreement, the following terms shall
have the meanings respectively assigned to them in this Section 1:
(a) "BTI Telecom" shall mean BTI Telecom Corp., a North Carolina
corporation.
(b) "Cause" shall mean the occurrence of any one or more of the following
events:
(i) Falsification of Company and/or BTI Telecom documents and
records, including, without limitation, financial/revenue
reports of all types, employment applications, time sheets, or
sales agreements;
(ii) Revealing proprietary Company or BTI Telecom information or
customer account information to unauthorized Company or
non-Company personnel, except as may otherwise be required by
law;
(iii) Reporting to work under the influence of any controlled
substance, or the use of any controlled substance on Company
property, except for alcohol provided by or on behalf of the
Company at Company-sponsored events;
(iv) Misuse, misappropriation or unauthorized removal of Company
property or the property of any Company personnel; or
(v) The making of a bona fide charge of discrimination or sexual
harassment by another employee of the Company or by an attendee
while at a Company-sponsored event or at any event at which
Employee served as a representative of the Company.
(c) "Change in Control of BTI Telecom" shall mean the occurrence of one of
the following events: (i) the date ▇▇. ▇▇▇▇▇▇ is no longer the
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of securities of BTI Telecom representing at
least 50% of the combined voting power of BTI Telecom's then
outstanding securities if, but only if, such date is prior to the date
upon which the Company registers its equity securities under the 1933
Securities Act; (ii) the date ▇▇. ▇▇▇▇▇▇ is no longer the chairman of
the board of BTI Telecom; or (iii) the closing date with respect to
the sale of the Company to a third party, whether such sale is
structured as an asset, stock, merger, or other similar type of
transaction.
(d) "▇▇. ▇▇▇▇▇▇" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(e) "Separation Event" shall mean the termination of Employee's employment
with the Company for any reason within three (3) years after the date
of a Change in Control of BTI Telecom (the "Termination Period").
Other terms used in this Agreement are defined in other provisions of this
Agreement and shall have the respective meanings given such terms in those
provisions.
2. Employment. Employee shall, so long as he remains in the active employment
of the Company, devote his full business time, attention, energy and skill
to the Company's business and not actively engage, either directly or
indirectly, in any business or other activity which is or may be deemed in
any way competitive with or adverse to the best interest of the Company's
business.
3. Severance Benefits. In consideration of Employee remaining an employee of
the Company, if there is a Separation Event, then Employee shall receive
the following:
(a) Severance pay in an amount equal to three (3) times the sum of the
following received by Employee in the most recent full calendar year
prior to the date of the Separation Event (except for commissions,
which shall be calculated in the manner set forth below):
(i) annual base salary, plus
(ii) all cash bonuses, plus
(iii) the average of all commissions received by Employee in the most
recent full two (2) calendar years prior to the date of the
Separation Event; less
(iv) all applicable withholding taxes and deductions.
Such foregoing sum shall be payable over the three (3) year period
following the date of the Separation Event in accordance with the
Company's general policies for the payment of compensation to its
personnel.
(b) Fringe benefits and perquisites provided by the Company to Employee
immediately prior to the date of the Separation Event until the
earlier of three (3) years from the date of the Separation Event or
the date any such fringe benefit or perquisite is provided by another
employer to Employee; provided, however, that Employee shall have no
right to participate in any pension, profit sharing, 401(k), or
similar plan offered by the Company.
(c) The continued use of the Company vehicle then used by the Employee in
his employment until the earlier of twelve (12) months from the date
of the Separation Event or the date another vehicle is provided by
another employer to the Employee (the "Vehicle Period"). During the
Vehicle Period, the Company shall be responsible for all
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applicable insurance, personal property tax and all repairs and
maintenance required to maintain such vehicle in proper working order
and condition (ordinary wear and tear excepted).
(d) The payment or reimbursement of all reasonable expenses incurred by
Employee for executive out-placement services for no more than a
twelve (12) month period from the date of the Separation Event;
provided, however, that the Company's obligation of payment or
reimbursement of such expenses is limited to Ten Thousand Dollars
($10,000.00).
In the event the Separation Event is the death of Employee or in the
event of Employee's death prior to the expiration of the three (3) year
payment period set forth in Subsection 3(a), above, the Company shall make
or continue to make, as the case may be, the payments set forth in
Subsection 3(a), above, during the three (3) year payment period or the
remainder of the three (3) year payment period, as the case may be, to
Employee's beneficiary designated by Employee on Exhibit A, which is
attached hereto and incorporated herein by reference. If Employee fails to
designate any such beneficiary, the payments shall be made to Employee's
surviving spouse, or if no surviving spouse, then to Employee's estate.
4. Other Termination of Employment. If Employee terminates his employment with
the Company at any time other than during the Termination Period or the
Company terminates the Employee at any time for Cause, no benefits shall
become due and payable under Section 3, above, and this Agreement shall be
considered terminated with respect to Employee.
5. Corporate Assets. No provision in this Agreement, or any action taken
pursuant to its provisions by either party, shall create, or be construed
to create, a trust of any kind, or a fiduciary relationship between the
Company and the Employee, his designated beneficiary, other beneficiaries
of Employee, or any other person. The payments to Employee, his designated
beneficiary, or any other beneficiary shall be made from assets which shall
continue to be a part of the general assets of the Company. No person shall
have, by virtue of the provisions of this Agreement, any interest in the
Company's assets. To the extent that any person acquires a right to receive
payments or benefits from the Company under this Agreement, the right shall
be no greater than the right of any unsecured general creditor of the
Company.
6. No-Employment Contract. Nothing contained in this Agreement shall be
construed as a contract of employment for any term of years, nor as
conferring upon Employee the right to continue as an employee of the
Company in any capacity. It is understood by the parties that this
Agreement relates exclusively to severance benefits payable after
termination of Employee's employment with the Company, and is not intended
to be an employment contract.
7. Employee's Capacity. Employee represents and warrants to the Company that
he has the capacity and right to enter into this Agreement without any
restriction whatsoever by any other agreement, other document or otherwise.
8. Complete Agreement. This document contains the entire agreement between the
parties regarding severance arrangements and supersedes any prior
discussions, negotiations, representations, or agreements between them
relating to severance arrangements for Employee. No additions or other
changes to this Agreement shall be made or be binding on either party
unless made in writing and signed by each party to this Agreement.
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9. Notices. All notices and other communications under this Agreement to any
party shall be in writing and shall be deemed given when delivered
personally, via facsimile (which is confirmed) to that party at the
telecopy number for that party set forth below, mailed by certified mail
(return receipt requested) to that party at the address for that party set
forth below (or at such other address for such party as such party shall
have specified in notice to the other party), or delivered to Federal
Express, UPS, or any similar express delivery service for delivery to that
party at that address:
(a) If to the Company:
Business Telecom, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Employee:
___________________________________
___________________________________
___________________________________
Facsimile No.: (___) _____-_______
10. Governing Law. All questions concerning the validity, intention, or meaning
of this Agreement or relating to the rights or obligations of the parties
with respect to performance hereunder shall be construed and resolved under
the laws of North Carolina.
11. Severability. The intention of the parties to this Agreement is to comply
fully with all laws and public policies, and this Agreement shall be
construed consistently with all laws and public policies to the extent
possible. If and to the extent that any court of competent jurisdiction
determines that it is impossible or violative of any legal prohibition to
construe any provision of this Agreement consistently with any law, legal
prohibition, or public policy and consequently holds that provision to be
invalid or prohibited, that shall in no way affect the validity of the
other provisions of this Agreement which shall remain in full force and
effect.
12. Nonwaiver. No failure by any party to insist upon strict compliance with
any term of this Agreement, to exercise any option, enforce any right, or
seek any remedy upon any default of any other party shall affect, or
constitute a waiver of, the first party's right to insist upon such strict
compliance, exercise that option, enforce that right, or seek that remedy
with respect to that default or any prior, contemporaneous, or subsequent
default; nor shall any custom or practice of the parties at variance with
any provision of this Agreement affect or constitute a waiver of, any
party's right to demand strict compliance with all provisions of this
Agreement.
13. Captions. The captions of the various sections of this Agreement are not
part of the context of this Agreement, but are only labels to assist in
locating those sections, and shall be ignored in construing this Agreement.
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14. Successors. This Agreement shall be personal to Employee and no rights or
obligations of Employee under this Agreement may be assigned by him. Except
as described in the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by and against the
respective heirs, legal representatives, successors, and assigns of each
party to this Agreement.
BUSINESS TELECOM, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
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EXHIBIT A
DESIGNATION OF BENEFICIARY
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I,_____________, hereby designate the following individual or individuals
as my beneficiary(ies) to receive payments in the event of my death in the
following percentages (which must total 100%) in accordance with Section 3 of
the Severance Agreement to which this Exhibit A is attached:
Beneficiary(ies) Percentage of Payment
---------------- ---------------------
(1) Name: ______________________ ______%
Address: ______________________
______________________
______________________
SS No.: ______________________
Telephone: (_____)_______-_______
(2) Name: ______________________ ______%
Address: ______________________
______________________
______________________
SS No.: ______________________
Telephone: (_____)______-________
(3) Name: ______________________ ______%
Address: ______________________
______________________
______________________
SS No.: ______________________
Telephone: (_____)_____-_________
(4) Name: ______________________ ______%
Address: ______________________
______________________
______________________
SS No.: ______________________
Telephone: (_____)____-__________
____________________________
(signature)
____________________________
(print name)
____________________________
(date)
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