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EXHIBIT 10.11
METROCALL, INC.
CHANGE OF CONTROL AGREEMENT
FOR CHIEF OPERATING OFFICER
May 15, 1996
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
Metrocall, Inc. (the "Company"), on behalf of itself, its
subsidiaries, and its shareholders, wishes to encourage your continued service
and dedication in the performance of your duties, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined in
Section 1(b) below) of the Company. The Board of Directors of the Company (the
"Board") believes that the prospect of a pending or threatened Change of
Control inevitably creates distractions and personal risks and uncertainties
for a company's executives and that it is in the best interests of the Company
to minimize such distractions to certain executives and the Company. The Board
further believes that it is in the best interests of the Company to encourage
its executives' full attention and dedication to their duties, both currently
and in the event of any threatened or pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of you and certain
members of the Company's management and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control of the Company.
To induce you (the "Executive") to remain in the Company's employ and
in consideration of your continued service to the Company, the Company agrees
that you shall receive the benefits set forth in this letter agreement (the
"Agreement") if your employment with the Company is terminated for any reason
after a Change of Control of the Company and has, of even date herewith,
entered into a revised employment agreement relating to your services as Chief
Operating Officer (the "Employment Agreement"). For purposes of this
Agreement, references to employment with the Company shall include employment
with a Subsidiary of the Company.
Section 1. DEFINITIONS
The following terms shall have the meanings set forth below for purposes of
this Agreement.
(a) CAUSE. Under this Agreement, "Cause" shall mean (1) dishonesty
of a material nature relating to performing services under the
Employment Agreement, (2) criminal conduct (other than minor
infractions and traffic violations) that relates
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to the performance of services under the Employment Agreement,
or (3) the Executive's willfully breaching or failing to
perform his employment duties as set forth in his Employment
Agreement, which act or omission results in a material adverse
effect on the Company. For purposes of this Section 1(a), no
act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
such action or omission was in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a
certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire
membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
the Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the
Executive has engaged in the conduct set forth in this
subsection and specifying the particulars thereof in detail.
(b) CHANGE OF CONTROL. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred if there is a
change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any successor
provision of similar import, whether or not the Company is
then subject to such reporting requirement; provided that,
without limitation, such a Change of Control shall be deemed
to have occurred if:
(i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of
Regulation 13D-G under the Exchange Act as currently
in effect), directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
total voting power of all of the Company's then
outstanding voting securities, unless through a
transaction consummated with the Board's prior
approval; provided, however, that for purposes of
this paragraph, persons acting in concert under the
terms of that certain Voting Agreement dated as of
August 31, 1994 shall not, solely as a result of
actions provided under such agreement, be treated as
a "person";
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period
constitute the Board and any new director(s) whose
election by the Board or nomination for election by
the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute a majority of the Board;
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(iii) the Company becomes a party to a merger, plan of
reorganization, consolidation, or share exchange in
which either (x) the Company will not be the
surviving corporation or (y) the Company will be the
surviving corporation and any outstanding shares of
the Company's common stock will be converted into
shares of any other company (other than a
reincorporation or the establishment of a holding
company involving no change of ownership of the
Company) or other securities or cash or other
property (excluding payments made solely for
fractional shares);
(iv) the shareholders of the Company approve a merger,
plan of reorganization, consolidation, or share
exchange with any other corporation, and immediately
following such merger, plan of reorganization,
consolidation, or share exchange the holders of the
voting securities of the Company outstanding
immediately prior thereto hold securities
representing fifty percent (50%) or less of the
combined voting power of the voting securities of the
Company or such surviving entity outstanding
immediately after such merger, plan of
reorganization, consolidation, or share exchange;
provided, however, that notwithstanding the
foregoing, no Change of Control for purposes of this
Section 1(b)(iv) shall be deemed to have occurred if
seventy-five percent (75%) or more of the members of
the Board of the Company or such surviving entity
immediately after such merger, plan of
reorganization, consolidation, or share exchange is
comprised of persons who served as directors of the
Company immediately before such merger, plan of
reorganization, consolidation, or share exchange or
who are otherwise designees of the Company; or
(v) any other event occurs that a majority of the Board,
in its sole discretion, shall determine constitutes a
Change of Control.
(c) CONTROLLED GROUP. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's
Subsidiaries.
(d) DISABILITY. "Disability" shall have the meaning set forth in
the Employment Agreement.
(e) EMPLOYER. For purposes of this Agreement, "Employer" shall
mean the Company or the Subsidiary, as the case may be, with
which the Executive has an employment relationship.
(f) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without the Executive's express
written consent, of any of the following circumstances:
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(i) the Company's failure to perform or observe any of
the material terms or provisions of this Agreement or
the Employment Agreement, and the continued failure
of the Company to cure such default within fifteen
(15) days after the Executive gives a written demand
for performance to the Company, which demand shall
describe specifically the nature of such alleged
failure to perform or observe such material terms or
provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial diminution in,
such Executive's status or responsibilities as in
effect immediately before a Change of Control of the
Company, including imposition of travel obligations
that differ materially from required business travel
immediately before the Change of Control;
(iii) any diminution in the status or responsibilities of
the Executive's position from that which existed
immediately before the Change of Control, whether by
reason of the Company's ceasing to be a public
company under the Exchange Act, becoming a subsidiary
of a successor public company, or otherwise;
(iv) (I) a reduction in the Executive's Base Salary (as
defined in the Employment Agreement), as that amount
may be increased from time to time and as in effect
immediately before the Change of Control; or (II) the
failure to pay a bonus award to which the Executive
is otherwise entitled under any short-term incentive
plan in which the Executive then participates, or any
successor incentive compensation plans at the time
such awards are usually paid;
(v) the termination of employment of Xxxxxxx X. Xxxxxxx,
III or Xxxxxxx X. Xxxxx (other than a termination (I)
by the Company for "Cause" or (II) because of death
or "Disability" as those terms are defined and
applied in their respective employment agreements),
including a termination that results from a failure
by the Company and Xxxxxxx or Xxxxx to reach
agreement to continue Xxxxxxx' or Kelly's employment
on terms at least as favorable to him, in the
aggregate, as those in effect before the Change in
Control of the Company;
(vi) a change in the principal place of the Executive's
employment, as in effect immediately before the
Change of Control of the Company, to a location more
than thirty-five (35) miles distant from the location
of such principal place at such time;
(vi) (A) the Company's failure to continue in effect any
incentive compensation plan or stock option plan in
which the Executive participates immediately before
the Change in Control, unless an
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equivalent alternative compensation arrangement
(embodied in an ongoing substitute or alternative
plan) has been provided to the Executive, or (B) the
Company's failure to continue the Executive's
participation in any such incentive or stock option
plan on substantially the same basis, both in terms
of the amount of benefits provided and the level of
the Executive's participation relative to other
participants, as existed immediately before the time
of the Change of Control;
(viii) the Company's violation of any applicable criminal
law not due to the Executive's gross negligence or
willful misconduct;
(ix) the failure of the Company or any successor to obtain
a satisfactory written agreement from any successor
to assume and agree to perform this Agreement, as
contemplated in Section 6(a) below; or
(x) any purported termination of the Executive's
employment that is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
3(b) or, if applicable, Section 1(a). For purposes
of this Agreement, no such purported termination
shall be effective except as constituting Good
Reason.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(g) SUBSIDIARY. For purposes of this Agreement, "Subsidiary"
shall mean any corporation of whose voting stock the Company
directly or indirectly owns more than fifty percent (50%).
(h) TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean: (i) if the Executive's
employment is terminated for Disability pursuant to the
Employment Agreement, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties
during such thirty-day period); and (ii) if the Executive's
employment is terminated for Cause or Good Reason or for any
reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the
case of a termination for Good Reason shall not be less than
thirty (30) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
Section 2. TERM OF AGREEMENT
(a) GENERAL. Upon execution by the Executive, this Agreement
shall commence as of May ___, 1996. This Agreement shall
continue in effect on December 31,
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1999; provided, however, that the term shall be automatically
extended for additional one (1) year periods on each
anniversary date of this Agreement, unless and until either
party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating
this Agreement, which termination shall be effective as of the
end of such initial term or extended term, as the case may be
(the "Expiration Date"); and provided further, however, that
if a Change of Control of the Company occurs before the
Expiration Date, this Agreement shall continue in effect for a
period of thirty-six months beyond the month in which the
Change of Control occurred.
(b) DISPOSITION OF EMPLOYER. If the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such
Subsidiary is sold or otherwise disposed of before a Change of
Control unless the Executive continues in employment with the
Controlled Group after such sale or other disposition. If the
Executive's Employer is sold or disposed of following a Change
of Control, this Agreement shall continue through its original
term or any extended term then in effect.
(c) DEEMED CHANGE OF CONTROL. If the Executive's employment with
the Employer is terminated before the date on which a Change
of Control occurs, and such termination was at the request of
a third party who has taken steps to effect a Change of
Control or the termination was otherwise caused by the Change
of Control, then for all purposes of this Agreement, a Change
of Control shall be deemed to have occurred before such
termination.
(d) EXPIRATION OF AGREEMENT. No termination or expiration of this
Agreement shall affect any rights, obligations, or liabilities
of either party that shall have accrued on or before the date
of such termination or expiration.
Section 3. TERMINATION FOLLOWING CHANGE OF CONTROL
(a) ENTITLEMENT TO BENEFITS. If a Change of Control of the
Company occurs, the Executive shall be entitled to the
benefits provided in Section 4 hereof upon his termination of
employment with the Company within three years after the date
of the Change of Control, unless such termination is (i) a
result of the Executive's death, (ii) for Cause, (iii) a
result of the Executive's Disability (pursuant to the terms of
the Employment Agreement that provide for termination as a
result of Disability), or (iv) by the Executive other than for
Good Reason. A termination of the Executive's employment that
entitles the Executive to the payment of benefits under
Section 4 hereof shall be referred to hereinafter as a
"Termination."
(b) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by the Executive
shall be communicated by
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written Notice of Termination to the other party hereto in
accordance with Section 8. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall
indicate the specific provision of this Agreement relied upon
and shall set 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.
If, following a Change of Control, the Executive's employment
shall be terminated for Cause or by the Executive for other
than Good Reason, the Company shall pay the Executive any
amounts to be paid to the Executive pursuant to the Employment
Agreement and any other compensation plans, programs, or
employment agreements then in effect, and the Company shall
have no further obligations to the Executive under this
Agreement.
If within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice notifies the other
party that a dispute exists concerning the grounds for
termination, then, notwithstanding the meaning of "Termination
Date" set forth in Section 1(h), the Termination Date shall be
the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision
rendered pursuant to Section 11; provided that the Termination
Date shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay the Executive his full
compensation in effect when the notice giving rise to the
dispute was given, and continue the Executive as a participant
in all benefits, plans, or perquisites in which the Executive
was participating or which he was enjoying when the Notice of
Termination giving rise to the dispute was given (to the
extent such continued participation is not prohibited by law
or the generally applicable terms of those arrangements),
until the dispute is finally resolved. Amounts paid under
this Section 3(b) are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
Section 4. COMPENSATION UPON A TERMINATION
Following a Change of Control of the Company, upon a Termination of the
Executive's employment by the Company without "Cause" or by the Executive for
"Good Reason," the Executive shall be entitled to the following benefits,
provided that the Termination occurs during the three-year period immediately
following the date of the Change of Control:
(a) STANDARD BENEFITS. The Company shall pay the Executive his
full Base Salary through the Termination Date, at the rate in
effect at the time the Notice of Termination is given, no
later than the second day following the Termination Date, plus
all other amounts to which the Executive is entitled under any
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compensation plan of the Company applicable to the Executive
at the time such payments are due. Without limitation,
amounts payable pursuant to this Section 4(a) shall include,
pursuant to the express terms of the short-term incentive plan
in which the Executive participates or otherwise, the
Executive's annual bonus under such short-term incentive plan,
pro-rated to the Termination Date.
(b) ADDITIONAL BENEFITS. The Company shall pay to the Executive
as additional pay ("Additional Pay"), the product of (i) three
(3) and (ii) the sum of (x) the Executive's annual Base Salary
rate in effect immediately before the Termination Date and (y)
the Executive's annual bonus amount under the short-term
incentive plan in which the Executive participates, such bonus
amount to be calculated on the basis of the extent to which
the performance factors targeted by the Compensation Committee
of the Board have been achieved (for this purpose, the
Company's performance through the Termination Date shall be
annualized based upon the actual number of days elapsed from
the beginning of the fiscal year in which the Termination
occurs through the Termination Date over a year of 360 days),
which shall be deemed to be 100% unless the performance
actually achieved is greater than 100%, in which case the
actual performance levels shall be utilized. The Company
shall pay to the Executive the Additional Pay in a lump sum,
in cash, not later than the thirtieth (30th) day following the
Termination Date.
(c) RETIREMENT PLAN BENEFITS. If not already vested, the
Executive shall be deemed fully vested in all Company
retirement plans and/or other written agreements relating to
pay upon retirement in which the Executive was a participant,
party, or beneficiary immediately preceding a Change of
Control, and any additional plans and/or agreements in which
such Executive became a participant, party, or beneficiary
thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to the Executive under such
plans and/or agreements, the years of service with the Company
and the age of the Executive under all such plans and
agreements shall be deemed increased by the lesser of
thirty-six (36) months or such shorter period of time as would
render the Executive sixty-five (65) years of age. For
purposes of this Section 4(c), "plans" include, without
limitation, any long-term incentive plan, or non-qualified and
mid-career retirement plans but does not include any plans
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If the terms
of the plans referenced in this Section 4(c) do not for any
reason coincide with the provisions of this Section 4(c), the
Executive shall be entitled to receive from the Company under
the terms of this Agreement an amount equivalent to all
amounts he would have received had all such plans continued in
existence as in effect on the date of this Agreement after
being amended to coincide with the terms of this Section 4(c).
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(d) OPTION PAYMENTS. In lieu of exercising or retaining any
rights the Executive may have to exercise some or all of the
outstanding stock options that he then holds (including any
rights to exercise stock options that arise during the Term if
he were to remain employed and including any that would
otherwise terminate as result of his termination of
employment), the Executive may elect within sixty (60) days
after termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash payment
equal to the aggregate difference, if positive, between (a)
the "fair market value" (determined as of the date of
termination using the higher of the "fair market value" (i) as
defined in the terms of the applicable option plan or option
agreement as of the date of termination and (ii) as defined
in the plan or agreement on the date of grant) of the shares
of common stock subject to the options and (b) the option
prices of the shares subject to such surrendered options; and
the Company shall make such payment within forty-five (45)
days after the Executive notifies the Company of his election
to surrender all or a portion of his options.
(e) HEALTH BENEFITS. Following the Termination Date, the Company
shall provide, at its own expense, the continued health
coverage required by Section 4980B of the Code.
(f) GROSS-UP PAYMENTS.
(i) If any payment or the value of any benefit received
or to be received by the Executive in connection with
the Executive's Termination or contingent upon a
Change of Control of the Company (whether received or
to be received pursuant to the terms of this
Agreement (the "Agreement Payments") or of any other
plan, arrangement, or agreement of the Company, its
successors, any person whose actions result in a
Change of Control of the Company, or any person
affiliated with any of them (or which, as a result of
the completion of the transactions causing a Change
of Control, will become affiliated with any of them
("Other Payments" and, together with the Agreement
Payments, the "Payments")) would be subject to the
excise tax imposed by Section 4999 of the Code or any
comparable federal, state, or local excise tax (such
excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the
"Excise Tax"), as determined as provided below, the
Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net
amount the Executive retains, after deduction of the
Excise Tax on Agreement Payments and Other Payments
and any federal, state, and local income tax and
Excise Tax upon the payment provided for by this
Section 4(f)(i), and any interest, penalties, or
additions to tax payable by the Executive with
respect thereto shall be equal to the total present
value of the Agreement Payments and Other Payments at
the time such Payments are to be made. The intent of
the parties is that the Company
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shall be solely responsible for and shall pay, any
Excise Tax on any Payments and Gross-Up Payment and
any income and employment taxes (including, without
limitation, penalties and interest) imposed on any
Gross-Up Payments as well as any loss of deduction
caused by the Gross-Up Payment.
(ii) All determinations required to be made under this
Section 4(f), including, without limitation, whether
and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations,
shall be made by tax counsel (either a law firm or a
nationally recognized public accounting firm)
selected by the Company and reasonably acceptable to
the Executive ("Tax Counsel"). The Company shall
cause the Tax Counsel to provide detailed supporting
calculations to the Company and the Executive within
fifteen (15) business days after notice is given by
the Executive to the Company that any or all of the
Payments have occurred, or such earlier time as is
requested by the Company. Within two (2) business
days after such notice is given to the Company, the
Company shall instruct the Tax Counsel to timely
provide the data required by this Section 4(f) to the
Executive. The Company shall pay all fees and
expenses of the Tax Counsel. The Company shall pay
any Excise Tax determined pursuant to this Section
4(f) to the Internal Revenue Service ("IRS") and/or
other appropriate taxing authority on the Executive's
behalf within five (5) days after receipt of the Tax
Counsel's determination. If the Tax Counsel
determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that
no Excise Tax is payable by the Executive, the Tax
Counsel shall furnish the Executive with a written
opinion that failure to disclose or report the Excise
Tax on the Executive's federal income tax return will
not constitute a substantial understatement of tax or
be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by
the Tax Counsel shall be binding upon the Company and
the Executive in the absence of material mathematical
or legal error.
As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial
determination by the Tax Counsel hereunder, it is
possible that the Company will not have made Gross-Up
Payments that should have been made or that it will
have made Gross-Up Payments that should not have been
made, in each case, consistent with the calculations
required to be made hereunder. If the Company
exhausts its remedies pursuant to Section 4(f)(iii)
below and the Executive is thereafter required to pay
any Excise Tax, the Tax Counsel shall determine the
amount of underpayment of Excise Taxes that has
occurred and the Company shall promptly pay any such
underpayment to the IRS or
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other appropriate taxing authority on the Executive's
behalf or, if the Executive has previously paid such
underpayment, to the Executive. If the Tax Counsel
determines that an overpayment of Gross-Up Payments
has occurred, any such overpayment shall be treated
for all purposes as a loan to the Executive with
interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code, due and payable
within ninety (90) days after written demand to the
Executive by the Company; provided, however, that the
Executive shall have no duty or obligation whatsoever
to repay such loan if the Executive's receipt of the
overpayment, or any portion thereof, is includible in
the Executive's income and the Executive's repayment
of the same is not deductible by the Executive for
federal and state income tax purposes.
(iii) The Executive shall notify the Company in writing of
any claim by the IRS or state or local taxing
authority, that, if successful, would result in any
Excise Tax or an underpayment of Gross-Up Payments.
Such notice shall be given as soon as practicable but
no later than fifteen (15) business days after the
Executive is informed in writing of the claim and
shall inform the Company of the nature of the claim,
the administrative or judicial appeal period, and the
date on which any payment of the claim must be paid.
The Executive shall not pay any portion of the claim
before the expiration of the thirty (30) day period
following the date on which the Executive gives such
notice to the Company (or such shorter period ending
on the date that any amount under the claim is due).
If the Company notifies the Executive in writing
before the expiration of such thirty (30) day period
that it desires to contest the claim, the Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to the
claim;
(B) take such action in connection with
contesting the claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation concerning the
claim by an attorney selected by the Company
who is reasonably acceptable to the
Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses
(including, without limitation, additional
interest and penalties and attorneys' fees)
incurred in such contests and shall indemnify
and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income
tax (including, without limitation, interest
and penalties
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thereon) imposed as a result of such
representation. Without limitation upon the
foregoing provisions of this Section
4(f)(iii), except as provided below, the
Company shall control all proceedings
concerning such contest and, in its sole
opinion, may pursue or forego any and all
administrative appeal, proceedings, hearings,
and conferences with the taxing authority
pertaining to the claim. At the Company's
written request and upon payment to the
Executive of an amount at least equal to the
claim plus any additional amount necessary to
obtain the jurisdiction of the appropriate
tribunal and/or court, the Executive shall
pay the same and xxx for a refund. The
Executive agrees to prosecute any contest of
a claim to a determination before any
administrative tribunal, in a court of
initial jurisdiction and in one or more
appellate courts, as the Company shall
determine; provided, however, that if the
Company requests the Executive to pay the
claim and xxx for a refund, the Company shall
advance the amount of such payment to the
Executive, on an interest-free basis, and
shall indemnify and hold the Executive
harmless on an after-tax basis, from any
Excise Tax or income tax (including, without
limitation, interest and penalties thereon)
imposed on such advance or for any imputed
income on such advance. Any extension of the
statute of limitations relating to assessment
of any Excise Tax for the taxable year of the
Executive that is the subject of the claim is
to be limited solely to the claim.
Furthermore, the Company's control of the
contest shall be limited to issues for which
a Gross-Up Payment would be payable
hereunder. The Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the IRS or any other
taxing authority.
(iv) If, after the Executive receives an amount the
Company advanced pursuant to Section 4(f)(iii) above,
the Executive receives any refund of a claim and/or
any additional amount that was necessary to obtain
jurisdiction, the Executive shall promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the Executive
receives an amount the Company advanced pursuant to
Section 4(f)(iii) above, a determination is made that
the Executive shall not be entitled to any refund of
the claim, and the Company does not notify the
Executive in writing of its intent to contest such
denial of refund of a claim before the expiration of
thirty (30) days after such determination, then the
portion of such advance attributable to a claim shall
be forgiven and shall not be required to be repaid.
The amount of such advance attributable to a claim
shall offset, to the extent thereof, the amount of
the underpayment required to be paid by the Company
to the Executive.
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(v) If, after the Company advances an additional amount
necessary to obtain jurisdiction, there is a final
determination made by the taxing authority that the
Executive is not entitled to any refund of such
amount, or any portion thereof, then the Executive
shall repay such nonrefundable amount to the Company
within thirty (30) days after the Executive receives
notice of such final determination. A final
determination shall occur when the period to contest
or otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been
waived or the time for contesting or appealing the
same has expired.
(g) LEGAL FEES AND EXPENSES. The Company shall pay to the
Executive all legal fees and expenses as and when incurred by
the Executive in connection with this Agreement, including all
such fees and expenses, if any, incurred in contesting or
disputing any Termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement, regardless of
the outcome, unless, in the case of a legal action brought by
or in the name of the Executive, a decision is rendered
pursuant to Section 10 that such action was not brought by the
Executive in good faith, in which event the Executive shall be
liable to the Company for its legal fees and expenses.
(h) NO MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation the Executive earns
as the result of employment by another employer or by
retirement or other benefits received after the Termination
Date or otherwise, except as specifically provided in this
Section 4. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the
Company or Employer may have against the Executive or other
parties.
Section 5. DEATH AND DISABILITY BENEFITS
In the event of the death or Disability of the Executive after a
Change of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are
entitled under the the Employment Agreement, the retirement plans, disability
policies, and other applicable plans or agreements of the Company.
Section 6. SUCCESSORS; BINDING AGREEMENT
(a) OBLIGATIONS OF SUCCESSORS. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly
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assume and agree to perform this Agreement in the same manner
and to the same extent that the Company is required to perform
it. Failure of the Company to obtain such assumption and
agreement before 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 the Executive had terminated his employment
following a Change of Control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the
Termination Date. As used in this Agreement, the "Company"
shall mean the Company as hereinabove defined and any
successor to its business and/or assets as aforesaid that
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) ENFORCEABLE BY BENEFICIARIES. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees (the
"Beneficiaries"). If the Executive dies while any amount
would still be payable hereunder if he had not then died, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the
Executive's Beneficiaries.
(c) EMPLOYMENT. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement,
nothing in this Agreement shall be construed to (i) limit in
any way the right of the Company or a Subsidiary to terminate
the Executive's employment at any time for any reason or for
no reason; or (ii) be evidence of any agreement or
understanding, expressed or implied, that the Company or a
Subsidiary will employ the Executive in any particular
position, on any particular terms, or at any particular rate
of remuneration.
Section 7. CONFIDENTIAL INFORMATION.
The Executive shall hold in fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge, or data relating to
the Company, the Subsidiaries, and their respective businesses, that shall have
been obtained during the Executive's employment by the Employer and that shall
not be public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge, or data
to anyone other than the Company, the Employer, or those designated by them.
In no event shall an asserted violation of this Section 7 or comparable
provisions in any applicable employment agreement constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
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15
Section 8. NOTICE
All notices, demands, requests. or other communications required or
permitted to be given or made hereunder shall be in writing and shall be
delivered, telecopied, or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, III
with a copy (which shall not constitute notice) to
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx
(a) if to the Executive:
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back, or the
affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
Section 9. MISCELLANEOUS
No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and
signed by the Executive and the Chairman of the Compensation Committee of the
Board of Directors. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any conditions 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 earlier
or later time. No
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16
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party that are
not expressly set forth in this Agreement. validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia. All references to sections of the Code or the
Exchange Act shall be deemed also to refer to any successor provisions of such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Sections 4 and 5 shall survive the expiration
of the term of this Agreement.
Section 10. 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.
Section 11. ARBITRATION
The Executive may designate in writing to the Company (in which case
this Section 11 shall have effect but not otherwise) that any dispute that may
arise directly or indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether arising
in contract, statute, tort, fraud, misrepresentation, or other legal theory,
shall be determined solely by arbitration in Washington, D.C. under the rules
of the American Arbitration Association (the "AAA"). The only legal claims
between the Executive, on the one hand, and the Company or any Subsidiary, on
the other, that would not be included in this agreement to arbitration are
claims by the Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by the
Executive that seek judicial relief in the form of specific performance of the
right to be paid until the Termination Date during the pendency of any dispute
or controversy arising under Section 3(b). If this Section 11 is in effect,
any claim with respect to this Agreement, the Executive's employment, or the
termination of the Executive's employment must be established by a
preponderance of the evidence submitted to the impartial arbitrator. A single
arbitrator engaged in the practice of law shall conduct any arbitration under
the then current procedures of the AAA and under the AAA's then current Model
Employment Arbitration Rules. The arbitrator shall have the authority to order
a pre-hearing exchange of information by the parties including, without
limitation, production of requested documents, and examination by deposition of
parties and their authorized agents. If this Section 11 is in effect, the
decision of the arbitrator (i) shall be final and binding, (ii) shall be
rendered within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration. The
arbitration award may be enforced in any court of competent jurisdiction. The
Federal Arbitration Act, 9 U.S.C. Section Section 1-15, not state law, shall
govern the arbitrability of all claims.
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17
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Assistant Secretary
of the Company one of the fully executed originals of this letter, which will
then constitute our agreement on this subject.
Sincerely,
METROCALL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board of Directors
Acknowledged and Agreed:
/s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
May 15, 1996
------------
Date
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