Exhibit 10.6
FORM OF EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of January __, 1999, by and between
TRITEL, INC., a Delaware corporation (the "Company"), and _____________
("Executive"). Capitalized terms used herein but not otherwise defined herein
shall have the meanings given to such terms in the Stockholders Agreement of the
Company, dated of even date herewith (the "Stockholders Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment (the "Agreement");
WHEREAS, Executive desires to accept such employment and enter into
such Agreement;
WHEREAS, ____________ and Executive (collectively, the "Senior
Executives") own all of the ownership interests in Tritel Management, LLC, a
Mississippi limited liability company ("Manager");
WHEREAS, the Senior Executives have caused the Manager to enter into a
Management Agreement with the Company, dated of even date herewith (the
"Management Agreement"), pursuant to which the Manager has agreed, among other
things, to manage the business of the Company;
WHEREAS, pursuant to Section 3.2(e) of the Securities Purchase
Agreement, dated as of May 20, 1998 (the "Securities Purchase Agreement"),
Executive has become the record and beneficial owner of ______ shares of the
Company's Class A Voting Common Stock, par value $.01 per share ("Class A Common
Stock") and ________ shares of the Company's Class C Common Stock, par value
$.01 per share (the "Class C Common Stock"; collectively, the "Restricted
Shares");
WHEREAS, in order to induce the Purchasers referred to in the
Securities Purchase Agreement to purchase the securities issued by the Company
thereunder, Executive desires to grant to the Company the repurchase rights with
respect to the Restricted Shares as referred to in Section 7; and
WHEREAS, the Company desires to accept the grant of such repurchase
rights.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive, intending to be legally bound, hereby
agree as follows:
Employment.
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Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
Employment Period. The term of Executive's employment shall be for a
period of five (5) years commencing on the date hereof (the "Commencement Date")
and continuing until January 1, 2004 (the "Expiration Date") unless this
Agreement shall have been earlier terminated in accordance with Section 5 (the
"Employment Period").
Position and Duties.
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During the Employment Period, Executive shall serve as Chairman of
the Board and Chief Executive Officer of the Company and be responsible for the
duties set forth on Schedule I, reporting directly to the Board of Directors.
During the Employment Period, except as set forth herein, Executive shall devote
his entire business time to the services required of him hereunder, except for
vacation time, personal time and reasonable periods of absence due to sickness,
personal injury or other disability. Nothing contained herein shall preclude
Executive from devoting reasonable periods of time to (i) the activities
described on Schedule II; (ii) serving on a board of directors of a charitable,
trade or other similar organization; or (iii) serving on other boards of
directors with the consent of the Board of Directors (excluding the Senior
Executives who are members of the Company's Board of Directors), in each such
case, so long as such activities do not interfere with the performance of
Executive's duties hereunder.
Compensation.
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Base Salary. The Company shall pay Executive an annual salary of
_________. Upon the first anniversary hereof, and annually thereafter, the
Compensation Committee of the Board of Directors shall review Executive's base
salary in light of the performance of Executive and the Company, and may, in its
discretion, increase (but not decrease) such base salary by an amount it
determines to be appropriate. Executive's annual base salary payable hereunder,
as it may be increased from time to time, is referred to herein as "Base
Salary". The Company shall pay Executive his Base Salary in equal monthly
installments, or in such other installments as the parties may mutually agree.
Annual Bonus. For each calendar year or part thereof during the
Employment Period, Executive shall be eligible to receive an annual bonus (an
"Annual Bonus") equal to up to _____ of his Base Salary based upon the
achievement of certain objectives determined by the Compensation Committee of
the Board of Directors for such calendar year, payable within thirty (30) days
after certification of the Company's financial statements for such year.
Benefits, Perquisites and Expenses.
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Benefit Plans. During the Employment Period, Executive shall be
eligible to participate in any welfare benefit plan sponsored or maintained by
the Company, including, without limitation, any group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, in each case, whether now existing or established
hereafter, to the extent that Executive is eligible to participate in any such
plan under the generally applicable provisions thereof.
Perquisites. Executive shall be entitled to up to four weeks paid
vacation annually in accordance with the Company's policies and practices.
Executive shall also be entitled to receive such perquisites as are generally
provided to other senior officers of the Company in accordance with the policies
and practices of the Company.
Business Expenses. The Company shall pay or reimburse Executive for all
reasonable expenses incurred or paid by Executive in performance of Executive's
duties hereunder, upon presentation of expense statements or vouchers and such
other information as the Company may reasonably require.
Indemnification. The Company shall, to the maximum extent permitted by
applicable law, the Company's certificate of incorporation or its bylaws,
indemnify Executive and hold Executive harmless from and against any claim, loss
or cause of action arising from or out of Executive's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including serving as a fiduciary, in which Executive serves at the
request of the Company. If any claim is asserted hereunder for which Executive
reasonably believes in good faith he is entitled to be indemnified, the Company
shall pay Executive's reasonable legal expenses (or cause such expenses to be
paid), as may be required but no less frequently than on a quarterly basis,
provided that Executive shall reimburse the Company for such amounts, plus
simple interest thereon at the 90-day United States Treasury Xxxx rate as in
effect from time to time, compounded annually, if Executive shall be found by a
final, non-appealable order of a court of competent jurisdiction not to be
entitled to indemnification. The indemnification obligations of the Company in
this paragraph shall survive any termination of this Agreement.
Directors and Officers Liability Insurance. The Company has obtained,
and shall use all commercially reasonable efforts to maintain, directors and
officers liability insurance coverage covering Executive in amounts customary
for similarly situated companies in the telecommunications industry.
Termination of Employment.
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Early Termination of the Employment Period. This Agreement may be
terminated in any of the following manners:
Executive may, upon 30 days' prior written notice to the Company,
voluntarily terminate employment with the Company at any time at the sole
discretion of Executive (a "Voluntary Termination");
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Executive may, upon written notice to the Company, terminate employment
with the Company at any time for "Good Reason" (as defined in Section 5(g)) it
being agreed that any such termination, although effected by Executive shall not
constitute a Voluntary Termination;
Executive's employment may, upon written notice to Executive, be
terminated by the Company at any time for Cause (as defined in Section 5(f));
This Agreement shall terminate automatically upon Executive's death;
The Company may, upon written notice to Executive, terminate this
Agreement upon Executive's Disability. As used herein, the term "Disability"
shall mean a determination that Executive suffers from illness or other physical
or mental impairment that prevents Executive from substantially performing his
duties for a period of 90 days during any six-month period during the Employment
Period or for 180 days during any 12-month period during the Employment Period.
The determination of whether (and, if appropriate, when) a Disability has
occurred shall be made by a majority of the Board of Directors of the Company
(excluding the Senior Executives that are directors of the Company);
The Company may terminate this Agreement immediately in the event of a
material breach of the Management Agreement by Manager (as determined by a
majority vote of the Board of Directors (excluding the Senior Executives that
are directors of the Company)), which has not been cured within thirty (30) days
following notice thereof from the Company, or the failure of the Company to meet
any of the objectives set forth on Schedule III-A to this Agreement; or
The Company may terminate this Agreement immediately in the event of
the failure of the Company to meet any of the objectives set forth in Schedule
III-B to this Agreement.
Benefits Payable Upon Termination.
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Following the end of the Employment Period pursuant to any manner
described in Section 5(a) or for any other reason, the Company shall pay to
Executive (or, in the event of his death, his surviving spouse, if any, or his
estate): (A) any Base Salary earned, but unpaid, for services rendered to the
Company on or prior to the date on which the Employment Period ended, and (B)
amounts which are vested or which Executive is otherwise entitled to receive
under the terms of or in accordance with any plan, policy, practice or program
of, or any contract or agreement with, the Company at or subsequent to the date
the Employment Period ends without regard to the performance by Executive of
further services or the resolution of a contingency.
Following the end of the Employment Period other than pursuant to a
termination described in Sections 5(a)(i), (iii) or (vii) (in respect of which
Executive shall not be entitled to any payments under this Section 5(b)(ii)),
Executive shall be entitled to receive the lesser of (x) his Base Salary, and
(y) the balance of his Base Salary through the Expiration Date. In the event
that the Employment Period shall end pursuant to a termination by Executive
pursuant to Section
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5(a)(ii) or a termination by the Company pursuant to Section 5(a)(vi), the
Executive shall also be entitled to receive the Annual Bonus (if earned in
accordance with Section 3(b) of this Agreement). The amount of the Annual Bonus
shall be determined as follows: (I) In the event that the date of termination is
on or prior to June 30 of any applicable calendar year, the amount of the Annual
Bonus shall be equal to a pro rata portion (based upon the actual number of days
during such calendar year that this Agreement shall have been in effect) of the
Annual Bonus payable in respect of such year (determined based upon the
achievement by the Company of the objectives for all of such calendar year).
(II) In the event that the date of termination is after June 30 of any
applicable calendar year, the amount of the Annual Bonus shall be equal to the
Annual Bonus payable in respect of such year (determined based upon the
achievement by the Company of the objectives for all of such calendar year).
Timing of Payments.
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Amounts payable pursuant to Section 5(b)(i)(A) and, except as provided
below upon termination of the Management Agreement, payments of Base Salary
pursuant to Section 5(b)(ii) shall be payable monthly in monthly installments in
arrears commencing on the last day of the month following the end of the
Employment Period. In the event that Executive's employment shall be terminated
pursuant to Section 5(a)(ii) or (vi), the Annual Bonus payable pursuant to
Section 5(b)(ii) shall, except as provided below upon termination of the
Management Agreement, be paid 30 days after the certification of the Company's
financial statements for such year. In the event that the Management Agreement
is terminated concurrently with the termination of this Agreement (A) the Annual
Bonus (if earned in accordance with Section 3(b) of this Agreement) shall be
payable on the later to occur of (x) 30 days after the certification of the
Company's financial statements for such year, and (y) the last day of the month
after which (a) a New Provider (as defined in the Management Agreement) shall be
retained by the Company in accordance with Section 5(e)(i)of the Management
Agreement, and (b) the Senior Executives shall have nominated a Successor
Control Group (as defined in the Management Agreement) acceptable to the Board
of Directors in its sole discretion (excluding the Senior Executives that are
directors of the Company) in accordance with Section 5(e)(ii) of the Management
Agreement, and (B) the Base Salary payable pursuant to Section 5(b)(ii) shall be
payable monthly in monthly installments on the last day of the month after which
(I) a New Provider shall be retained by the Company in accordance with Section
5(e)(i) of the Management Agreement and (II) the Senior Executives shall have
nominated a Successor Control Group reasonably acceptable to the Board of
Directors in its sole discretion (excluding the Senior Executives that are
directors of the Company) in accordance with Section 5(e)(ii) of the Management
Agreement.
Vested benefits referred to in clause (B) of Section 5(b)(i) shall be
payable in accordance with the terms of the plan, policy, practice, program,
contract or agreement under which such benefits have accrued.
The Company shall be entitled to set off against the amounts payable to
the Executive following the termination of this Agreement pursuant to Section
5(b)(ii), any amounts earned by
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either Executive in other employment after the termination of this Agreement;
provided, however, that Executive shall not be required, as a condition to the
receipt of such payment pursuant to Section 5(b)(ii), to seek such other
employment.
Continuing Obligations. After receipt of written notice of termination,
but prior to the effective date of such termination, Executive shall continue to
perform his duties under this Agreement unless specifically instructed to
discontinue such performance. In the event of termination, Executive and the
Company shall remain liable for their respective obligations accrued under this
Agreement prior to the effective date of termination.
Definition of Cause. For purposes of this Agreement, "Cause" means
only:
Executive's indictment or conviction of a felony;
Fraud, misappropriation or embezzlement by Executive against the
Company or any subsidiary or affiliate of the Company; or
Executive's willful misconduct or gross negligence in connection with
his employment hereunder which has materially adversely affected the Company,
monetarily or otherwise, as determined by a majority vote of the Board of
Directors of the Company (excluding Executive and other Company executives that
are directors of the Company).
Definition of Good Reason. For purposes of this Agreement "Good Reason"
means any of the following:
The Company fails to make any payment when due pursuant to Section 3
within thirty (30) days following Executive's written notice to the Company of
such failure;
A material breach of this Agreement by the Company (other than a
payment default) which has not been cured within thirty (30) days following
notice thereof from the Company;
Executive is demoted or removed from his/her respective offices or
there is a material diminishment of Executive's responsibilities, duties or
status which diminishment is not rescinded within 30 days after the date of
receipt by the Board of Directors of the Company of Executive's written notice
referring to this provision and describing such diminishment; or
The Company relocates its principal offices without Executive's consent
to a location more than 50 miles from the principal offices of the Company in
Jackson, Mississippi.
Noncompetition and Confidentiality.
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Noncompetition. During the Employment Period and for one year
thereafter, Executive shall not, without the consent of the Company, assist or
become associated with any person or entity, whether as a principal, partner,
employee, consultant or shareholder (other than as a holder of not in excess of
5% of the outstanding voting shares of any publicly traded company)
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that is actively engaged in the business of providing mobile wireless
telecommunications services in the Territory (as defined in the Company's
Stockholders' Agreement); provided, however, that in the event the Employment
Period is terminated (x) by Executive pursuant to Section 5(a)(ii) or by the
Company pursuant to Section 5(a)(vi) Executive shall have no obligations
pursuant to this Section 6(a), and (y) by the Company pursuant to Section
5(a)(vii) such one-year period shall be three (3) months, subject to the right
of the Company, upon written notice given to Executive, to extend such three (3)
month period on a month-to-month basis for up to an additional nine (9) month
period on the condition that the Company pays to Executive his Base Salary
during such three (3) month period and for any such additional period that the
Company elects to extend Executive's obligations pursuant to this Section 6(a).
Confidentiality. Without the prior written consent of the Company,
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, Executive
shall not disclose any trade secrets, customer lists, drawings, designs,
information regarding product development, marketing plans, sales plans,
manufacturing plans, management organization (including data and other
information relating to members of the Board of Directors and management),
operating policies and manuals, business plans, financial records, packaging
design or other financial, commercial, business or technical information
relating to the Company or any of its subsidiaries or affiliates (collectively,
"Confidential Information"), to any third person, unless such Confidential
Information has been previously disclosed to the public by the Company or is in
the public domain (other than by reason of Executive's breach of this Paragraph
6(b)), except that Executive may disclose Confidential Information to the extent
advisable in his sole discretion in connection with (i) the performance of
Executive's duties hereunder, or (ii) the issuance of Company securities, or
(iii) obtaining financing for the Company, or (iv) the enforcement of
Executive's rights under this Agreement, or (v) any disclosures that may be
required by law, including securities laws.
Inventions. Executive hereby sells, transfers and assigns to the
Company all of the right, title and interest of Executive in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by Executive, solely or jointly,
or in whole or in part, during the Employment Term which (i) relate to methods,
apparatus, designs, products, processes or devices sold, leased, used or under
construction or development by the Company or any subsidiary or affiliate or
(ii) otherwise relate to or pertain to the business, functions or operations of
the Company or any subsidiary or affiliate, or (iii) arise (wholly or partly)
from the efforts of Executive during the Employment Period. Executive shall
communicate promptly and disclose to the Company, in such form as the Company
reasonably requests, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and, whether
during the Employment Period or thereafter, Executive shall execute and deliver
to the Company (at the Company's sole cost and expense) such formal transfers
and assignments and such other papers and documents as may be required of
Executive to permit the Company to file and prosecute the patent applications
and, as to copyrightable material, to obtain copyright thereon.
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Company Property. Promptly following Executive's termination of
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control, and all
tangible embodiments of Confidential Information in Executive's possession in
whatever media such Confidential Information is maintained.
Non-Solicitation of Employees. During the Employment Period and for one
year thereafter, Executive will not directly or indirectly induce any employee
of the Company or any of its subsidiaries or affiliates to terminate employment
with such entity, and will not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by the Company or a subsidiary thereof, unless
such person shall have ceased to be employed by such entity for a period of at
least six months; provided, however, that nothing contained in this Agreement
shall prevent Executive from engaging in a general solicitation for employment
that is not directed at employees of the Company or any of its subsidiaries or
affiliates.
Injunctive Relief with Respect to Covenants. Executive acknowledges and
agrees that the covenants and obligations of Executive with respect to
noncompetition, inventions, confidentiality and Company property contained in
this Section 6 relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, Executive agrees that the Company shall be entitled to an injunction,
restraining order, or such other equitable relief as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants and obligations contained in this
Paragraph 6. These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.
Vesting and Repurchase of Unvested Shares, Etc.
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General. Executive by his acceptance of the Restricted Share
certificates bearing the legend set forth in paragraph (e) below, agrees that
the Restricted Shares shall be subject to repurchase by the Company at the
Repurchase Price in accordance with the terms of this Section 7. As used in this
Section 7, the following terms have the following meanings:
"Automatic Repurchase Event" means (v) the consummation of a Company
Merger after giving effect to which the Cash Equity Investors set forth in the
Securities Purchase Agreement, in the aggregate, shall beneficially own on a
Fully Diluted Basis less than 33% of the capital stock or other equity interests
in the surviving entity, (w) the consummation of a Company Sale, (x) the
termination of Executive's employment pursuant to this Agreement or any
agreement supplementing, amending or extending this Agreement, (y) if and only
if the IPO Date (as defined in the Stockholder Agreement) has theretofore
occurred, the seven (7) year anniversary of the date hereof, and (z) if and only
if the IPO Date has not occurred prior to the seven (7) year anniversary of the
date hereof, the IPO Date.
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"Base Price" means the initial purchase price per share of the
Company's Series C Preferred Common Stock, $.01 par value, paid by a Cash Equity
Investor on the date hereof (including the Unfunded Commitment) appropriately
adjusted for stock splits, stock dividends and similar changes in capitalization
(but excluding changes in the liquidation preference of the Preferred Stock of
the Company in accordance with the Restated Certificate).
"Base Shares" means ______ shares of Class A Common Stock and ________
shares of Class C Common Stock.
"Equity Kicker Shares" means a number of Restricted Shares equal to
_________ shares of Class A Common Stock.
"Fully Diluted Basis" means, with respect to the shares of Common Stock
outstanding, all of the shares of Common Stock then outstanding (regardless of
whether subject to repurchase), plus (without duplication) all the shares of
Common Stock issuable upon the exercise of outstanding options or convertible
securities (excluding the Company's Series A Preferred Stock, $.01 par value);
provided, that for the purpose of calculating the number of shares of Common
Stock outstanding on a Fully Diluted Basis in order to determine whether the
Internal Rate of Return pursuant to Section 7(b)(ii) equals (A) more than 25%
but less than 35%, none of the Equity Kicker Shares shall be deemed to be
outstanding, and (B) more than 35%, one-half of the Equity Kicker Shares shall
be deemed to be outstanding.
"Market Price" means in the case of (I) an Automatic Repurchase Event
(A) specified in clause (v) or (w) of the definition thereof, the per share
consideration paid or payable to the holders of Common Stock in connection with
such event, (B) specified in clause (x) of the definition thereof if the IPO
Date shall not have occurred prior to the date of termination, (1) the fair
market value of all of the assets of the Company and its Subsidiaries at the
time of any calculation of such value, less (a) any expenses which would be
incurred solely in connection with the disposition of such assets, (b) the
aggregate amount of all liabilities of the Company and (c) the aggregate
redemption price of all outstanding shares of all series of Preferred Stock of
the Company, all as determined in good faith by the Board of Directors
(excluding any Senior Executive that is a director of the Company), divided by
(2) the number of shares of Common Stock outstanding on a Fully Diluted Basis;
provided, however, if the number of Base Shares or Equity Kicker Shares being
repurchased by the Company from the Senior Executives on the date of
determination of Market Price exceeds .5% of the Common Stock on a Fully Diluted
Basis, such determination shall be determined by an investment banking firm
selected by the Board of Directors of the Company and reasonably acceptable to
the Executive, (C) specified in clause (x) of the definition thereof if the IPO
Date shall have occurred on or prior to the date of termination, the average
closing price of the Class A Common Stock during the ten (10) trading days prior
to such date of termination, (D) specified in clause (y) of the definition
thereof, the average closing price of the Class A Common Stock during the ten
(10) trading days prior to such seventh (7th) anniversary of the date hereof, or
(E) specified in clause (z) of the definition thereof, the per share offering
price of the Class A Common Stock issued in connection with the public offering
occurring on the IPO Date, or (II) a Trigger Date (A) which is on the IPO Date,
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the per share offering price of the Class A Common Stock issued in connection
with the public offering occurring on the IPO Date, or (B) which is after the
IPO Date, the average closing price of share of Class A Common Stock during the
ten (10) trading days prior to such Trigger Date.
"Non-Released Base Shares" means the number of shares of Class A Common
Stock initially issued to Executive as Base Shares less the aggregate number of
Executive's Base Shares that have (x) become Triggered Shares, or (y) been
repurchased by the Company.
"Non-Released Equity Kicker Shares" the number of shares of Class A
Common Stock initially issued to Executive as Equity Kicker Shares less the
aggregate number of Executive's Equity Kicker Shares that have (x) become
Triggered Shares, or (y) been repurchased by the Company.
"Repurchase Price" means $.01 per share.
"Trigger Date" means the date of delivery to the Company by Executive
of a Trigger Notice that refers to Base Shares and/or Equity Kicker Shares.
"Trigger Notice" means a notice given by Executive with respect to a
specified number of Base Shares or Equity Kicker Shares to determine the number
of Triggered Shares.
"Trigger Shares" means Restricted Shares set forth in a Trigger Notice
and not repurchased in connection with such notice pursuant to this Section 7;
provided, however, that Base Shares that are not so repurchased shall, to the
extent applicable, continue to be subject to vesting in accordance with Schedule
IV annexed hereto.
Repurchase of Base Shares and Equity Kicker Shares.
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Repurchase of Base Shares upon Automatic Repurchase Event. Upon an
Automatic Repurchase Event, Executive shall sell to the Company, and the Company
shall purchase from Executive, the aggregate of (I) all Base Shares that shall
not have vested in accordance with Schedule IV, plus (II) a number of Base
Shares equal to the number of Non-Released Base Shares beneficially owned by
Executive multiplied by a fraction, the numerator of which is the Base Price and
the denominator of which is the Market Price on the date of such event, plus
(III) the number of Restricted Shares subject to repurchase pursuant to Sections
7(b)(iv).
Repurchase of Equity Kicker Shares upon Automatic Repurchase Event.
Upon an Automatic Repurchase Event specified in clause (x) of the definition
thereof occurring prior to the IPO Date with respect to Executive, Executive
shall sell to the Company, and the Company shall purchase from Executive, all
Equity Kicker Shares. Upon any Automatic Repurchase Event other than an event
specified in clause (x) of the definition thereof occurring prior to the IPO
Date with respect to Executive, Executive shall sell to the Company, and the
Company shall purchase from Executive, the aggregate of (I) the percentage of
Executive's Non-Released Equity Kicker Shares set forth opposite the Internal
Rate of Return realized by the Cash Equity Investors as set forth on the chart
below as of the date of the Automatic Repurchase Event:
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Internal Rate of Return Percentage of Non-Released
Realized by Cash Equity Equity Kicker Shares to be
Investors Repurchased
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Less than 25%
25% or more but less than 35%
35% or more
, plus (II) a number of Non-Released Equity Kicker Shares beneficially owned by
Executive (less any Equity Kicker Shares, if any, repurchased pursuant to clause
(I) hereof) multiplied by a fraction, the numerator of which is the Base Price
and the denominator of which is the Market Price on the date of such event, plus
(III) the number of Restricted Shares subject to repurchase pursuant to Sections
7(b)(iv) that are not repurchased pursuant to clause (i) above.
For the purpose of this Section 7, the Cash Equity Investors will be deemed to
have "realized an Internal Rate of Return" of any percentage specified, as of
any date, when (i) the aggregate amount of all distributions (but not including
proceeds from sales of Common Stock) actually made in respect of the Cash Equity
Investors' Common Stock, plus an amount equal to interest thereon at the rate of
10% per annum, compounded annually, from the date each such distribution is made
to and including the date of the calculation, plus the product of the Market
Price multiplied by the number of shares of Common Stock beneficially owned by
the Cash Equity Investors on the date hereof (as adjusted for stock splits,
stock dividends and similar changes in capitalization), is equal to (ii) the
aggregate amount of all capital contributions made by the Cash Equity Investors,
plus an amount equal to interest thereon at such percentage per annum,
compounded annually, from the date each such capital contribution is made to and
including such date of calculation.
Repurchase of Base Shares or Equity Kicker Shares on Trigger Date.
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On any Trigger Date Executive may elect, by delivery of a Trigger
Notice with respect to a specified number of Base Shares and/or Equity Kicker
Shares to determine the number of Triggered Shares. Within 20 days of the giving
of a Trigger Notice the Company shall repurchase from Executive, and Executive
shall sell to the Company for the Repurchase Price, (x) in the case of Base
Shares, a number of Base Shares specified in the Trigger Notice multiplied by a
fraction of the numerator of which is the Base Price and the denominator of
which Market Price on the date of such notice and (y) in the case of Equity
Kicker Shares (I) first, a percentage of the number of such Equity Kicker Shares
specified in the Trigger Notice set forth opposite the Internal Rate of Return
(determined as specified in clause (ii) above) realized by the Cash Equity
Investors as set forth on the chart below in connection with the Trigger Notice
as of the Trigger Date:
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Internal Rate of Return Percentage of Non-Released
Realized by Cash Equity Equity Kicker Shares to be
Investors Repurchased
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Less than 25%
25% or more but less than 35%
35% or more
, plus (II) a number of Executive's Equity Kicker Shares (less any Equity Kicker
Shares, if any, repurchased pursuant to clause I above) multiplied by a
fraction, the numerator of which is the Base Price and the denominator of which
is the Market Price on the date of such notice.
Each Trigger Notice shall be with respect to at least (x) 20% of the
Base Shares initially issued to Executive, or (y) at least 50% of the Equity
Kicker Shares initially issued to Executive. A Trigger Notice may be delivered
(x) not less than twenty (20) Business Days (as such term is defined in the
Stockholders Agreement) prior to the IPO Date if the Trigger Date is the IPO
Date, or (y) any Business Day occurring during the ten (10) Business Day period
commencing ten (10) Business Days following the Company's public announcement of
its earnings for the (i) then most recently completed fiscal year, and (ii) the
six-month period ended June 30 of each fiscal year. No more than one Trigger
Notice may be delivered by Executive within any twelve (12) month period. No
Trigger Notice may be delivered by Executive prior to the IPO Date. Executive
may only deliver a Trigger Notice with respect to Equity Kicker Shares after a
Trigger Notice with respect to all Base Shares beneficially owned by such holder
shall have been delivered to the Company.
In connection with any such repurchases of Base Shares, the Base Shares
to be repurchased by the Company shall proportionately reduce the number of Base
Shares initially issued to Executive and allocable to each Vesting Date Event
set forth on Schedule IV.
Additional Repurchase Rights of the Company.
--------------------------------------------
Anything to the contrary contained herein notwithstanding, in the event
this Agreement is terminated by the Company pursuant to Section 5(a)(iii),
Executive shall sell to the Company, and the Company shall repurchase from
Executive, all of the Restricted Shares (whether or not vested).
In the event that the Management Agreement is terminated and the
Manager does not approve a "New Provider" (as such term is defined in the
Management Agreement) within five (5) business days of notice of such New
Provider's nomination by the Board of Directors, in accordance with Section
5(e)(i) of the Management Agreement, then for each successive thirty (30) day
period or portion thereof following such five (5) business day period that a New
Provider shall not have been approved by the Manager, Executive shall sell to
the Company 50% of the Restricted Shares then owned by Executive (after giving
effect to all other repurchases pursuant to this Section 7).
12
In the event that Executive and the other Senior Executives do not
nominate a Successor Control Group reasonably acceptable to the Board of
Directors of the Company in its sole discretion (excluding the Senior Executives
that are directors of the Company) in accordance with such Section 5(e)(ii) of
the Management Agreement within the five (5) business day period set forth in
the first sentence of Section 5(e)(ii) of the Management Agreement, then for
each successive 30 day period or portion thereof that Executive and the other
Senior Executives shall not have nominated a Successor Control Group reasonably
acceptable to the Board of Directors of the Company in its sole discretion
(excluding the Senior Executives that are directors of the Company), the
Executive shall sell to the Company after the expiration of each 30 day period,
in addition to and after giving effect to all other repurchases by the Company
of Restricted Shares pursuant to this Section 7 (including Section 7(b)(iv)(B)),
an additional 50% of the Restricted Shares then owned by Executive.
Purchase Price; Closing of Repurchase; Assignment of Repurchase Right.
Any repurchase pursuant to this Section 7 shall be for the Repurchase Price. The
closing of a purchase and sale of Repurchased Shares shall take place on a date
mutually agreed by Executive and the Company, but in no event later than 20 days
after (i) the date that employment of Executive shall have terminated or, in the
case of a repurchase pursuant to Sections 7(b)(iv), the end of any 30-day period
referred to in Section 7(b)(iv), or (ii) in the case of Automatic Repurchase
Event other than termination of employment of Executive, the occurrence of the
applicable event, or (iii) the date of a Trigger Notice (except that in
connection with a Trigger Notice given with respect to the IPO Date, the closing
shall take place on the IPO Date). At such closing, the Company shall deliver to
the Executive a check in the amount of the aggregate Repurchase Price and, upon
delivery thereof, the Company shall become the legal and beneficial owner of the
Restricted Shares and all rights and interests therein or relating thereto, and
the Company shall have the right to retain and transfer to its own name such
shares being repurchased by the Company. Whenever the Company shall have the
right to repurchase Restricted Shares hereunder, the Company may designate and
assign one or more employees, officers, directors or shareholders of the Company
or other persons or organizations to exercise all or a party of the Company's
repurchase rights under this Agreement and purchase all or a part of such
Shares.
Escrow of Shares. The Certificate(s) representing all Restricted Shares
shall be held by the Secretary of the Company as escrow holder (the "Escrow
Holder"), along with a stock power executed by the Executive in blank. The
Escrow Holder is hereby directed to permit transfer of such shares only in
accordance with this Agreement and the Stockholders Agreement. In the event
further instructions are desired by the Escrow Holder, he shall be entitled to
rely upon written directions of the Board of Directors of the Company (excluding
any Senior Executive that is a director of the Company). The Escrow Holder shall
have no liability for any act or omission hereunder while acting in good faith
in the exercise of his own judgment. The Company agrees to indemnify and hold
Escrow Holder free and harmless from and against any and all losses, costs,
damages, liabilities or expenses, including counsel fees to which Escrow Holder
may be put or which he may incur by reason of or in connection with the escrow
arrangement hereunder. If the Company or any assignee repurchases any of the
Restricted Shares pursuant to this Section 7, the Escrow Holder, upon receipt of
written notice of such
13
repurchase from the proposed transferee, shall take all steps necessary to
accomplish such repurchase. From time to time, upon Executive's request, Escrow
Holder shall: (i) cancel the certificate(s) held by the Escrow Holder and
representing Restricted Shares, (ii) cause new certificate(s) to be issued
representing the number of Restricted Shares no longer subject to repurchase
pursuant to paragraphs (i), (ii) and (iii) of Section 7(b), which certificate(s)
the Escrow Holder shall deliver to Executive, and (iii) cause new certificate(s)
to be issued representing the balance of the Restricted Shares, which
certificate(s) shall be held in escrow by the Escrow Holder in accordance with
the provisions of this Section 7(d). Subject to the terms hereof, Executive
shall have all the rights of stockholder with respect to the Restricted Shares
while they are held in escrow, including without limitation, the right to vote
the Restricted Shares and receive any cash dividends declared thereon. If, from
time to time during the term of the Company's repurchase right, there is (i) any
stock dividend, stock split or other change in the Restricted Shares, or (ii)
any merger or sale of all or substantially all of the assets or other
acquisition of the Company, any and all new, substituted or additional
securities to which such Executive is entitled by reason of his ownership of the
Restricted Shares shall be immediately subject to this escrow, deposited with
the Escrow Holder and included thereafter as "Restricted Shares" for purposes of
this Agreement and the Company's repurchase right.
Legends. The share certificates evidencing the Restricted Shares shall
be endorsed with the following legend (in addition to any legend required to be
placed thereon by applicable federal or state securities laws or the Company's
Stockholders Agreement):
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A
MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN AFFILIATE OF
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER
THINGS, FOR THE REPURCHASE BY THE COMPANY OF THE SHARES
REPRESENTED BY THIS CERTIFICATE.
No Conflict With Prior Agreements; Due Authorization.
-----------------------------------------------------
Executive represents to the Company that neither Executive's execution
of this Agreement or commencement of employment hereunder nor the performance of
Executive's duties hereunder conflicts with any contractual commitment on
Executive's part to any third party. The Company represents to Executive that it
is fully authorized and empowered by action of the Company's Board of Directors
to enter into this Agreement and that performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm
or other entity.
Nothing herein shall be construed to require Executive to use or
disclose any information that he is prohibited from using or disclosing as a
result of legal or contractual obligations.
Miscellaneous.
--------------
14
Survival. Sections 4(d), 5, 6, 7 and 9 shall survive the termination
hereof.
Binding Effect. This Agreement shall be binding on the Company and any
person or entity which succeeds to the interest of the Company (regardless of
whether such succession occurs by operation of law) by reason of the sale of all
or a portion the Company's stock, a merger, consolidation, or reorganization
involving the Company or a sale of the assets of the business of the Company (or
portion thereof) in which Executive performs a majority of his services. This
Agreement shall also inure to the benefit of Executive's heirs, executors,
administrators and legal representatives.
Assignment. Except as provided under Section 9(b), neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party, except that the Company may delegate to any of its direct or indirect
wholly owned subsidiaries its obligations to provide compensation and benefits
hereunder, provided no such delegation shall relieve the Company of its
obligations hereunder.
Entire Agreement. This Agreement, together with the Schedules attached
hereto, constitutes the entire agreement between the parties hereto with respect
to the matters referred to herein, and no other agreement, oral or otherwise,
shall be binding between the parties unless it is in writing and signed by the
party against whom enforcement is sought. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has been represented and fully advised by competent counsel in entering into
this Agreement, that he has read it and that he understands it and its legal
consequences. No parol or other evidence may be admitted to alter, modify or
construe this Agreement, which may be altered, modified or amended only by a
writing signed by the parties hereto.
Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of Sections 6(a), (b) or (c) is not enforceable in accordance with its terms,
Executive and the Company agree that such Section shall be reformed to make such
Section enforceable in a manner which provides the Company the maximum rights
permitted at law.
Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally against receipt,
by courier service or by registered mail, return receipt requested, and shall be
effective upon actual receipt by the party to which such
15
notice shall be directed, and shall be addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in accordance
with the terms hereof):
If to the Company, to the attention of its Board of
Directors at the Company's principal executive
offices.
If to Executive:
Headings. Headings to paragraphs in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
Resolution of Disputes. All disputes, controversies and claims arising
in connection with this Agreement that are not settled by agreement between the
parties shall be finally settled under the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") in effect from time to time. A single
arbitrator shall be appointed by agreement between the parties or, failing such
agreement, by AAA. The arbitrator may grant any remedy that (s)he deems just and
equitable within the scope of this Agreement, including specific performance.
The award of the arbitrator shall be final and binding and judgment thereon may
be entered in any court having jurisdiction. The costs and expenses (including
reasonable attorney's fees) of the prevailing party shall be borne and paid by
the party that the arbitrator determines is the non-prevailing party.
16
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunto set his hand
as of the day and year first above written.
TRITEL, INC.
By:
-----------------------------------
Name:
Title:
EXECUTIVE:
--------------------------------------
17
SCHEDULE I
----------
Duties
------
18
SCHEDULE II
Permitted Activities
--------------------
19
SCHEDULE III-A
Objectives
----------
[TO BE ESTABLISHED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS]
20
SCHEDULE III-B
Objectives
----------
21
SCHEDULE IV
-----------
Vesting Schedule
----------------
Vesting Date Event Percent of Base Shares
------------------ -----------------------
Commencement Date
Second Anniversary
Third Anniversary
Fourth Anniversary
Fifth Anniversary
Completion of Year 1 and Year 2 of
Minimum Build-Out Plan
Completion of Year 3 of Minimum Build-
Out Plan
Total 100%
Base Shares that are shares of Class C Common Stock shall vest prior to the
vesting of any shares of Class A Common Stock.
Accelerated Vesting
-------------------
o Upon termination of the Employment Agreement by the Company pursuant to
Section 5(a)(vii) of this Agreement, the Base Shares that would have vested
on the immediately following Anniversary Date of such termination shall
vest.
o Upon termination of the Employment Agreement on or prior to the third
anniversary of the date hereof by the Company pursuant to Section 5(a)(vi)
of this Agreement or by Executive pursuant to Section 5(a)(ii) of this
Agreement, an additional number of Base Shares shall vest such that 75% of
the Base Shares shall have vested.
o Upon termination of the Employment Agreement after the third anniversary of
the date hereof by the Company pursuant to Section 5(a)(vi) of this
Agreement or by Executive pursuant to Section 5(a)(ii) of this Agreement,
100% of the Base Shares shall vest.
o Upon termination of the Employment Agreement by reason of a Company Merger
or Company Sale, all Base Shares shall immediately vest.
22
