EXHIBIT 10 (l)
LETTER AGREEMENT
Roseville Communications Company
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
January 16, 2001
Xxxxxx X. Xxxxxx
Vice President
RCS Wireless
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Xxx:
Roseville Communications Company (the "Company") considers it
essential to the best interests of the Company and its shareholders to xxxxxx
the continued employment of key management personnel in a period of uncertainty
regarding the Company's future in light of the consolidation in the
telecommunications industry. In this connection, the Board of Directors of the
Company (the "Board") recognizes that the possibility of a change in control
exists and that such possibility, and the uncertainty and questions which it
necessarily raises among management, may result in the departure or distraction
of management personnel to the detriment of the Company and its shareholders
when their undivided attention and commitment to the best interests of the
Company and its shareholders are particularly important.
Accordingly, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including you, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in the employ of the Company
and in consideration of your agreement set forth in Section 2 hereof, the
Company agrees that you shall receive the benefits set forth in this letter
agreement ("Agreement") in the event of a "change in control of the Company" and
a "constructive termination" (each as defined in Section 2 hereof) under the
circumstances described below.
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2001; provided,
however, that commencing on January 1, 2001 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than by November 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this Agreement; provided,
further, that following a change in control of the Company (as hereinafter
defined) the term of this Agreement shall automatically extend to the date which
is two (2) years following such change in control.
2. Change in Control and Constructive Termination. No
benefits shall be payable hereunder unless there shall have been a change in
control of the Company and thereafter a constructive termination, as set forth
below. For purposes of this Agreement, a "change in control of the Company"
shall be deemed to have occurred if (A) any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing Twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding voting securities; (B) there is a merger or consolidation of the
Company in which the Company does not survive as an independent public company;
or (C) the business or businesses of the Company for which your services are
principally performed are disposed of by the Company pursuant to a partial or
complete liquidation of the Company, a sale of assets (including stock of a
subsidiary) of the Company, or otherwise. For purposes of this Agreement,
"constructive termination" shall mean a change in control of the company, as
well as, and as a direct result thereof, (i) a decrease in the total amount of
your base salary below its level in effect on the date hereof or as the same may
be increased from time to time, or a decrease in the bonus percentage to which
you are entitled, without your consent, provided, however, nothing herein shall
be construed to guarantee your bonus award if performance is below target, or
(ii) a reduction in the importance of your job responsibilities without your
consent, with the determination of whether a reduction in job responsibility has
taken place to be in your discretion or, (iii) your geographical relocation
without your consent. Absent written consent, after a change in control of the
Company, no action or inaction by you within ninety (90) days following the
occurrence of the events described in (i), (ii) or (iii) hereof shall be deemed
consent to such events.
3. Compensation Following Change of Control and Constructive
Termination. Subject to the terms and conditions of this Agreement, following a
change in control of the Company and constructive termination, as defined in
Section 2, the Company shall pay you a lump sum payment, within ten (10) days
after the constructive termination, in the amount equal to the sum of:
(A) The sum of your then effective annual base salary through
the termination date and any accrued vacation pay, plus
(B) two times the sum of (I) your full annual base salary on
the date of the constructive termination, plus (II) the greater of your target
bonus or the most recent annual bonus paid to you.
In addition, the Company shall continue to provide to you and
your family at the Company's expense, for twenty-four (24) months following the
change in control and the constructive termination, the life insurance, medical,
dental and other benefits provided to you and your family immediately prior to
the change in control and constructive termination. The Company also shall pay
to you all legal fees and expenses incurred by you in seeking to obtain or
enforce any right or benefit provided by this Agreement. You shall not be
required to mitigate the amount of any payment provided for in this Section 3 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 3 be reduced by any compensation earned by
you as the result of employment by another employer or by retirement benefits
after the date of termination, or otherwise.
4. Certain Additional Payments by the Company.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 4) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any corresponding provisions of state or local tax laws, or any interest or
penalties are incurred by you with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then you shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after your
payment of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of Section 4(iii), all
determinations required to be made under this Section 4, including 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 determination, shall be made
by Ernst & Young LLP or such other certified public accounting firm as may be
designated by you (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and you within 15 business days of
the receipt of notice from you that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the change of control, you shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 4, shall be paid by the
Company to you within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and you. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 4(iii) and you thereafter are
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for your benefit.
(iii) You shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after you are informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. You shall not pay such
claim prior to the expiration of the 30-day period following the date on which
you give such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies you in writing prior to the expiration of such period that it desires
to contest such claim, you shall:
(A) give the Company any information reasonably requested by
the Company relating to such claim,
(B) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold you
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4(iii), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct you to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and you agree to prosecute such
contest 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 directs you to pay such claim
and xxx for a refund, the Company shall advance the amount of such payment to
you, on an interest-free basis and shall indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for your taxable year with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and you shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iv) If, after your receipt of an amount advanced by the
Company pursuant to Section 4(iii), you become entitled to receive any refund
with respect to such claim, you shall (subject to the Company's complying with
the requirements of Section 4(iii)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after your receipt of an amount advanced by the Company
pursuant to Section 4(iii), a determination is made that you shall not be
entitled to any refund with respect to such claim and the Company does not
notify you in writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or
indirect, by merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly agree to perform this
Agreement. Failure of the Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle you to compensation from the Company in the same amount and on
the same terms as you would be entitled hereunder following a change in control
of the Company and constructive termination, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date on which you become entitled to such
compensation from the Company. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be payable
to you hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.
6. Notice. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of a change of address shall be effective only upon receipt.
7. 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 you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California.
8. 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.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Supercedes Prior Agreements. The Company and you agree
that this Agreement supercedes all prior agreements, whether written or oral,
relating to the subject matter of this Agreement including, without limitation,
any prior letter agreements relating to payments in the event of a change in
control of the Company, or any provisions of any letters of offer of employment
with the Company."
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely yours,
ROSEVILLE COMMUNICATIONS COMPANY
By ___________________________
Xxxxxx X. Xxxxx
Chairman
AGREED TO this _____ day
of ________________, 2001.
_______________________________
Xxxxxx X. Xxxxxx
