CITIZENS COMMUNICATIONS COMPANY
WITH
▇▇▇▇▇▇▇ ▇▇▇
Employment Agreement
Dated: As of October 1, 2000
TABLE OF CONTENTS
1. EMPLOYMENT; DUTIES.......................................................................................2
2. TERM.....................................................................................................3
3. COMPENSATION, EXPENSES AND BENEFITS......................................................................3
a. Base Salary............................................................................3
b. Stock Compensation.....................................................................3
c. Registration of Shares.................................................................8
4. PARTICIPATION IN PLANS..................................................................................10
5. SPECIAL INSURANCE ARRANGEMENT...........................................................................12
6. EXPENSES, TAX AND OTHER SERVICES; ACCOUTERMENTS OF OFFICE, VACATION.....................................13
a. Expenses..............................................................................13
b. Tax and Other Services................................................................13
7. PLACE AND TIME FOR SERVICES.............................................................................13
8. BONUS; ADDITIONAL PAYMENTS..............................................................................14
9. SPLIT-DOLLAR INSURANCE..................................................................................14
10. EXCLUSIVITY.............................................................................................14
11. ADVISORY SERVICES.......................................................................................15
a. General...............................................................................15
b. Termination...........................................................................16
c. Other Matters.........................................................................16
12. WAIVERS; LIMITATIONS OF LAW.............................................................................17
13. CONTINUED AVAILABILITY OF BENEFITS AFTER RETIREMENT.....................................................18
14. TERMINATION.............................................................................................19
a. Termination for Cause.................................................................19
b. Other Termination.....................................................................20
c. Challenge or Contest..................................................................21
15. CONSEQUENCES OF TERMINATION.............................................................................21
a. Termination Under Section 14a.........................................................21
b. Termination Under Section 14b.........................................................23
c. Special Advisory Term Payment.........................................................24
d. Vested Rights not Affected............................................................24
e. Mitigation............................................................................25
f. Excess Parachute Payments.............................................................25
g. Remedies..............................................................................25
16. INDEMNITY, DIRECTORS' AND OFFICERS' INSURANCE...........................................................25
17. DETERMINATION OF BENEFITS...............................................................................26
18. MERGER, CONSOLIDATION, OR SALE OF ASSETS OR STOCK.......................................................26
19. ADDITIONAL OPTION TO ACQUIRE SHARES.....................................................................27
20. MISCELLANEOUS...........................................................................................29
a. Decisions by Company..................................................................29
b. Entire Agreement......................................................................29
c. Assignability.........................................................................29
d. No Attachment.........................................................................29
e. Binding Agreement.....................................................................29
f. No Waiver.............................................................................30
g. Expenses and Legal Fees...............................................................30
h. Right to Accelerate...................................................................30
i. Severability..........................................................................31
j. Headings..............................................................................31
k. Governing Law.........................................................................31
l. Counterparts..........................................................................31
m. Notices...............................................................................32
n. Transfer..............................................................................32
21. NON-APPROVAL OF 2000 PLAN...............................................................................33
22. FAMILY MEMBER...........................................................................................33
23. NO DIMINUTION OF BENEFITS...............................................................................33
EMPLOYMENT AGREEMENT
This Employment Agreement entered into as of October 1, 2000 by and between
Citizens Communications Company, a Delaware corporation, with offices at Three
High Ridge Park, Stamford, Connecticut 06905 ("the Company") and ▇▇▇▇▇▇▇ ▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("the Executive").
RECITALS
The Company and the Executive under date of July 11, 1996 have heretofore
entered into an agreement pursuant to which the Company employed the Executive
as its Chief Executive Officer for a term ending December 31, 2000 (the "1996
Agreement"). The Executive is currently acting as Chief Executive Officer of the
Company and as its Chairman pursuant to the 1996 Agreement to the full
satisfaction of the Company.
The Company is desirous of retaining the services of the Executive as its
Chief Executive and Chairman for an additional five (5) years beyond December
31, 2000 and having the benefit of the Executive's advice and counsel for an
additional five (5) years beyond December 31, 2005 all is set forth in this
Agreement and believes such retention is in the best interests of the Company.
The Company has requested the Executive to extend his employment with the
Company under the terms, provisions and conditions set forth in this Agreement.
As an inducement to the Executive to enter into this Agreement extending his
employment by the Company, the Company is willing to grant and award the
Executive shares of stock in the Company and options to acquire additional
shares of stock of the Company as well as other benefits. The Company believes
such grants, awards and benefits will continue to motivate the Executive in the
performance of his duties. At the same time the Company has requested and has
advised the Executive that as part of this Agreement extending his employment,
and a material inducement to the Company, the Executive shall be required to
extend the date when restrictions lapse on the 500,000 shares of the Company's
Common Stock awarded to the Executive under the Company's 1990 Management Equity
Incentive Plan (the "Current Restricted Shares") and presently 559,974 shares by
reason of stock dividends, to a date subsequent to the expiration or prior
termination of this Agreement, all as provided in this Agreement.
The Executive is willing to extend his term of employment with the Company
for such additional five-year period and to enter into this Agreement upon the
terms, provisions and conditions set forth herein, including without limitation,
the award and grant of shares of the Company's Common Stock and options to
acquire additional shares of the Company's Common Stock and the other benefits
provided herein, and including extension of the date as provided in this
Agreement when restrictions will lapse on the Current Restricted Shares provided
the number of Current Restricted shares is increased from 559,974 to 809,974, to
which the Company has agreed.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, each to the other in hand paid and
the receipt and adequacy of which is mutually acknowledged, the parties agree as
follows:
1. EMPLOYMENT; DUTIES:
------------------
1. The Company hereby employs and continues the employment of the Executive
and the Executive hereby accepts such employment for the duration of the
Term (as herein defined) and upon the terms and conditions hereafter
provided, as chief executive officer of the Company. As such chief
executive, the Executive shall have the power and authority set forth in
Schedule "A" annexed, which is an integral part of this Agreement. During
the Term the Executive shall continue to be designated as the Chairman of
the Board of the Company and the By-Laws of the Company shall continue to
provide that the Chairman of the Board shall be the chief executive officer
of the Company. The Executive currently serves as chairman of Electric
Lightwave, Inc. (▇▇▇), a subsidiary of the Company and shall continue in
that capacity for the duration of the Term, so long as ▇▇▇ is controlled by
the Company. Additionally, during the Term, the Executive agrees to serve,
if it is mutually determined to be appropriate or if the Executive desires
to be so elected or appointed, for the period for which he is and from
time-to-time shall be appointed or elected, as an officer of any subsidiary
or affiliate of the Company, in addition to ▇▇▇. The Company shall not take
any action to reduce the scope of the Executive's authority, position,
functions, duties and responsibilities from that which is in effect at the
date hereof and/or which is contemplated hereby, unless he shall otherwise
consent in writing.
2. The Executive is currently a member of the Board of Directors of the
Company. The Company shall use its best efforts to cause the Executive to
continue to be a member of its Board of Directors throughout the Term, and
shall include the Executive in management's slate for election as a
director at every stockholders' meeting at which his term for director
would otherwise expire and/or at all annual meetings of stockholders. The
Company shall use its best efforts to cause the Executive to be a member of
the Board of Directors of all subsidiaries of the Company throughout the
Term. The Executive agrees to serve and continue to serve, if elected, as a
director and as a member of any committee of the Board of Directors of the
Company and also agrees to serve, if elected, as a member of the Board of
Directors of all subsidiaries of the Company. During the Term of the
Agreement, the Executive shall not receive a fee as a director or as a
member of any committee of directors of the Company or any subsidiary of
the Company.
2. TERMS:
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1. The term of the Executive's employment under this Agreement shall
commence on October 1, 2000 and shall expire on December 31, 2005 (the
"Term"). The Executive's employment under this Agreement may be terminated
prior to the expiration of the Term, as hereinafter provided.
2. The phrase "terminate this Agreement" when used herein shall refer to
the termination of the period of employment as well as the Advisory Period,
as hereafter defined, and the rendering of advisory services under this
Agreement.
3. COMPENSATION, EXPENSES AND BENEFITS:
-----------------------------------
1. Base Salary. For the period October 1, 2000 through December 31, 2000
the Company shall pay the Executive a base salary of $225,000 which is the
base salary payable under the 1996 Agreement. The Company shall pay to the
Executive a base salary of $900,000 (the "Base Salary") for each year of
the Term commencing January 1, 2001. The payment of aforesaid $225,000 as
well as the Base Salary shall be payable currently in accordance with the
customary payroll practices of the Company but in no event less frequently
than monthly and shall be subject to such withholdings as may be required
by applicable law.
2. Stock Compensation. In addition to his Base Salary, and in consideration
of his entering into this Agreement, and subject to the provision of
sub-section (c) of this Section 3, and in the event of termination pursuant
to the provisions of Section 14 subject to the provisions of Section 15,
the Executive shall be awarded and Company agrees to and shall give and
deliver to the Executive, upon the execution and delivery of this Agreement
(or at such later date set forth in this Section 3b) the following shares
and options to acquire shares:
1. 750,000 shares of the Common Stock of the Company (the "Additional
Restricted Shares"), which are in addition to the Current Restricted
Shares, and which shall be registered in the Executive's name but
shall be subject to a restriction period (the "Additional Restriction
Period") (after which all restrictions shall lapse) which shall mean
the period commencing with the delivery of said shares to the
Executive and ending with the first to occur of (i) the first January
1 next succeeding the expiration on December 31, 2005 of the Term ,
(ii) termination of employment by death of the Executive or by either
the Executive or the Company under this Agreement in accordance with
its provisions prior to December 31, 2005, provided that if the
Executive is the chief executive officer on December 31 of the year in
which such termination occurs or if the Executive is otherwise a
"covered employee" for the purpose of Section 162(m) of the Internal
Revenue Code of 1986, as amended ("Code"), for the taxable year in
which such termination occurs, the Additional Restriction Period shall
end on the next succeeding January 1 after such termination, (iii)
sale of all or substantially all of the assets or capital stock of the
Company, (iv) merger, consolidation or other amalgamation or
combination of the Company, in which merger or other transaction the
Company is not the surviving entity, or (v) a Change in Control as
defined in Section 19. During the Additional Restriction Period, none
of the Additional Restricted Shares may be sold, exchanged,
transferred, hypothecated or otherwise disposed of except that the
Executive shall not be precluded from exchanging any Additional
Restricted Shares for any other shares of the Company that thereby
become similarly restricted by this Section or are similarly
restricted and except that Executive may transfer Additional
Restricted Shares to a Family Member as defined in Section 23 provided
the Family Member agrees to hold said shares subject to the terms and
provisions of this Agreement. Except for the restrictions on the
Additional Restricted Shares during the Additional Restriction Period
set forth in the immediately preceding sentence, Executive shall have
all of the rights of a shareholder with respect to the Additional
Restricted Shares, including without limitation the right to vote the
shares and receive dividends and other distributions. During the
Additional Restriction Period, dividends and other distributions
payable in capital stock of the Company received by the Executive
shall be subject to the foregoing restrictions.
[1.] The foregoing award of the Additional Restricted Shares
shall be subject to the following proviso: In the event that
EBIDTA of the Company as herein defined (A) for the fiscal year
2005, if the Term of this Agreement expires on December 31, 2005,
or (B) for the fiscal year most recently completed in the event
the employment of Executive as chief executive officer is
terminated by the Company for "Good Cause" as defined in Section
14(a), is not in excess of $360,000,000 by at least the following
applicable percentages (the "Applicable Percentage"):
Applicable Fiscal Year Under Applicable
(A) or (B) above Percentage
Calendar Year 2001 5
Calendar Year 2002 10
Calendar Year 2003 15
Calendar Year 2004 20
Calendar Year 2005 25
the 750,000 Additional Restricted Shares, as same may be
otherwise adjusted by stock dividends or other adjustments, shall
be reduced by a fraction, the numerator of which is the
difference between the Applicable Percentage and the actual
percentage increase in EBIDTA for the particular applicable
fiscal year and the denominator of which is the Applicable
Percentage for the particular year. (If termination occurs during
a fiscal year, the EBIDTA for such year shall be annualized based
on the EBIDTA for the portion of the year prior to termination.)
As an example of the application of the foregoing, assuming that
termination of employment occurs at the end of the fiscal 2003
and the actual EBIDTA for fiscal year 2003 is in excess of
$360,000,000 by 12%, then the reduction in Restricted Shares
(assuming the 750,000 Additional Restricted Shares have not been
otherwise adjusted) shall be determined as follows:
15% (the Applicable Percentage) minus 12% (the Actual Percentage)
for the particular applicable fiscal year
---------------------------------------------------------------- = 20%
15% (the Applicable Percentage) multiplied by [750,000]
reduction in number of Restricted Shares
[2.] The reduction of 20% results in the number of Restricted
Shares being 750,000 minus 150,000 shares, or 600,000 shares.
[3.] Provided further, however, (I) the aforesaid formula shall
apply and the number of Additional Restricted Shares shall be
reducible in accordance with such formula only if the Additional
Restriction Period terminates by reason of an event set forth in
subdivisions (A), or (B) in [i] above, (II) in the event that
employment under this Agreement terminates by reason of the
events set forth in subdivision (B) above, and only in such
events, the number of Additional Restricted Shares shall be
subject to reduction pursuant to said formula and additionally
shall be subject to further reduction (the "Further Reduction")
by the fraction, the numerator of which shall be the number of
full calendar months remaining in the unexpired portion of the
Term at the date of the termination of employment under this
Agreement pursuant to an event set forth in subdivision (B)
above, and the denominator of which is 60, (III) and if the
Additional Restriction Period terminates by reason of any event
other than one referred to in subdivision (A) or (B) above, there
shall be no reduction in the number of Additional Restricted
Shares pursuant to the aforesaid formula (relating to EBIDTA) and
fraction (relating to Further Reduction) and both the aforesaid
formula and the aforesaid fraction shall not be applicable.
[4.] For the purpose of this Agreement, EBIDTA means, for any
period, consolidated net income or loss for such period,
excluding gains or losses from extraordinary or non-recurring
items (including but not limited to Assimilation Costs associated
with the integration of acquisitions), of the Company and its
consolidated or combined subsidiaries plus the sum of
consolidated interest expense, depreciation and amortization
expense, provision for income taxes, and all other non-cash
expenses and income included in the determination of net income
or loss. Notwithstanding the above, EBIDTA shall include the
EBIDTA of any investment or subsidiary accounted for on the
equity method of accounting to the extent of the Company's
interest in same. Provided, however, if the Company or any of its
subsidiaries has sold, discontinued or otherwise disposed of any
of its subsidiaries, divisions or businesses (a "Disposed
Property" or "Disposed Properties") during any period for which
EBIDTA is to be computed, or during the Term, EBIDTA shall be
computed as if each of such Disposed Properties had not been
owned by the Company or a subsidiary during any part of the Term
or during the fiscal year ended December 31, 1999. Minority
interests included in cash flow in accordance with the first two
sentences of this paragraph shall be treated in a manner
consistent with the immediately preceding sentence with respect
to any Disposed Property. For all purposes for which EBIDTA is to
be determined under this Agreement, EBIDTA shall be determined by
the Company's independent public accountants utilizing for each
of the applicable years those generally accepted accounting
principles ("GAAP") which are in effect for the fiscal year ended
December 31, 1999.
2. Options to acquire 2,500,000 shares of the Common Stock of the Company,
568,933 of which are to be granted under the Company's 1996 Equity
Incentive Plan (the "1996 Plan") and 1,931,067 of which are to be granted
under the Company's 2000 Management Equity Incentive Plan (the "2000 Plan")
subject to the approval of such plan by the stockholders of the Company, or
in such other manner as the Executive and the Company may agree, and which
options shall vest and be exercisable at the following times and option
prices with the understanding that once vested options may be exercised at
any time thereafter during the consecutive ten-year period commencing on
the date of the grant of said options, which is deemed to be the date of
the execution of this Agreement and with the understanding that in the
event from and after the date hereof, of a change in corporate
capitalization, stock split or stock dividend, the number of shares
purchasable upon exercise of an option shall be increased by the new number
of shares which result from the shares covered by the option immediately
before the change, split or dividend. The exercise price for shares shall
be reduced proportionately and the total exercise price will remain the
same.
[1.] Options to Purchase 250,000 shares shall vest on December 31,
2000 and (subject to the approval of the 2000 Plan by the stockholders
of the Company with respect to each of the last eight (8) installments
of 250,000 options) on each December 31 of each of the succeeding nine
(9) consecutive years (except that the last 250,000 options shall vest
on the date that the immediately preceding 250,000 options vest) with
the understanding that upon the expiration or prior termination of
this Agreement or upon the earlier termination of the Additional
Restriction Period, all options which have not as yet vested shall
immediately vest.
[2.] The exercise price of the first 500,000 options to vest shall be
the Fair Market Value of the shares of the Company's Common Stock as
defined and determined under 1996 Plan or other arrangement on the
date of the grant of such options, which is the date of execution of
this Agreement and the exercise price for each additional 500,000
options to vest shall be $2.00 per share in excess of the exercise
price of the immediately preceding 500,000 shares.
3. Registration of Shares.
----------------------
1. The Company represents and warrants that (A) the issuance to the
Executive of the Current Restricted Shares was effected under and in
accordance with the Company's 1990 Management Equity Incentive Plan
(the "1990 Plan") and was registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a registration
statement on Form S-8, (B) the offer and sale of all shares of stock
of the Company subject to the 1996 Plan, including the shares issuable
upon exercise of the options granted to the Executive under the 1996
Plan, have been registered under the Securities Act pursuant to a
registration statement on Form S-8, and (C) each such registration
statement is currently effective, complies with all current
requirements of the Securities Act and the regulations thereunder as
may be applicable, and is not subject to any stop order or other
proceeding.
2. The Company agrees that it will submit the 2000 Plan to its
stockholders for their approval at the next meeting of stockholders,
and will use its best efforts to obtain such approval.
3. The Company further agrees that, as promptly as practicable after
the date hereof, it will prepare and file with the Securities and
Exchange Commission (the "Commission"), and cause to become effective,
(A) such amendments to each of the registration statements referred to
in Section 3(c)(A), including a re-offer prospectus (as such term is
used in the instructions to Form S-8), so that the Executive would be
permitted, without limitation under Section 5 of the Securities Act as
to time or amount, to dispose of any or all of the shares of Company
stock referred to in Section 3(c)(A), and (B) one or more registration
statements on Form S-8 relating to (x) the shares of Company stock
subject to the 2000 Plan, including the shares issuable under the
options to be granted to the Executive under the 2000 Plan, (y) the
Additional Restricted Shares, and (z) the 250,000 shares of Company
stock referred to in Section 3(d). The Company will include in each
registration statement referred to in Section 3(c)(C)(B) a re-offer
prospectus so that the Executive would be permitted, without
limitation under Section 5 of the Securities Act as to time or amount,
to dispose of any or all of the shares of Company stock referred to in
Section 3(c)(C)(B). Each re-offer prospectus referred to in this
Section 3(c)(C) shall also relate to the resale by any person to whom
the Executive may transfer any such stock other than pursuant to such
re-offer prospectus, so long as such transfer did not violate this
Agreement, and shall describe such plan of distribution as the
Executive may reasonably request.
4. At all times after the date hereof, in the case of each
registration statement referred to in Section 3(c)(A), or the date of
filing, in the case of each registration statement referred to in
Section 3(c)(C), and until the disposition by the Executive of all
Company stock which he acquired or has the right to acquire under such
registration statement, the Company shall (A) use its best efforts so
that such registration statement shall remain effective, (B) from time
to time, as may be required, prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectuses (including the re-offer prospectus) used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act and the regulations thereunder and to continue to
permit the disposition by the Executive of all such Company stock, (C)
furnish to the Executive such numbers of copies of the re-offer
prospectus contained therein as he may reasonably request to
facilitate the disposition of such stock, and (D) notify the Executive
of the happening of any event as a result of which the re-offer
prospectus included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and promptly file such amendments to such registration
statement as shall be necessary so that such re-offer prospectus does
not contain such an untrue statement or omission.
5. The representations and covenants of the Company in this Section
3(c) shall be for the benefit of the Executive and any transferee
referred to in the last sentence of Section 3(c) (C).
4. In further consideration of the Executive entering into this Agreement,
the Company agrees that the number of Current Restricted Shares shall be
increased by 250,000 shares of the Company's Common Stock, from 559,974 to
809,974 shares. The 559,974 shares shall be held under the same terms and
provisions as set forth in the 1996 Agreement except that the Restriction
Period therein set forth is modified so that same shall be identical to the
Additional Restriction Period and that same shall be subject to the
provisions of Section 3(b)A [i] relating to the EBIDTA formula, subject
however, to the provisions of Section 3bA[iii]. The additional 250,000
shares shall be subject to both the Additional Restricted Period and to the
provisions of Section 3(b)A [i] relating to the EBIDTA formula subject to
the provisions of Section 3bA[iii] and the Further Reduction, if
applicable, and in the event of termination pursuant to Section 14, to the
provisions of Section 15 with respect to the Additional Restricted Shares,
provided that both the Current Restricted Shares and said 250,000 shares
may be transferred as provided in Section 3bA with respect to Additional
Restricted Shares.
4. PARTICIPATION IN PLANS:
----------------------
1. The various plans (in the aggregate the "Plans" and individually, a
"Plan") presently in effect by the Company and ▇▇▇ for the benefit of its
respective employees are set forth in Schedule "B" annexed which is an
integral part of this Agreement.
2. The Executive shall continue to participate and be entitled to
participate in all Plans and all plans which may hereafter be adopted by
the Company for the benefit of employees and/or senior employees generally,
in an amount consistent with and appropriate to the Executive's station,
compensation and function as Chief Executive Officer and Chairman of the
Company. In addition, it is agreed that the Executive shall be entitled to
participate in similar plans of subsidiaries of the Company, including
without limitation any and all plans for the benefit of employees or senior
employees of ▇▇▇.
1. Provided however that it is acknowledged and agreed under and
pursuant to the Company's Pension Plan the maximum amount of annual
compensation that is taken into account in determining an employee's
pension is currently $170,000. To compensate for the inability to take
into account the Executive's annual compensation in excess of $170,000
(or the then current maximum amount) in determining his pension under
the Company's Pension Plan and in further consideration of the
Executive entering into this Employment Agreement and to further
induce the Executive so to do, the Company, the Executive (and/or a
trust created by the Executive) shall put into effect promptly after
the execution of this Agreement, but in no event later than sixty (60)
days immediately succeeding the execution of this Agreement, a
split-dollar insurance policy and arrangement utilizing both first to
die and second-to-die policies on the lives of the Executive and his
wife, ▇▇▇▇▇▇ ▇▇▇, with companies licensed to underwrite such insurance
in the State of Connecticut which will provide that on the death of
the second-to-die of the Executive and his said wife a payment of not
less than $15 million shall be made to the aforesaid trust or to the
trustee of the trust concurrently being created by the Executive as
grantor thereof, which trust shall also be the owner of the policies
effecting such insurance.
2. The arrangement for this split-dollar life insurance shall be
substantially the same as the arrangement entered into with respect to
the split-dollar insurance referenced in Section 3(c)(iv)(B) of the
1996 Agreement including but not limited to payment of all premiums by
the Company and with the express undertaking and agreement of the
Company that the policies of insurance shall be fully paid-up policies
on or before expiration or prior termination of this Agreement and the
Executive's employment by the Company.
3. Further, to the extent that the Executive, his said wife and/or the
applicable trustee or trust become or are subject to income and/or
gift taxes under the Code and/or applicable state law, by reason of
any premiums paid by the Company on the applicable policies of
insurance, (whether paid directly to the insurance carrier or to the
Executive or the applicable trustee or trust) and/or with respect to
the PS 58 or PS 38 (or successor promulgations) values applicable to
each policy (including but not limited to such values attributable to
time frames following payment of all premiums on the applicable policy
or policies) and/or by reason of any other amounts taxable to the
Executive, his said wife, or the applicable trustee or trust (both
income and gift taxes) emanating from such arrangement, the Company
shall pay all such taxes and fully reimburse the Executive, his said
wife and/or the applicable trust or trustee for same on a grossed-up
and after tax basis.
4. Provided further however that in the event the Executive's
employment is terminated pursuant to Section 14(a), the said $15
million of life insurance required to be maintained by the Company at
its cost shall be reduced by a fraction (the "Reducing Fraction") the
numerator of which shall be the number of full months remaining in the
Term following termination of the Executive's employment and the
denominator of which is 60 (the reduced amount of life insurance being
referred to as the "Reduced Insurance") with the understanding and
agreement that notwithstanding the foregoing, the life insurance shall
be maintained at the $15 million level at the request of the Executive
(or his surviving spouse) provided the differential in the cost of
maintaining said life insurance over and above the level of the
Reduced Insurance shall be the obligation of the Executive (or his
surviving spouse, if applicable).
5. Provided further that in the event the Executive and/or his wife
are not accepted for said insurance by reason of medical condition
then in lieu of such insurance being effected, the Company shall pay
to the Executive or his estate or legal representatives as the case
may be, the sum of $7 million on the expiration or sooner termination
of this Agreement and the Executive's employment with the Company,
with the understanding that in the event the Executive's employment by
the Company is terminated pursuant to the provision of said Section
14(a), the aforesaid $7 million shall be reduced by the Reduction
Fraction.
6. Payments to be made to the Executive under any of the Plans shall
be made as provided in the respective Plans except that
notwithstanding the provisions of any particular Plan, payment under
the Plans shall be made to the Executive or his representatives no
later than the expiration or prior termination of this Agreement. None
of the benefits of the Executive under any of the Plans and under this
Agreement shall be subject to forfeiture, notwithstanding any
provision to the contrary in such Plan for forfeiture or divestiture
of benefits or compensation, subject to the provisions of Section 12.
5. SPECIAL INSURANCE ARRANGEMENT: It is acknowledged that the Executive does not
participate in the arrangement presently existing for senior management of the
Company which provides for benefits to participating employees on retirement or
sooner death utilizing the vehicle of life insurance on a split-dollar basis. In
lieu of such participation, a policy of insurance on the life of the Executive
in the principal amount of $3,000,000 and underwritten by Security Life of
Denver, currently owned by the Company and with the Company being the
beneficiary thereof, shall be modified so that the beneficiary thereof, at the
Executive's election, shall be the Executive or his legal representatives and
that said beneficiary designation shall be irrevocable vis-a-vis the Company,
with only the Executive having the right to change same. The Company shall
maintain said policy in full force and effect and pay all costs of such
maintenance, including without limitation the payment to Executive on a
grossed-up after tax basis, any and all taxes levied or assessed against
Executive or for which Executive may be or become liable by reason of the
Company providing and maintaining said insurance or emanating from such
insurance. At the expiration of the Term, as extended by this Employment
Agreement, or the prior termination of Executive's employment other than by
reason of his death, the ownership of said policy shall be turned over to the
Executive or his legal representatives, as applicable on a fully paid-up basis,
with no additional premiums due or to become due therein and with the Company
remaining obligated to pay Executive, on a grossed-up after tax basis any taxes
for which Executive may become liable by reason of the continued maintenance of
said policy.
6. EXPENSES, TAX AND OTHER SERVICES; ACCOUNTERMENTS OF OFFICE, VACATION:
1. Expenses. The Company will promptly pay or, if not paid, reimburse
Executive upon reasonable substantiation, for all expenses, including
without limitation, travel and business entertainment expenses, incurred by
Executive on behalf of or in connection with the conduct of the business of
the Company. In connection with the rendition and performance of
Executive's services, the Company shall provide Executive with the use of,
and shall pay all costs of maintenance and repair of an automobile of
Executive's choosing, and a driver. The Executive shall also be entitled to
all accouterments of office that are currently being made available by the
Company to the Executive.
2. Tax and Other Services. To further induce the Executive to enter into
this Agreement, and to enable the Executive to render the most effective
services practicable and to facilitate appropriate financial planning, and
consistent with the Company's prior practice the Company shall reimburse
the Executive or pay for costs incurred by him for tax, financial,
investment, estate planning, legal and accounting services, which may be
rendered or incurred at any time during the Term. Such payments shall be
made on the Executive's request therefor as such cost are incurred by him.
3. Vacation. Executive shall be entitled to a vacation of six (6) weeks
during each year of the Term, at times mutually agreeable to Executive and
the Company. All payments and benefits to executive shall be paid and
continue during all vacation periods.
7. PLACE AND TIME FOR SERVICES: Executive's base of operations shall be
Fairfield County, CT (the "Base Area"), although Executive, at his election, may
render his services from other locations. However, Executive shall not be
required to render his services on a permanent or other than temporary basis
outside of the Base Area. Executive agrees, nevertheless, from time-to-time, to
take such trips and travel outside said area as may reasonably be necessary in
connection with his duties. In the event any trip or the contemplated duration
of any trip by the Executive outside of the Base Area is in excess of two (2)
days, Executive's wife may accompany Executive and the costs and expenses
incident to the Executive's wife shall be paid for or reimbursed by the Company.
First class travel including without limitation, first class air travel, or
travel by plane consistent with current practice being made available to the
Executive, and lodging arrangements shall be made available to the Executive.
8. BONUS; ADDITIONAL PAYMENTS: Nothing in any provision of this Agreement shall
preclude increases in Executive's compensation, including without limitation,
additional benefits, annual and other bonuses, incentive awards and other
payments or benefits as the Board of Directors or appropriate committee of the
Board of Directors of the Company may approve, in its sole discretion, all of
which payments and benefits are expressly authorized.
9. SPLIT-DOLLAR INSURANCE: The Company and Executive confirm the obligations of
the Company to provide, maintain and pay for insurance of the type known as
split-dollar life insurance as set forth in Sections 3(c)(iv) A and B of the
1996 Agreement and that all premiums on all of the insurance referenced in said
sections have been paid in full and that the policies providing for said
insurance are paid-up policies. The provisions of said sections of the 1996
Agreement shall govern the relationship of the Executive and the Company with
respect to such insurance.
10. EXCLUSIVITY:
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1. The Company acknowledges that the Executive from time-to-time during the
term may serve as a member of the Board of Directors of Adelphia
Communications Corporation, and certain of such company's subsidiaries and
affiliated companies (all referred to as "Adelphia"). The Company agrees
that the Executive may serve as such director (or a member of a committee
of directors) and the Company shall make no claim of any nature against
Executive for his legal representatives by reason of any association with
Adelphia. Additionally, subject to the provisions of Section 10(b) (with
respect to Executive engaging in competition materially detrimental to the
Company), and without the necessity of seeking approval of the Board of
Directors of the Company, the Executive may serve as a member of the board
of directors, non-working officer, non-working partner or stockholder, or
in any other similar position or capacity for any company, firm, person
other than the Company and other than Adelphia, concurrently with his
employment under this Agreement, and further may engage in the management
of his own affairs and supervision of his investments and other assets
concurrently with his employment hereunder. Executive shall retain for his
account any and all compensation and other benefits payable or awarded to
him with the respect to services rendered to or for Adelphia or to or for
such other entities.
2. Other that an association with Adelphia and as otherwise permitted by
Section 10(a), the Executive shall not engage in competition with the
Company which is materially detrimental to the Company; provided, however,
that the Executive shall not be deemed to have engaged in such competition
unless and until the Executive shall have received written notice on behalf
of the Board of Directors of the Company from an independent consultant
selected by those Directors who are not employees of the Company,
specifying the conduct alleged to constitute such competition, and the
Executive has thereafter continued to engage in such conduct after a
reasonable opportunity and a reasonable period, (but in no event less than
60 or more than 120 days) after receipt of such notice to refrain from such
conduct. In the event of discontinuance by the Executive, he shall not be
or be deemed to be in violation of the provisions of this Section 10(b).
Additionally, and without limitation, Executive shall have the right to
contest in appropriate forums the determination of the independent
consultant. Notwithstanding and without limitation of the foregoing, it is
agreed that ownership by Executive and/or his wife of a non-controlling
interest in a publicly traded entity that is competitive to the Company and
its subsidiaries, taken as a whole, without the rendition by the Executive
of senior management services, shall not be deemed to be engagement in
competition. The provisions of this Section shall constitute the sole
contractual provisions between the Executive and the Company restricting
the activities or conduct of the Executive. Any similar provisions in any
Plan, or any other Company benefit plan, or elsewhere, shall terminate and
be deemed terminated and be unenforceable to the extent inconsistent with
or more burdensome to Executive than this Section subject to the
limitations of Section 12 of this Agreement.
11. ADVISORY SERVICES:
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1. General. The Executive shall render the advisory services described in
this Section 11(a) as an advisor-consultant of the Company for the period
commencing on January 1, 2006, the day immediately succeeding the
expiration of the Term. This advisory period shall continue consecutively
through the fifth anniversary of the commencement date thereof (the
"Advisory Period"). During the Advisory Period, the Executive will provide
such advisory services concerning the business, affairs and management of
the Company as may reasonably be requested by the Board of Directors of the
Company, which shall be performed at a time or times and at places which
are mutually convenient to both parties and which are consistent with the
Executive's other employment and private activities. Services may be
performed via telephone, facsimile, telecopier, electronic mail, or other
avenue of communication. The Executive may engage in other full time
employment of any kind during the Advisory Period, provided that during the
Advisory Period the Executive shall not engage in full time employment that
is in materially detrimental competition with the Company or any of its
subsidiaries as provided for in Section 10(b), it being agreed without
limitation that the rendition of services for or to Adelphia or any
successor of Adelphia is not and shall not be deemed in competition with
the Company or any of its subsidiaries. During each year of the Advisory
Period, the Company shall pay the Executive and the Executive shall be
entitled to receive a payment of $500,000 payable in equal monthly
installments. Such payments are referred to as the Advisory Payments.
2. Termination. Notwithstanding the foregoing, coincident with, or at any
time after the commencement of the Advisory Period, the Executive, on
notice to the Company may terminate the Advisory Period and not be required
to render any additional advisory services and have no further obligations
to the Company in the event such termination is based on the advice or
recommendation of Executive's physician(s) or other medical and/or mental
health practitioner(s) that in his (her or their) opinion continued
rendering of his services and acting as an advisor-consultant would likely
have an adverse effect on the Executive's physical or mental health (a
"Disability Notice"). The Advisory Period is also terminated by the death
of the Executive and may also be terminated by the Company but only for
Good Cause as defined in Section 14(a) and for breach of the
non-competitive provisions referenced in Section 11(a).
3. Other Matters. During the Advisory Period and for such further period as
may be mutually agreed (in the event that subsequent to the end of the
Advisory Period there should then be a business relationship between the
Company and the Executive), the Company at its expense shall provide
Executive with and maintain in good repair and condition, an appropriate
private office outside the Company's offices (taking into account the
position held by the Executive and his length of service and contribution
to the growth and development of the Company) at a location acceptable to
the Executive, appropriate office furnishings, all utilities, equipment,
parking privileges, office and secretarial assistants and other amenities
and accouterments of office (all of which are referred to as "Advisory
Support"), it being understood and agreed that such Advisory Support is to
be and is being provided for the Company's benefit, and provided, however,
that until the Executive's new office is ready (it being agreed that same
will be ready immediately succeeding commencement of the Advisory Period),
the Company shall provide Executive with and maintain in good repair and
condition an appropriate temporary private office together with office and
secretarial assistants and other services which were available to Executive
when acting as chief executive officer. The Company shall be responsible
for the hiring, employment by the Company and compensation, including all
benefits, of the personnel forming part of the Advisory Support and for all
required moving and relocation expenses.
4. Provided however that notwithstanding the provisions of Section 11(a),
in the discretion of the Company, the Company may elect to eliminate the
Advisory Period and substitute in its place on a split-dollar basis, a
second-to-die insurance policy or policies of life insurance insuring both
the Executive and his wife and with a trust and trustee designated by the
Executive as the owner and beneficiary of said policy or policies, in the
principal sum of not less than $7 million. Such insurance shall be effected
prior to the effectiveness of any election and as a condition to making
such election. The Executive, his wife and said trust and the trustee
thereof as well as the Company shall have the same respective rights and
obligations with the respect to said policy or policies as are set forth in
Section 4b. of this Agreement with respect to the $15 million of
second-to-die life insurance referenced in said section, with same being
reduced by the Reducing Fraction in the event the Advisory Period is
terminated by the Company for Good Cause or for breach of the
non-competitive provisions of Section 10(b). Provided further that in lieu
of such insurance being effected and in lieu of an Advisory Period and
Advisory Support, the Company shall pay to the Executive or his estate or
legal representatives, as the case may be, not later than the date when the
Advisory Period would otherwise have commenced, the sum of $3.2 million
with the understanding that same shall only be reduced by the Reducing
Fraction in the event the Advisory Period is terminated by the Company for
Good Cause.
12. WAIVERS; LIMITATIONS OF LAW: The Company shall make such waivers, amendments
to Plans or consents under Plans, or amendments and consents in connection with
other benefits provided for herein, as may be necessary to carry-out the intent
of Sections 3(b), 3(d) and 4. However, in no event shall the Company or any Plan
take any action which would (A) contravene applicable law, (B) bring about the
disqualification under the Code of any Plan presently qualified under the Code,
or (C) eliminate any exception from liability under Section 16(b) of the
Securities Exchange Act of 1934 for any director or officer subject thereto. If,
by reason of any matter referred to in this Section, any action cannot be
undertaken at the time at which it is expected, requested or proposed by the
Executive, it (or as much thereof as shall be permissible) shall be undertaken
at the earliest time possible thereafter, or in the case of a request for
deferred payment, at the time closest to that requested which is permissible
without contravening this Section. To the extent that benefits under a Plan or
other benefits or payments provide for herein would be lost to the Executive
permanently or for any period of time by reason of this Section, the Company
shall provide such benefits supplementarily outside such Plan or in an
alternative form within the Plan which will not disqualify the Plan.
13. CONTINUED AVAILABILITY OF BENEFITS AFTER RETIREMENT:
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1. Nothing herein is intended to limit or eliminate any benefits to which
the Executive (or, after his death, his beneficiaries or estate) or his
wife is or may be or become entitled under any of the Plans. No amendment
to any Plan shall be carried-out which shall deprive the Executive or his
wife from continuing to participate in and receive the aforesaid benefits
and all other benefits provided for in this Agreement, unless the Executive
or his wife is compensated by supplemental payments and benefits outside
said Plan so that he or she is in no way prejudiced by any such Plan
amendment. Additionally, after expiration or prior termination of the Term
and/or the Advisory Period, the life insurance coverage and entitlement of
the Executive and his wife shall be continued at the level of coverage
provided in this Agreement and the 1996 Agreement until his death and if
applicable, until the last to die of the Executive and his wife, in all
cases without diminution of any of the Company's obligations under this
Agreement and the 1996 Agreement. The Executive may convert such insurance
arrangements into new or different insurance coverages or substitute
different insurance arrangements, as he shall determine from time to time,
and also may extend coverage to his wife and extend the period to include
her lifetime; provided, however, that if the Executive should elect to make
any such different arrangements, the total cost of an actuarial basis of
the insurance coverage which shall be borne or be expected to be borne by
the Company shall not exceed the cost to the Company on an actuarial basis
of maintaining (for the remainder of the Executive's life and if
applicable, that of Executive's wife) the level of life insurance coverage
to which the Executive is entitled as described above. Such costs on an
actuarial basis shall be determined as provided in Section 17 hereof. The
implementation of this paragraph shall be subject to the provisions set
forth in Section 12.
2. The Company agrees and shall provide the Executive and his wife or the
survivor of them, at the sole cost of the Company, effective with the
expiration or prior termination, for any reason, of the Term or the
Executive's employment by the Company, and for the duration of joint lives
of the Executive and his wife and the life of the survivor of them, with a
medical, dental, hospitalization and health plan and insurance having the
same benefits as are contained in the plans available for the Executive
immediately preceding the expiration or prior termination of the Term or
his employment with the Company. In the event such plans provide for the
continuation of such benefits subsequent to the Executive's employment by
the Company and for the duration of the lives of the Executive and his wife
and for the survivor of them, the Company may utilize such plans and the
participation of the Executive and wife in such plans to satisfy its
obligations set forth in the immediately preceding sentence.
14. TERMINATION:
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1. Termination of Cause. The Executive's employment by the Company may be
terminated as follows with the understanding that termination of the
Executive's employment shall also terminate the Advisory Period.
1. The Company may terminate the Executive's employment by the Company
for "Good Cause" as hereafter defined. With the exception of
termination under Section 14(b)(ii), this is the only basis for which
the Company may terminate the Executive's employment.
2. As used in this Agreement, "Good Cause" shall be limited to (A)
chronic alcoholism or chronic drug addiction materially and
injuriously affecting the Executive's performance, (B) wilful
malfeasance by the Executive consisting of his refusal without proper
cause to perform his duties of Chief Executive Officer of the Company
under this Agreement and which refusal has a materially injurious
effect on the Company's business, (C) the Executive's conviction of a
felony involving moral turpitude and related directly to the conduct
of Executive's Office (which through lapse of time or otherwise is not
subject to appeal) or (D) engaging in and not thereafter refraining
from competition as provided in Section 10(b), provided that any such
termination shall be effective as of the date which is 120 days after
receipt of the written notice referenced in Section 10(b) by the
Executive provided the Executive has not refrained from the particular
competition, and provided further however, if any such termination is
based on of the Executive's wilful malfeasance without proper cause to
perform his duties as Chief Executive Officer under this Agreement and
within 30 business days following the date of the receipt of notice of
termination the Executive uses his reasonable efforts to perform such
obligations, the termination shall not be effective. Without
limitation the Executive shall have the right to contest or challenge
in appropriate forums any termination for Good Cause.
2. Other Termination. This Agreement and the Executive's employment by the
Company shall be terminated (i) on the death of the Executive, (ii) on
written notice from the Company to the Executive in the event of an illness
or other disability which has incapacitated the Executive from performing
his duties for twelve or more consecutive months ("Permanent Incapacity"),
and may be terminated (iii) by the Executive effective 30 days after the
giving of notice in the instance of an illness or disability to the
Executive which may not be a Permanent Incapacity under this Section 14(b)
but is one which the Executive's physician(s) or other medical and/or
mental health practitioner(s), advise or recommend that in his (her or
their) the continuance of Executive in his employment with the Company
would likely have an adverse effect on the Executive's physical or mental
health; provided however that if within 30 days after receiving the
aforesaid notice from the Executive, the Company shall give notice to the
Executive that the Company wishes the Executive to continue to remain as
chief executive of the Company notwithstanding such illness or disability
with the Executive only being required to render services subject to the
limitations and restriction of such illness or disability and without
diminution of compensation and benefits, the effectiveness of the notice of
termination of employment given by the Executive shall be postponed for a
period designated by the Company in its notice but not in excess of four
months, at the end of which the Executive shall reconsider his notice of
termination in light of the condition of his illness or disability at that
time, provided further that, if the Executive shall give further notice of
termination at the end of such period, termination of employment shall
occur ten (10) days after the giving of such notice, (iv) by the Executive
on written notice to the Company effective 30 days after the giving of such
notice, if at any time during the Term the Company shall be in material
breach of any of its obligations hereunder, provided that the Executive's
services shall not terminate if within such 30-day period the Company shall
have cured all such material breaches of its obligations, it being
understood that a material breach by the Company for the purposes of this
Section shall include, but not be limited to failure of Executive to be
elected or retained as Chairman of the Board and Chief Executive Officer of
the Company and chairman of the Board of ▇▇▇ (so long as ▇▇▇ is a Company
controlled by the Company), or the failure of the Company to cause
Executive to so serve in all such positions, a reduction by the Board of
Directors in the Executive's authority, functions, duties or
responsibilities provided in this Agreement (whether or not accompanied by
a change in title) which has not been fully corrected within said 30-day
period, the Company's requirement that all persons and personnel (or
causing all persons or personnel to) report directly or indirectly to other
than Executive, or the Company's failure to cause Executive to be the
senior officer of the Company, (v) by the Executive, on written notice to
the Company upon a Change in Control as this term is defined in Section 19,
and (vi) by the Executive in the event of a merger of the Company, in which
the Company is not the surviving company, or in the event of a
consolidation of the Company or a sale of all or substantially all of the
assets or Capital Stock of the Company.
3. Challenge or Contest. Without limitation on his rights and remedies, the
Executive shall have the right to challenge or contest any termination by
the Company pursuant to Section 14(a) or 14(b)(ii) by appropriate legal
action. In the event the Executive challenges or contests termination by
the Company pursuant to Section 14(a) or 14(b)(ii) no such termination
shall be effective until a non-appealable order of a court having
jurisdiction finds that such termination was justified, and the Executive
has not cured the particular default within a reasonable time thereafter.
In any such legal action the Executive shall have the right to obtain
damages from the Company (including without limitation, legal fees and
expenses) and in addition thereto, the payments, proceeds and
participations set forth in Section 15(b) if and to the extent that such
termination is determined by final non-appealable court order of a court
having jurisdiction to have been wrongful. With particular reference to the
Company seeking to terminate this Agreement for "Good Cause," failure of
the court to find that the Company terminated employment under this
Agreement for "Good Cause" as defined, shall be deemed to be a
determination that the termination by the Company was wrongful.
15. CONSEQUENCES OF TERMINAITON:
---------------------------
1. Termination Under Section 14a. In the event the Executive's employment
with the Company is terminated pursuant to Section 14a, the Executive shall
be entitled to receive and be given and the Company shall pay over to and
provide the Executive with the following:
1. The Executive's Base Salary through the end of the week in which
the termination is effective and all cash balances in any and all of
the Plans and all deferred compensation payments allocable to or
accrued to the Executive as of the date of termination.
2. All options theretofore granted to the Executive, whether under any
of the Plans or otherwise, that vest or may have theretofore vested
under their respective terms on or prior to the termination date,
shall be exercisable by the Executive, according to the respective
terms of the applicable option agreements but in no event no earlier
than 12 months immediately succeeding such termination.
3. All restrictions shall lapse on such number of Current Restricted
Shares determined by applying to the aggregate of Current Restricted
Shares a fraction, the numerator of which is the number of whole
months in the Term to the date of termination, and the denominator of
which is 60 and subject to possible further reduction by the
applicability of the provision of Sections 3(b)A [i]. Such lapse shall
occur the first day immediately succeeding termination and the Company
confirms that said shares are the sole property of the Executive for
any and all purposes. The shares on which said restrictions shall not
have lapsed shall be forfeited to the Company.
4. All restrictions shall lapse on such number of Additional
Restricted Shares (including for this purpose the 250,000 shares
referenced in Section 3d) determined by applying to the aggregate of
such Additional Restricted Shares a fraction, the numerator of which
is the number of whole months in the Term to the date of termination
and the denominator of which is 60 and subject to possible further
reduction by the applicability of the provisions of Section 3(b)A[i].
Such lapse shall occur the first day immediately succeeding
termination and the Company confirms that said lapsed shares are the
sole property of the Executive for any and all purposes. The shares on
which said restrictions shall not have lapsed shall be forfeited to
the Company.
5. The benefits of all split-dollar life insurance referenced in
Sections 4, and 11d of this Agreement shall continue to be available
to the Executive and the Company shall continue in force and shall
continue to maintain said insurance and the polices providing for same
and to pay any and all income and gift taxes taxable to the Executive,
his wife and/or the applicable trust, on a gross-up and after-tax
basis, by reason of or relating to said split-dollar insurance,
subject with respect to said split-dollar insurance, to reduction in
amount as set forth in said Sections; provided however that in the
event all premiums have not been paid on the policies providing for
said split-dollar insurance such that said policies are fully paid-up
policies requiring no further payment of premiums, the Company shall
pay over to a trust created by the Executive, such amount of monies
that will provide (from principal) all of the funds necessary to make
all future payments of premiums on said policies, and provided further
that in the event said insurance was not available by reason of
medical condition of the Executive and/or his wife, the monetized
amount provided for in said Sections 4 and 11d of this Agreement shall
be paid over to the Executive subject to reduction as therein
provided.
6. The Company shall remain obligated to provide to the Executive and
his wife during their joint lives and the life of the survivor of
them, the medical, dental, hospitalization and health benefits
referenced in Section 13(b) of this Agreement.
2. Termination Under Section 14b. In the event this Agreement and the
Executive's employment with the Company is terminated pursuant to Section
14b, the Executive or his estate or legal representatives, as the case may
be, shall be entitled to receive and be given and the Company shall pay
over to and provide the Executive, his estate or legal representatives with
the following and the provisions of Section 3(b) A [i] shall not be
applicable in the instances of any of the subsections below:
1. All of the monies, options, shares, vesting and lapse of
restrictions, insurance and other benefits (all referred to as
"Benefits") that are to be paid over and given or made available to
the Executive in the instance of a termination pursuant to Section
14(a), plus the following, with the understanding that there shall be
no duplication of payments and benefits provided in this Section 15(b)
with payments and benefits provided in Section 15(a).
2. Base Salary for the remainder of the Term plus a bonus payment for
the fiscal year of the Term commencing with the fiscal year in which
termination occurs (the "Remaining Years") determined by utilizing the
average of the bonuses awarded (in cash and/or securities) for the
full fiscal years of the Term preceding termination and applying same
proportionately for the Remaining Years; provided that if termination
occurs prior to January 1, 2002, the period to be utilized is the full
fiscal years in the 1996 Agreement.
3. The amount by which the split-dollar insurance referenced in
Sections 4b. and 11(d), would otherwise be reduced, as therein
referenced in the event this Agreement were terminated pursuant to
Section 14(a), or if said insurance has been monetized as provided in
Section 4b, E and Section 11(d), the amount by which said monetized
amount would be reduced if this Agreement were terminated pursuant to
Section 14(a).
4. The immediate vesting of all options heretofore granted to the
Executive which have not theretofore vested prior to the date of
termination, including without limitation, those options referenced in
Section 3 of this Agreement which have not vested at the date of
termination, with the right to exercise same from time to time during
the later of the 12-month period immediately succeeding termination
and the respective dates provided therefore under the applicable
option agreement, which with respect to the options granted pursuant
to Section 3, is the ten-year period as referenced in Section 3.
5. The immediate lapse of all restrictions on shares heretofore
granted or awarded to the Executive, which did not lapse prior to
termination including but not limited to restrictions on the Current
Restricted Shares and the Additional Restricted Shares, including the
250,000 shares referenced in Section 3d within the meaning of
Additional Restricted Shares and the Company confirms that all of said
lapsed shares are the sole property of the Executive for any and all
purposes.
6. All benefits under any and all Plans (as well as all future plans)
adopted by the Company which would have been available to the
Executive through the expiration of the Term on December 31, 2005
assuming the Executive were employed and fully performing all of his
obligations to such date.
3. Special Advisory Term Payment. In addition to the payments and benefits
provided in Section 15(a) and 15(b), in the event the Advisory Period is
terminated pursuant to Section 11(b) other than termination by the Company
for Good Cause, there shall be paid to the Executive the sum of $3.2
million reduced by the Advisory Period payments theretofore paid to him
pursuant to Section 11(a).
4. Vested Rights not Affected. Consistent with both the provisions and the
intent of Section 15(b), any termination under Section 14(b) shall not
affect any vested rights which the Executive may have at the effective date
of such termination pursuant to any insurance or other death benefit plans
or arrangements of the Company or under any stock option, stock
appreciation right, bonus unit, management incentive or other plan of the
Company maintained for its senior executives whether or not referenced
herein, all of which rights shall remain in full force and effect (and any
period shall not be deemed shortened as result of the Executive's
termination of employment, notwithstanding the provisions of any related
plan, agreements or certificates issued thereunder), nor shall such
termination affect the obligations of the Company to continue to provide
the Executive with the other benefits, payments and other entitlements
required to be provided to the Executive under this Agreement.
5. Mitigation. In the event of the termination of this Agreement, whether
under Section 14(a) or 14(b), or the termination of the Advisory Period
subsequent to the commencement thereof, the Executive shall not be required
to mitigate his damages hereunder and payments and benefits to be made in
event of termination under either of said sections or the termination of
the Advisory Period, shall not be limited or reduced by any amount
Executive might earn or be able to earn from other employment or ventures.
6. Excess Parachute Payments. The parties believe that the above payments
or benefits pursuant to Section 15 do and will not constitute "Excess
Parachute Payments" under Section 208G of the Code. Notwithstanding such
belief, if any such payment or benefit under Section 15 is determined by
the United States Internal Revenue Service to be an "Excess Parachute
Payment" the Company shall pay Executive additional amounts (the "Tax
Payment") on a fully reimbursed after-tax basis equal to the sum of excise
tax under Section 4999 of the Code, income taxes under Subtitle A of the
Code and all other taxes under applicable state law on such Excess
Parachute Payments.
7. Remedies. The Company recognizes and agrees that because of Executive's
special talents, stature and opportunities that the provisions of this
Agreement regarding further payments of Base Salary, Advisory Payments and
the other payments and the benefits provided for in Section 15, constitute
fair and reasonable provisions for the consequences of such termination and
do not constitute a penalty.
16. INDEMNITY, DIRECTORS' AND OFFICERS' INSURANCE:
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1. The Company agrees to and confirms its obligations, to indemnify the
Executive as an officer, director, employee and agent, and its related
obligation to advance funds for expenses to the Executive as contained in
the Company's certificate of incorporation, by-laws and any other
instruments or provided for by law or otherwise. Such obligations shall be
in scope the greatest of (i) the obligations existing as of the date
hereof, (ii) the obligations as they may be amended or otherwise revised in
the future, or (iii) the maximum protection available for officers and/or
directors under applicable law. The Company agrees that it will use its
best efforts to the end that the By-laws and Certificate of Incorporation
of the Company shall not be amended to reduce any indemnity protection
presently available to officers and/or directors.
2. The Company presently maintains Directors and Officers Insurance in
limits of $25,000,000. The Company agrees to maintain Directors' and
Officers' Insurance (at a minimum in such limit) covering the Company's
obligation, among other things, to indemnify the Executive for loss,
liability and expense resulting from litigation relating to his activities
a an officer, director, employee or agent of the Company, and/or any of its
subsidiaries, and, following termination of employment under this
Agreement, to maintain equivalent coverage for the executive, for the
maximum period of all applicable periods of limitation, on an "occurrence"
basis (or as a named former officer and director on a "claims made" basis
or otherwise, for his activities during the Term and Advisory Period, while
he is an officer or director of the Company or any of its subsidiaries.
17. DETERMINATION OF BENEFITS. Whenever under this Agreement it is necessary to
determine actuarially equivalent continuing benefits, or whether one benefit,
cost or payment is less than, equal to or larger than another (whether or not
such benefit, cost or payment is provided under this Agreement) or to make any
determination or calculation specifically designated in this Agreement to be
made in accordance with this Section 17, or the present or commuted value of
payment or payments to be made in the future or over a period of time, or
whenever either party hereto requests that any calculation relevant to this
calculation be checked, such determination, calculation or procedure shall be
made by an independent actuary acceptable to the Executive and the Company,
using when such information is needed the mortality tables when currently in use
for purposes of the Company's Pension Plan (assuming 100% joint and survivor
benefits), and the discount rate equal to the United States Treasury Rate for
the period closest to the period over which the determination is being made.
18. MERGER, CONSOLIDAITON, OR SALE OF ASSETS OR STOCK:
-------------------------------------------------
1. Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its
assets or capital stock to, another corporation or business organization
which has a net worth at least equal to that of the Company immediately
preceding such merger, consolidation, transfer or sale, and which other
corporation or business organization expressly assumes in writing this
Agreement and all benefit plans, programs or practices, and other corporate
undertakings, obligation and agreements of the Company, including without
limitation, those set forth in this Agreement. Upon such a consolidation,
merger or transfer of assets or stock and assumption, the term "Company"
shall refer to such other corporation or business organization, and this
Agreement shall continue in full force and effect, and such other
corporation or business organization shall, ipso facto, assume, in writing,
this Agreement and all other obligations of the Company contemplated by
this Agreement. No such consolidation, merger or transfer shall relieve the
Company from any of the Company's obligations under this Agreement without
he written consent of the Executive or if Executive is deceased of his
legal representative, or if permanently incapacitated, of his surviving
wife, or if the Executive's surviving wife is deceased or permanently
incapacitated, the Executive's legal representatives.
2. Nothing in this Section 18 shall diminish the provisions of Sections
3(b) and 15(b) which provide for lapse of restrictions on the Additional
Restricted Shares on expiration, or prior termination of this Agreement in
the instance of, a sale of assets, transfer of stock, merger or
consolidation of the Company or change in control.
:
19. ADDITIONAL OPTION TO ACQUIRE SHARES:
-----------------------------------
1. In the event of a Change in Control, as defined in Section 19c, the
Executive shall have the right and option, exercisable by Executive in
Executive's discretion, from time to time during the period set forth
below, by notice to the Company (the "Option Notice") to acquire from the
Company up to 10,000,000 shares, in the aggregate (the precise number of
shares to be determined by the Executive in his discretion), of the Common
Stock ("Common Stock") of the Company (adjusted as set forth in Subsection
(b)) at a price per share, to be paid by Executive equal to the Closing
Price (as hereafter defined) of said stock on the date of the giving of the
Option Notice, or if such day is a Saturday, Sunday or Holiday, on the
immediately preceding business day on which securities are generally traded
(the "Applicable Date"). The Option Notice shall be given on or before the
latest of (i) December 31, 2005, (ii) the expiration date of any renewal or
extension of this Agreement or any other employment agreement between
Executive and the Company (the "New Agreement") and (iii) six months
following the termination of Executive's employment with the Company
subsequent to the Term or the term of any new agreement. The Closing price
shall be the last such reported sales price, regular way, on the Applicable
Date, or, in case no such reported sale takes place on such particular day,
the average of the closing bid and asked prices, regular way, for such
particular day, in each case on the principal national securities exchange
or in the NASDAQ-National Market System (the "Securities Exchange") on
which the shares of Common Stock are listed or admitted to trading or, if
not listed or admitted to trading, the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market as reported by
NASDAQ or any comparable system, as adjusted pursuant to Subsection (b).
Payment shall be made by the Executive within ten (10) business days
following the giving of the Option Notice.
2. The number of shares subject to the option set forth in subsection (a)
above, shall be adjusted to reflect, after the date of this Agreement, any
(i) declaration or payment of dividends in the form of Common Stock, or
other stock of the Company, (ii) stock splits, (iii) subdivisions or
combinations or reclassifications of outstanding shares of Common Stock or
(d) the issuance to holders of Common Stock of options, warrants or rights
to acquire additional shares of such respective series and any other
distribution made by its Company to holders of Common Stock, and the Option
Price shall be adjusted to reflect all of the foregoing.
3. A "Change in Control" of the Company shall be deemed to occur when (A)
any person or group of affiliated or related persons (other than a group of
which Executive or an entity controlled by Executive is a participant and
other than an employee benefit plan of the Company) acquires, directly or
indirectly, voting securities or assets of the Company if, immediately
after giving effect to such acquisition, such person or group of affiliated
or related persons either (i) beneficially owns 15% or more of the total
voting power of all of the Company's voting securities outstanding at the
time of such acquisition, or 15% or more than the fair market value of the
Company's issued and outstanding stock, or (ii) within the preceding
12-month period acquired the voting power referenced in (i) above, or (iii)
within the preceding 12-month period acquired 15% or more of the assets of
the Company, or (iv) otherwise effectively controls the operations of the
Company, whether by control of its Board of Directors, by contract, or
otherwise, or (B) a majority of the members of the Board of Directors of
the Company is replaced during the preceding 12-month period by directors
whose appointment or election was not endorsed by the prior Board. Provided
that if (a)(i) the acquisition of voting securities or assets or (ii) the
beneficial ownership of voting power by such person or group of affiliated
or related persons or (b) the transfer of effective control of the
operations of the Company, or control of the board or other effective
control of the Company to such person or group or affiliated or related
persons requires the approval or authorization of any regulatory or
governmental agency or authority as a condition to any such acquisition,
beneficial ownership, transfer of effective control or control of the
board, the Change of Control shall be deemed to take place on the later of
the date (A) when such approval or authorization is obtained or (B) when
such acquisition or transfer of control takes place.
20. MISCELLANEOUS:
-------------
1. Decisions by Company. Except as otherwise expressly provided in this
Agreement, any decision, designation, consent or other action by the
Company relating to this Agreement, its operation or its termination, shall
be made by the Board of Directors, or at the direction of the Board of
Directors, when so requested by the Executive.
2. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written
or oral, between the parties and may not be modified except by an agreement
signed by the Executive (and/or where applicable his legal representatives
and his wife) and the Company.
3. Assignability. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned or delegated by the Executive;
provided, however, that nothing in this subsection (c) shall preclude (1)
the Executive from designating a beneficiary to receive any benefit payable
on his death, and (ii) the legal representatives of the estate of the
Executive or his wife from assigning any rights hereunder to the person or
persons entitled thereto under his or her will, or, in case of intestacy,
to the person or persons entitled thereto under the laws of the intestacy.
Except as expressly provided for in Section 18, this Agreement and the
Company' rights and obligations hereunder, may not be assigned or
delegated by the Company.
4. No Attachment. Except as otherwise required by law, no right to receive
payments under this Agreement shall be subject to encumbrance, charge,
execution, attachment, levy or similar process or assignment by operation
of law, and any attempt voluntary/or involuntary, to effect any such action
shall be null, void and of no effect.
5. Binding Agreement. This Agreement shall be binding upon an inure of the
benefit of the Executive and the Company and their respective permitted
successors and permitted assigns.
6. No Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for the future
or as to any act other than that specifically waived.
7. Expenses and Legal Fees. The Company shall pay all legal fees (which
shall include without limitation, fees of tax advisors and tax counsel and
associated expenses and disbursements) incurred by Executive in the
negotiation and execution of this Agreement. Additionally, the Company
shall pay all legal fees of litigation, and other expenses incurred by the
Executive, his wife, or the estate, legal representative or other
beneficiary of either ("Claimant") (i) as a result of (A) the Company's
refusal to make payments or failure to make payments when due to which the
Claimant or any benefit plan, fund or agent is or shall become entitled
under this Agreement, or otherwise, (B) the refusal or failure of the
Company to make provision for or acknowledge any employee benefit to which
the Claimant is or shall become entitled as provided for by this Agreement
or otherwise, or (C) the refusal or failure by any benefit plan, fund or
agent established for the benefit of the Company's employees to make any
such payment when due, or (ii) contesting the validity, enforceability or
interpretation of this Agreement or any portion thereof.
8. Right to Accelerate. Without limitation of any rights of Executive to
otherwise cause acceleration of any benefits or monies due or to become due
to Executive, his wife or their respective legal representatives, if the
Company or any of the benefit plans or funds referenced herein shall fail
to make, when due, any payment referred to in this Agreement or shall
refuse to make any such payment, or shall fail or refuse to make provision
for, any employee or other benefit to which the Claimant is entitled, the
Claimant may, at his, her or its option, accelerate and declare due,
payable and performable all such payments, provisions or entitlement,
provided, however, that such acceleration shall be effected only by written
notice thereof delivered by the Claimant to the Company specifying in
detail the basis for acceleration, and shall be effective as of the date
which is thirty (30) business days after the receipt of such notice by the
Company; provided further, however, that if within thirty (30) business
days following the date of receipt of such notice the Company shall make,
when due, the payment in question or shall agree to make any such payment
when due, or shall make provision therefor, the acceleration shall not be
effective. If at any time the Claimant has the right to accelerate payments
under this Section, same shall be determined in accordance with the
provisions of Section17, but incorporating, however, in said lump sum
calculation the average annual increase in the Consumer Price Index for
(the New York - Northeastern New Jersey Area Consumer Price Index for Urban
Wage Earners and Clerical Workers, or any equivalent succession thereto as
determined by the Bureau of Labor Statistics of the United States
Department of Labor) the most recent 36 months preceding the date on which
said accelerated payment is to be made. The Claimant may, but shall not be
required to, bring one or more legal actions to enforce payment, or other
appropriate remedy, of any and all amounts to which the Claimant has then
become, or shall at any time in the future become entitled, whether or not
then due, payable or performable.
9. Severability. If for any reason any provision of this Agreement shall be
held invalid, such invalidity shall not affect any other provision of this
Agreement not held invalid, and all other such provisions shall to the full
extent consistent with law continue in full force and effect so as to
carry-out the intent of this Agreement. If any such provision shall be held
invalid in part, such invalidity shall in no way affect the rest of such
provision not held invalid, and the rest of such provision, together with
all other provisions of this Agreement, shall likewise to the full extent
consistent with the law continue in full force and effect so as to
carry-out the intent of this Agreement. In the event of any such
invalidity, the parties shall both endeavor and negotiate in, good faith,
to agree upon substitute provisions to effectuate the interest of the
provisions held to be invalid.
10. Headings. The headings of Sections are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the provisions of this Agreement.
11. Governing Law. The Company being a Delaware corporation, the validity,
interpretation, performance and enforcement of this Agreement shall be
governed by the internal laws of the State of Delaware applicable to
agreements made and fully to be performed therein, without any reference to
any rules of conflicts of laws.
12. Counterparts. This Agreement may be executed in two or more
counterparts, and such counterparts when taken together shall constitute
one executed instrument.
13. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally, (ii) when
transmitted by facsimile transmission to the facsimile number set forth
below (during normal business hours of the recipient or the immediate
succeeding business day), (iii) when mailed, on the second business day
immediately succeeding the mailing by registered or certified mail (return
receipt requested), postage prepaid, or (iv) when delivered by overnight
courier such as Federal Express, on the day delivered, addressed to the
parties at the following respective address (or at such other address for a
party as shall be specified by like notice, provided that notices of
changes of address shall be effective only upon receipt thereof):
(i) If to the Company at:
Three ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Board of Directors
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Executive at:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With A Copy To:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Duane, Morris & Heckscher LLP
39th Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
14. Transfer. Nothing in the 1996 Agreement as modified by this Agreement
shall be deemed to limit or prohibit the transfer by Executive of any
shares of the Common Stock of the Company to which he becomes the holder or
beneficial owner except as expressly provided herein in this Agreement.
21. NON-APPROVAL OF 2000 PLAN: In the event the 2000 Plan is not approved by the
Stockholders of the Company at their next meeting, the Company and the Executive
shall promptly (and in no event more than twenty (20) days following such
failure to approval) meet and in good faith negotiate alternative forms of
benefits to be paid and provided to the Executive as a substitute and to
compensate Executive for the inability of the Company to provide the Executive
with the options under the 2000 Plan provided for in this Agreement.
22. FAMILY MEMBERS: For the purposes of Section 3bA and other provisions of this
Agreement, the term Family Member shall mean the Executive's spouse, any issue
of the Executive, and any trust for the benefit of the Executive, his spouse or
any issue of the Executive, a charitable organization, including without
limitation, a private foundation, organized or managed by the Executive or any
of the foregoing, or entity, organization, company organized or controlled by
the Executive.
23. NO DIMINUTION OF BENEFITS: Nothing in this Agreement shall diminish any
monies or benefits payable or available to the Executive under the 1996
Agreement. In the event any provision of the 1996 Agreement is inconsistent with
the provisions of this Agreement, the provisions of this Agreement shall
prevail, provided that the fact that a payment or benefit provided for in this
Agreement is cumulative to a benefit or payment in the 1996 Agreement does not
by itself make same inconsistent with the terms and provisions of the 1996
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed their names, all as of
the date and year first above written.
Citizens Communications Company
By: _______________________________
Its
Attest:
_______________________________
Secretary of
Citizens Communications Company
_______________________________
▇▇▇▇▇▇▇ ▇▇▇
APPROVED:
_______________________________
_______________________________
_______________________________
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Chairman)
Constituting all of the Members of the
Compensation Committee of the Board
of Directors of Citizens Communications
Company.
SCHEDULE A
POWER AND AUTHORITY OF THE CHIEF EXECUTIVE
As chief executive, the Executive shall be in charge of and have final
authority and responsibility for all phases of the activities, operations and
business of the Company and its subsidiaries, subject only to such authority and
responsibility which under applicable law cannot be delegated and which may only
be exercised by the Board of Directors of the Company. The Executive shall be
the most senior officer of the Company and report directly to the Board of
Directors, and no officer of the Company shall have authority and responsibility
greater than or senior to the Executive.
SCHEDULE B
24. The Citizens Communications Company Management Equity Incentive Plan (1990);
25. The Citizens Communications Company 1996 Equity Incentive Plan;
26. The Citizens Communications Company 2000 Equity Incentive Plan 1;
27. The Citizens Communications Company 401 K Savings Plan;
28. The Citizens Communications Company Incentive Plan;
29. The Citizens Communications Company Executive Deferred Savings Plan;
30. Welfare plans such as medical, dental and other health plans of the Company;
31. The Company's Pension Plan;
32. The Electric Lightwave, Inc. 1997 Equity Incentive Plan;
33. Travel Insurance Plan,
34. Other plans currently in effect but not enumerated above.
---------------------------
1 Approved by the Company's Board of Directors. To be submitted to the
Company's stockholders for their approval at their next annual meeting.
AGREEMENT OF CLARIFICATION
Under the date hereof we, the undersigned, ▇▇▇▇▇▇▇ ▇▇▇ (sometimes referred
to as the "Executive"), and Citizens Communications Company ("Citizens") are
entering into an agreement of employment (the "Agreement") pursuant to which
Citizens employs the Executive as its chief executive for a period of five (5)
years commencing January 1, 2001, subject to prior termination as provided in
the Agreement.
Sections 3(b) and 3(d) of the Agreement provides for the grant to Executive
of 750,000 shares and 250,000 shares, respectively, of Citizens Common Stock, to
be reduced under certain circumstances if the applicable percentage increase in
EBIDTA (as defined in the Agreement) is not met, all as provided for in the
Agreement.
We are now mutually desirous of clarifying the determination of EBIDTA as
applied to earnings generated by the net proceeds available to Citizens from the
discontinuance, sale or other disposition of a Disposed Property, as defined in
the Agreement (the "Additional Proceeds"). As currently defined in the Agreement
such earnings are to be taken into account and included in determining EBIDTA
for an applicable year.
In the event either of the undersigned believes that such inclusion will
work an inequitable measurement of the increase in EBIDTA from the fiscal year
1999 to the year of termination, such party (the "Notifying Party") within
twenty (20) days following the end of the first fiscal year of Citizens in which
EBIDTA includes earnings generated by the Additional Proceeds, shall notify the
other party (the "Receiving Party") of this position in writing (the
"Notification") and thereafter and within 20 days immediately following receipt
of the Notification by the Receiving Party, the parties shall meet and negotiate
in good faith the methodology pursuant to which the amount of earnings generated
by the Additional Proceeds are to be included in the determination of EBIDTA. If
the parties are unable to reach an agreement within 20 days following
commencement of the negotiation (the "Negotiation Period") the methodology to be
utilized shall be determined by arbitration in New York City by a panel of three
(3) arbitrators, one (1) chosen by the Selected Arbitrators. The Selected
Arbitrators shall be chosen within ten (10) days immediately succeeding the end
of the Negotiation Period and the third (3rd) arbitrator shall be chosen by the
Selected Arbitrators within 10 days immediately succeeding the date when the
second of the Selected Arbitrators is chosen. In the event the American
Arbitration Association ("AAA") permits or authorizes its then obtaining rules,
other than the rules of the AAA relating to selection of arbitrators, to be
utilized by the arbitrators, such rules of the AAA shall be utilized. In the
event the AAA does not authorize or permit such rules to be utilized by the
arbitrators, the arbitrators shall hold such procedures as they may deem
appropriate and which are in accordance with applicable law, and have such
authority that is available to arbitrators under the applicable law. The
arbitrators shall complete their hearings proceedings with thirty (30) days
immediately succeeding the designation of the third arbitrator and shall render
their decision (which may be by majority vote) within 30 days immediately
succeeding the completion of proceedings. The decision of the arbitrators shall
be final and binding as provided by applicable law.
In connection with the foregoing each of Executive and Citizens
acknowledges and agrees that it is his or its respective intention that the
manner of computing EBIDTA resulting from any discontinuance, sale or other
disposition of any Disposed Property, as defined in the Agreement, shall not
have any negative or detrimental effect or impact on attaining the specified
percentage increases in EBIDTA set forth in Section 3(b). In reaching a decision
the arbitrators are to take into account this intention of the parties.
In the event no Notification is given with said twenty-day period, no
adjustment shall be made in determining EBIDTA and same shall be determined as
provided for in Section 3(b) of the Agreement.
Additionally and consistent with the intent set forth in Section 4, 5 and
11 of the Agreement, in the event the split-dollar arrangements referenced
therein result in income and/or gift tax on or being imposed, levied or assessed
against Executive, his wife and/or any of the trusts or the trustees referenced
in said section by reason of the Technical Advice Memorandum 9604001 issued by
the U. S. Internal Revenue Service under the date of September 8, 1995 (copy of
which is annexed) and rules referenced therein, Citizens shall pay such taxes
and fully reimburse, on an after tax basis, the Executive, his wife or the
applicable trust and trustee, as the case may be.
By signing their respective names, hereto, the undersigned hereby agree to
the foregoing.
CITIZENS COMMUNICATIONS COMPANY
By: _________________________________ ____________________________________
Its ▇▇▇▇▇▇▇ ▇▇▇
Approval of Compensation Committee of the Company to be annexed together with
applicable resolution adopted by the Committee as well as applicable resolution
of the full Board, and Secretary's certification that resolutions were duly
adopted and are subsisting.