1
EXHIBIT 10.5
CONDITIONAL EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of August 1996, between
Sygnet Communications, Inc., an Ohio corporation (the "Company") and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ("Executive").
R E C I T A L S :
A. Executive is currently employed by Horizon Cellular.
B. The Company expects to close about September 30, 1996 on an agreement to
purchase certain cellular telephone business assets, including various FCC
non-wireline cellular telephone licenses for RSAs in Pennsylvania and New York
("Horizon Purchase").
C. The Company has filed a Registration Statement with the SEC, whereby the
Company will seek to finance in part the Horizon Purchase through issuing
securities to the public, including approximately $110 million in high yield
debt, and $35 million in equity (the "IPO").
D. The Company wishes to employ Executive as Vice President and Chief
Operating Officer after the Horizon Purchase.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
contained herein, it is hereby agreed by and between the parties as follows:
1. DEFINITIONS. The following words and terms shall have the following meanings
unless the context otherwise indicates:
o "CAUSE" means any act or omission that is materially injurious to the
Employer and that constitutes on the part of Executive (i) common law
fraud, (ii) a felony, (iii) dishonesty, or (iv) continuing neglect
(other than as a result of permanent disability, as defined in Section
4.1 hereof) by Executive in connection with the performance of his
duties hereunder; provided that there shall be no "Cause" based upon
Executive's neglect until (a) Employer shall have given written notice
to Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for asserting the existence
of "Cause" and (b) Executive shall not have remedied the situation
giving rise to such facts and circumstances within twenty (20) days
after receipt of the foregoing notice or taking all reasonable steps
to that end during such 20-day period and thereafter.
o "EFFECTIVE DATE" means the earlier of the date the IPO is consummated
or the closing date of the Horizon Purchase.
o "EMPLOYER" has the meaning assigned thereto in Section 2.1(a) below.
o "TERM OF EMPLOYMENT" means the period commencing on the Effective Date
and expiring on
2
the earliest to occur of (i) the later of the second anniversary of
the Effective Date or, if applicable, the expiration of the final
renewal period under Section 2.2 of this Agreement, and (ii) the date
at which the Executive ceases for any reason to be an employee and is
entitled to the benefits, if any, provided in Section 4 below.
2. EMPLOYMENT.
2.1 POSITION AND DUTIES. Through the Term of Employment, Executive shall be
employed as Vice President and Chief Operating Officer of the Company and: (a)
Executive shall devote his full business time and efforts to the business and
affairs of the Company or the successor to the Company by which Executive has
been employed pursuant to this Agreement and its parent, Sygnet Wireless, Inc.
(the Company, the parent, and/or such successor, as the case may be, being
herein sometimes referred to as the "Employer"), except for reasonable vacations
and for illness; provided, however, this provision shall not preclude Executive
from serving as a director or member of a board or committee of any other
corporation or other organization involving no conflict of interests with the
interests of Employer, or from managing his personal investments, so long as
such activities do not materially interfere with the regular performance of his
duties under this Agreement.
2.2 RENEWAL. This Agreement may be renewed for additional periods, as
mutually agreed by the Company and Executive, at a rate of compensation to be
agreed upon by Executive and the Company. Unless one party submits to the other
a notice that it does not wish to renew this Agreement (a "Non Renewal Notice")
at least ninety (90) days prior to the end of the then current Term, the parties
shall begin discussions regarding Executive's compensation for the applicable
renewal period. In the event the parties have not completed such discussions at
the end of the then current Term of this Agreement, and the parties desire to
continue good faith discussions of Executive's compensation, then the Term of
this Agreement shall be extended until the expiration of thirty (30) days after
one party submits a Non Renewal Notice to the other and, during such extended
Term, Executive agrees to continue his employment with the Company and the
Company agrees to continue paying and providing benefits to Executive at the
then current rates under this Agreement. In the event that the Company, at any
time, submits a Non Renewal Notice to Executive, the Company agrees to retain
Executive as a consultant to the Company for a period of one (1) year following
the expiration of the then current Term of this Agreement and Executive shall be
compensated for such consulting as provided in Section 4.4 hereof.
3. COMPENSATION.
3.1 COMPENSATION DURING TERM. Executive shall be entitled to the following
compensation for services as an employee or consultant hereunder:
(a) Initial base compensation of $120,000.00 per year, payable in
convenient installments not less frequently than monthly.
(b) Continuing participation in all other employee benefit plans and
practices of the Company in effect as of the Effective Date, as the
same may be modified, supplemented or replaced, as well as to
reimbursement, upon proper accounting, of reasonable expenses and
disbursements incurred by Executive in the course of Executive's
duties; and
(c) Participation in the Company's Executive Bonus Plan and Stock Option
Plan.
Nothing contained in the foregoing shall preclude improvement of
compensation, reward opportunities or benefits available to Executive.
3
3.2 INDEMNIFICATION AND INSURANCE. Executive shall be entitled to all
applicable indemnification and director's and officer's liability insurance
provided by Employer to its directors and officers.
4. TERMINATION.
4.1 UPON DEATH OR DISABILITY. Except for the obligations of the Company set
forth in this Section 4.1, this Agreement shall automatically terminate upon
Executive's death or permanent disability, as defined in the Company's long-term
disability program. In the event of such termination, the Employer shall
promptly pay to Executive's estate all benefits and compensation accrued
hereunder through the end of the month in which occurred Executive's death or
permanent disability, as the case may be.
4.2 FOR CAUSE. Employer may not terminate Executive's employment hereunder
except for Cause. If Executive's employment is terminated for Cause, Employer
shall promptly pay Executive his full accrued Base Compensation, and all other
vested benefits, through the date of such termination at the rate in effect at
the time of such Termination, and Employer shall have no further obligations to
Executive under this Agreement. Notwithstanding the foregoing, termination for
Cause under this Section 4.2 shall not relieve Executive of his obligations
under Section 5 below.
4.3 CONSTRUCTIVE TERMINATION. Executive may, by written notice to the
Company, convert his status from that of an employee to that of a consultant to
the Company within sixty (60) days after the occurrence, without the express
written consent of Executive, of any of the following:
(a) the assignment to Executive of duties not materially comparable to
Executive's duties provided for herein.
(b) any failure by Employer to comply with any of the provisions of
Sections 2 or 3 above, other than an immaterial or inadvertent failure
remedied by Employer promptly after receipt of notice thereof given by
Executive.
As a result of Executive's conversion of his status from that of an
employee to that of a consultant under this Section 4.3, for a period of one (1)
year after the date of such conversion (i) Employer shall continue to make all
payments required to be made by it under Section 3 of this Agreement, and (ii)
Executive shall continue to be treated as an employee under the provisions of
the benefit plans, programs and practices referred to in Section 3.1 above;
provided that, if despite the foregoing, benefits under any such plan, program
or practice may not be provided thereunder to Executive because he is no longer
an employee, Employer shall provide, pay or provide for payment of such benefits
to Executive.
4.4 TERMINATION WITHOUT ▇▇▇▇▇.▇▇ the event of termination of employment
hereunder by Employer without Cause, Executive's status shall automatically
convert to that of a consultant to the Company and for a period of one (1) year
thereafter (i) Employer shall continue to make all payments required to be made
by it under Section 3 of this Agreement, and (ii) Executive shall continue to be
treated as an employee under the provisions of the benefit plans, programs and
practices referred to in Section 3.1 above; provided that, if despite the
foregoing, benefits under any such plan, program or practice may not be provided
thereunder to Executive because he is no longer an employee, Employer shall
provide, pay or provide for payment of such benefits to Executive.
4.5 TERMINATION BY EXECUTIVE. In the event of termination of employment
hereunder by Executive other than pursuant to Section 4.3 above, Employer shall
pay to Executive all benefits and compensation accrued hereunder through the
date of termination, and Employer shall have no further obligations to Executive
under this Agreement.
4
5. CONFIDENTIALITY AND NON-COMPETE.
5.1 NONDISCLOSURE AND INDEMNIFICATION. Executive acknowledges that the
Company's Proprietary Information (as defined below), which was designed and
developed by the Company with considerable effort and at great expense, is
unique, secret and confidential, and constitutes the exclusive property and
trade secrets of the Company. Executive further acknowledges that an integral
part of the Company's business involves the receipt of confidential Customer
Information (as defined below). Executive further acknowledges that any
unauthorized use of the Proprietary Information or the Customer Information by
Executive, or any disclosure of the same to any third parties, would be wrongful
and would cause irreparable injury to the Company, its customers and customer's
employees and/or clients.
Accordingly, Executive covenants and agrees that, for the period of
his employment and thereafter, he will (i) hold the Proprietary Information and
the Customer Information in strictest confidence, (ii) not disclose such
information to any person, firm, corporation or other entity, and (iii) not use
such information for any purpose not expressly authorized by the Company.
Executive also agrees that upon request he shall return all business records in
his possession or control in any way relating to the Company, its Proprietary
Information, or the Customer Information. Executive agrees to indemnify and hold
the Company harmless from any loss, claims or damages, including attorneys' fees
and costs, arising out of or relating to the unauthorized disclosure or use of
the Company's Proprietary Information or the Customer Information by Executive.
For the purposes of this Agreement, the term "Customer Information"
shall mean, whether verbal or written, (i) the identity of any employee or other
individual for whom claims, payroll, enrollment or similar data or other
information are or have been submitted by or on behalf of the Customer to the
Company; (ii) confidential information regarding the business of the Customer or
its clients learned in the course of providing service and/or products to the
Customer; (iii) other confidential information submitted from time to time by
the Customer to the Company; and (iv) the identity of the Customer or its
clients as the source of such data or information.
For the purposes of this Agreement, the term "Proprietary Information"
shall mean, whether verbal or written, all customer lists, prospective customer
lists, trade secrets, databases, processes, computer programs, object codes,
course codes, passwords, entry codes, inventions, improvements, manufacturing or
systems techniques formulas, development or experimental work, work in process,
business data disclosed to the Company by or for the benefit of the Company's
customers, information relating to the Company's business contracts (including,
without limitation, contracts with customers, service providers, medical
insurers and claims administrators), marketing strategies, any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company, and shall include Customer Information that was
developed or enhanced by the Company including data furnished by or on behalf of
the Customer.
Neither Proprietary Information nor Customer Information shall include
information which (a) is or becomes generally available to the public other than
as a result of Executive's disclosure, or (b) becomes available to Executive on
a non-confidential basis from a source other than the Company or the Customer.
Notwithstanding the foregoing, such information shall carry the presumption that
it is either Proprietary Information or Customer Information and Executive shall
treat such information as confidential.
5.2 AGREEMENT NOT TO COMPETE. Executive agrees that during the period the
Company is making payments under Sections 3.1, 4.3 or 4.4 of this Agreement and
for a period of one (1) year thereafter, Executive shall not, directly or
indirectly, individually or on behalf of any other person or entity, engage in
any activities that are competitive with the business of the Company in any
state in which the Company does business or was considering doing business while
Executive was employed as an employee or as a consultant. Specifically,
Executive agrees that Executive shall not:
5
(a) call upon, solicit, sell or attempt to sell any products or services
similar to or in competition with those offered by the Company to any
person or entity that was a customer of the Company at any time during
Executive's employment with the Company or was actively solicited by
the Company during the six (6) month period preceding the termination
of Executive's employment with the Company;
(b) engage in any business (or provide any managerial, sales or other
employment or contract services to a business or activity which is
similar to the services performed by Executive for the Company) that
is in competition with the business of the Company or any state the
Company does business or is considering doing business; or
(c) encourage, solicit or otherwise attempt to persuade any employee of
the Company to violate any confidentiality, non-competition or
employment agreements with the Company, or policies of the Company.
Executive agrees that the restrictions contained in this Section 5.2
are reasonable in all respects and are to be interpreted in light of all the
facts and circumstances existing at the time enforcement is sought. However,
should any court or other body of competent jurisdiction determine that all or
any portion of the agreements set forth herein is invalid or unenforceable for
any reason, such agreement (or portion thereof) shall be restricted and deemed
amended to the minimum extent necessary so as to preserve and establish its
validity and enforceability.
5.3 In the event of a breach of this Section 5 by Executive, in addition to
obtaining an injunction, the Company shall be entitled to terminate any further
payment of benefits to Executive and the Company shall be relieved of all future
obligations to Executive under this Agreement.
5.4 In the event the Company fails to make any payment required of it under
this Agreement or breaches any stock option agreement or benefit plan relating
to Executive, Executive shall be relieved of all further obligations under
Section 5.2 of this Agreement.
6. CONDITION PRECEDENT. This Agreement and the attached Stock Option Agreement,
are subject to the condition of either the consummation of the IPO or the
closing of the Horizon Purchase before December 31, 1996. If neither the IPO is
consummated nor the Horizon purchase has closed by December 31, 1996, then this
Agreement and the Stock Option Agreement are both void.
7. MISCELLANEOUS PROVISIONS.
7.1 WITHHOLDING. Notwithstanding anything to the contrary contained in this
Agreement, all payments required to be made by Employer hereunder to Executive
or his estate or beneficiaries shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as Employer may
reasonably determine it is required to withhold pursuant to any applicable law,
regulation or benefit plan.
7.2 ENTIRE AGREEMENT; CAPTIONS. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all earlier agreements, whether oral or written, between
Executive and the Company without extinguishing or diminishing any rights
heretofore acquired by the Company under such agreements. The captions and
section headings of this Agreement are solely for convenience of reference and
shall not affect the interpretation of any provision hereof.
6
7.3 NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail or by overnight delivery service to Executive at
his last address he has filed in writing with Employer or, in the case of
Employer, at its principal executive offices.
7.4 NON-ALIENATION. Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien or security interest upon
any amounts provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of descent
and distribution.
7.5 GOVERNING LAW. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Ohio.
7.6 AMENDMENT. This Agreement may be amended or cancelled only by mutual
agreement of the parties, or their respective successors, in writing.
7.7 SUCCESSOR TO THE COMPANY. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Company and any
successor of the Company.
7.8 SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect in such jurisdiction, and any such invalid or
unenforceable provision shall not be considered invalid or unenforceable in any
other jurisdiction.
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on
the date and year first above written.
COMPANY: Sygnet Communications, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------
Title: President
----------------------------
EXECUTIVE
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇