Exhibit 10.1
CHANGE-IN-CONTROL
AGREEMENT
This Change-in-Control Agreement,
dated
,
20 (“Agreement”),
is made by and between Windstream Corporation, a Delaware
corporation (as hereinafter defined, the
“Corporation”), and
(as
hereinafter defined, the “Executive”).
WHEREAS, the Board of Directors of
the Corporation (as hereinafter defined, the “Board”)
recognizes that the possibility of a Change in Control (as
hereinafter defined) of the Corporation exists and that such
possibility, and the uncertainty it may cause, may result in the
departure or distraction of key management employees of the
Corporation or of a Subsidiary to the detriment of the Corporation
and its stockholders; and
WHEREAS, the Executive is a key
management employee of the Corporation or of a Subsidiary;
and
WHEREAS, the Board has determined
that the Corporation should encourage the continued employment of
the Executive by the Corporation or a Subsidiary and the continued
dedication of the Executive to his assigned duties without
distraction as a result of the circumstances arising from the
possibility of a Change in Control; and
NOW THEREFORE, in consideration of
the premises and the mutual covenants herein contained, the
Corporation and the Executive hereby agree as follows:
1. Defined Terms . For
purposes of this Agreement, the following terms shall have the
meanings indicated below:
(A) “Annual Incentive
Plan” shall mean the Windstream Corporation Performance
Incentive Compensation Plan, the Windstream Corporation Executive
Incentive Compensation Plan and any one or more other formalized
plans, if any, in which the Executive is eligible to participate
providing incentive compensation payable in cash to eligible
participants determined on the basis of a measuring period not in
excess of 12 calendar months, but shall expressly exclude, without
limitation, the Windstream 2007 Deferred Compensation Plan, the
Windstream Benefit Restoration Plan, any plan qualified or intended
to be qualified under Section 401(a) of the Code and any plan
supplementary thereto, the Windstream 2006 Equity Incentive Plan,
and any other plan or arrangement under which stock, stock options,
stock appreciation rights, restricted stock or similar options,
stock, or rights are issued, any amendment or restatement of, or
successor plan to, any of the foregoing plans in effect from time
to time, and any executive fringe benefits.
(B) “Annual Incentive
Target” shall mean with respect to any measuring period, the
amount of cash compensation that would be payable to the Executive
under the Annual Incentive Plan for such measuring period, computed
assuming that the level of performance with respect to a
performance goal identified in accordance with the terms of the
Annual Incentive Plan as the “target” level of
performance has been achieved. Where no level of performance has
been specifically identified as the “target” level, the
“target” level shall be (i)
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the only level if one level is identified,
(ii) the higher of two levels if two levels are identified,
and (iii) the highest level if three or more levels are
identified. Where the amount of compensation depends on the
achievement of multiple performance goals, the achievement of each
target level of performance with respect to each goal shall be
assumed.
(C) “Board” shall mean
the Board of Directors of the Corporation, as constituted from time
to time.
(D) “Cause” for
termination by the Corporation of the Executive’s employment
shall mean (i) the willful failure by the Executive
substantially to perform the Executive’s duties with the
Corporation or a Subsidiary, other than any failure resulting from
the Executive’s incapacity due to physical or mental illness
or any actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive in accordance with
paragraph (A) of Section 8, that continues for at least
30 calendar days after the Board delivers to the Executive a
written demand for performance that identifies specifically and in
detail the manner in which the Board believes that the Executive
willfully has failed substantially to perform the Executive’s
duties, (ii) a conviction, guilty plea or plea of nolo
contendere of the Executive for any felony, (iii) the
willful engaging by the Executive in misconduct that is
demonstrably and materially injurious to the Corporation or any
Subsidiary, monetarily or otherwise, (iv) a material violation
by the Executive of the corporate governance board guidelines and
code of ethics of the Corporation or any Subsidiary; (v) a
material violation by the Executive of the requirements of the
Sarbanes-Oxley Act of 2002 or other federal or state securities
law, rule or regulation, (vi) the repeated use of alcohol by
the Executive that materially interferes with the Executive’s
duties, the use of illegal drugs by the Executive, or a violation
by the Executive of the drug and/or alcohol policies of a the
Corporation or any Subsidiary, or (vii) a material breach by
the Executive of any of the protective covenants contained in
Section 9. For purposes of this definition, no act, or failure
to act, on the Executive’s part shall be deemed
“willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive’s act, or failure to act, was in the best interest
of the Corporation and its Subsidiaries.
(E) A “Change in
Control” shall mean, if at any time subsequent to the date of
this Agreement any of the following events shall have
occurred:
(i) The acquisition by any
individual, entity or “group,” within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act
(a “Person”), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Corporation where such acquisition causes any
such Person to own fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”); provided,
however, that for purposes of this definition, any acquisition by
any corporation pursuant to a transaction that complies with
clauses (A), (B) and (C) of subparagraph (iii) below
shall not be deemed to result in a Change in Control;
(ii) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Corporation’s stockholders, was approved by a
vote of at least a
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majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(iii) The consummation of a
reorganization, merger or consolidation or sale or other
disposition of more than fifty percent (50%) of the assets of
the Corporation (a “Business Combination”), in each
case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, at least fifty percent
(50%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Corporation or all or
substantially all of the Corporation’s assets either directly
or through one or more subsidiaries), in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Voting Securities, as the case may
be, (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly,
fifty percent (50%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination, and (C) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or the action of the Board,
providing for such Business Combination; or
(iv) Approval by the stockholders of
the Corporation of a complete liquidation or dissolution of the
Corporation.
(F) “Code” shall mean
the Internal Revenue Code of 1986, as amended from time to
time.
(G) “Corporation” shall
mean Windstream Corporation and any successor to its business or
assets, by operation of law or otherwise.
(H) “Date of
Termination” shall have the meaning stated in paragraph
(B) of Section 8 hereof.
(I) “Disability” shall
be deemed the reason for the termination by the Corporation of the
Executive’s employment, if, as a result of the
Executive’s incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of
the Executive’s duties with the Corporation or a Subsidiary
for a period of six consecutive months, the Corporation shall have
given the Executive a Notice of Termination for Disability, and,
within 20 business days after the Notice of Termination is given,
the Executive shall not have returned to the full-time performance
of the Executive’s duties.
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(J) “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
(K) “Executive” shall
mean the individual named in the first paragraph of this
Agreement.
(L) “Good Reason” for
termination by the Executive of the Executive’s employment
shall mean the occurrence, without the Executive’s express
written consent, of any one of the following:
(i) the assignment to the Executive
of any duties inconsistent with the Executive’s status as an
executive officer of the Corporation or of a Subsidiary or a
substantial adverse alteration in the nature or status of the
Executive’s responsibilities from those in effect immediately
prior to the Change in Control;
(ii) a reduction by the Corporation
in the Executive’s annual base salary to any amount less than
the Executive’s annual base salary as in effect immediately
prior to the Change in Control;
(iii) the relocation of the
principal executive offices of the Corporation to a location more
than 35 miles from the location of such offices immediately prior
to the Change in Control or the Corporation’s requiring the
Executive to be based anywhere other than the principal executive
offices of the Corporation, or in the case that the Executive was
not based at the principal executive offices of the Corporation
immediately prior to the Change of Control, to a location more than
35 miles from the location where the Executive was based
immediately prior to the Change of Control, except for required
business travel to an extent substantially consistent with the
Executive’s business travel obligations immediately prior to
the Change in Control;
(iv) the failure by the Corporation
to pay to the Executive any portion of the Executive’s
current compensation, or to pay to the Executive any deferred
compensation under any deferred compensation program of the
Corporation, within five calendar days after the date the
compensation is due (taking into account applicable restrictions
under Section 409A) or to pay or reimburse the Executive for
any expenses incurred by him for required business
travel;
(v) the failure by the Corporation
to continue in effect any compensation plan in which the Executive
participates immediately prior to the Change in Control that is
material to the Executive’s total compensation, including but
not limited to, stock option, restricted stock, stock appreciation
right, incentive compensation, bonus, and other plans, unless an
equitable alternative arrangement embodied in an ongoing substitute
or alternative plan has been made, or the failure by the
Corporation to continue the Executive’s participation therein
(or in a substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of compensation
provided and the level of the Executive’s participation
relative to other participants, than existed immediately prior to
the Change in Control;
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(vi) the failure by the Corporation
to continue to provide the Executive with benefits substantially
similar to those enjoyed by the Executive under any of the
Corporation’s pension, profit-sharing, life insurance,
medical, health and accident, disability, or other employee benefit
plans in which the Executive was participating immediately prior to
the Change in Control; the failure by the Corporation to continue
to provide the Executive any material fringe benefit or perquisite
enjoyed by the Executive immediately prior to the Change in
Control; or the failure by the Corporation to provide the Executive
with the number of paid vacation days to which the Executive is
entitled in accordance with the Corporation’s normal vacation
policy in effect immediately prior to the Change in
Control;
(vii) any purported termination by
the Corporation of the Executive’s employment that is not
effected in accordance with a Notice of Termination satisfying the
requirements of paragraph (A) of Section 8 hereof;
or
(viii) any failure by the
Corporation to comply with and satisfy Section 12(A) of this
Agreement, other than a failure not occurring in bad faith and
which is remedied by the Corporation promptly after receipt of
notice thereof given by the Executive.
(M)
“Non-Interference/Assistance Period” shall mean the
period commencing with the Date of Termination and ending on the
first anniversary of the Date of Termination.
(N) “Notice of
Termination” shall have the meaning stated in paragraph
(A) of Section 8 hereof.
(O) “Payment Trigger”
shall mean the occurrence of a Change in Control during the term of
this Agreement coincident with or followed at any time before the
end of the second anniversary of the Change in Control by the
termination of the Executive’s employment with the
Corporation or a Subsidiary in a manner that constitutes a
“separation from service”, as defined in
Section 409A, for any reason other than (i) by the
Executive without Good Reason, (ii) by the Corporation as a
result of the Disability of the Executive or with Cause or,
(iii) as a result of the death of the Executive.
(P) “Section 409A” shall
mean Section 409A of the Code and any proposed, temporary or
final regulations, or any other guidance, promulgated with respect
to such Section 409A by the U.S. Department of Treasury or the
Internal Revenue Service.
(Q) “Subsidiary” shall
mean any corporation or other entity or enterprise, whether
incorporated or unincorporated, of which at least a majority of the
securities or other interests having by their terms ordinary voting
power to elect a majority of the board of directors or others
serving similar functions with respect to such corporation or other
entity or enterprise is owned by the Corporation or other entity or
enterprise of which the Corporation directly or indirectly owns
securities or other interests having all the voting
power.
2. Term of Agreement . This
Agreement shall become effective on the date hereof and, subject to
the second sentence of this Section 2, shall continue in
effect until the earliest of (i) a Date of Termination in
accordance with Section 8, or the death of the Executive,
shall have occurred prior to a Change in Control, (ii) if a
Payment Trigger shall have occurred during the
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term of this Agreement, the performance by the
Corporation of all its obligations, and the satisfaction by the
Corporation of all its obligations and liabilities, under this
Agreement, (iii) January 1, 2013 if, as of such date, a
Change in Control shall not have occurred and be continuing, or
(iv) in the event, as of January 1, 2013, a Change in
Control shall have occurred and be continuing, either the
expiration of such period thereafter within which a Payment Trigger
does not or can not occur or the ensuing occurrence of a Payment
Trigger and the performance by the Corporation of all of its
obligations and liabilities under this Agreement. Any Change in
Control during the term of this Agreement that for any reason
ceases to constitute a Change in Control or is not followed by a
Payment Trigger shall not effect a termination or lapse of this
Agreement.
3. General Provisions
.
(A) The Corporation hereby
represents and warrants to the Executive as follows: The execution
and delivery of this Agreement and the performance by the
Corporation of the actions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the
Corporation. This Agreement is a legal, valid and legally binding
obligation of the Corporation enforceable in accordance with its
terms. Neither the execution or delivery of this Agreement nor the
consummation by the Corporation of the actions contemplated hereby
(i) will violate any provision of the certificate of
incorporation or bylaws (or other charter documents) of the
Corporation, (ii) will violate or be in conflict with any
applicable law or any judgment, decree, injunction or order of any
court or governmental agency or authority, or (iii) will
violate or conflict with or constitute a default (or an event of
which, with notice or lapse of time or both, would constitute a
default) under or will result in the termination of, accelerate the
performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the assets or
properties of the Corporation under, any term or provision of the
certificate of incorporation or bylaws (or other charter documents)
of the Corporation or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to
which the Corporation is a party or by which the Corporation or any
of its properties or assets may be bound or affected.
(B) No amount or benefit shall be
payable under this Agreement unless there shall have occurred a
Payment Trigger during the term of this Agreement. In no event
shall payments in accordance with this Agreement be made in respect
of more than one Payment Trigger.
(C) This Agreement shall not be
construed as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the Executive
and the Corporation, the Executive shall not have any right to be
retained in the employ of the Corporation or of a Subsidiary.
Notwithstanding the immediately preceding sentence or any other
provision of this Agreement, no purported termination of the
Executive’s employment that is not effected in accordance
with a Notice of Termination satisfying paragraph (A) of
Section 8 shall be effective for purposes of this Agreement.
The Executive’s right, following the occurrence of a Change
in Control, to terminate his employment under this Agreement for
Good Reason shall not be affected by the Executive’s
Disability or incapacity. The Executive’s continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason
under this Agreement.
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4. Payments Due Upon a Payment
Trigger . Upon the occurrence of a Payment Trigger during the
term of this Agreement:
(A) The Corporation shall pay to the
Executive the following amounts in cash as follows:
(i) the Executive’s annual
base salary through the Date of Termination to the extent not
theretofore paid, and such amount shall be paid in a lump sum
within 30 days following the Date of Termination;
(ii) the amount of any incentive
compensation that has been allocated or awarded to the Executive
for a completed fiscal year or other completed measuring period
preceding the occurrence of the Date of Termination under any
incentive compensation plan but has not yet been paid to the
Executive, and such amount shall be paid in a lump sum within
(x) 30 days following the Date of Termination or (y) any
earlier date as required by the applicable incentive
plan;
(iii) the product of (x) the
Annual Incentive Target in effect immediately prior to the Payment
Trigger and (y) a fraction, the numerator of which is the
number of calendar days in the current fiscal year through the Date
of Termination, and the denominator of which is 365, reduced by the
amount, if any, paid or payable to the Executive under the Annual
Incentive Plan’s terms with respect to the fiscal year during
which the Date of Termination occurs, and such amount shall be paid
in a lump sum within (I) the 30-day period commencing on the
60th day following the Date of Termination, or (II) such later
period as required by Section 6; and
(iv) any accrued vacation pay to the
extent not theretofore paid, and such amount shall be paid in a
lump sum within 30 days following the Date of
Termination.
(B) The Corporation shall pay to the
Executive in a lump sum in cash within the 30 day period commencing
on the 60th day following the Date of Termination, or within such
later period as required by Sections 6, an amount equal to the
product of:
(i) multiplied
by, (ii) the sum of: (x) the higher of the
Executive’s annual base salary in effect immediately prior to
the occurrence of the Change in Control or the Executive’s
annual base salary in effect immediately prior to the Payment
Trigger, plus (y) the higher of the Executive’s Annual
Incentive Target in effect immediately prior to the occurrence of
the Change in Control or the Executive’s Annual Incentive
Target in effect immediately prior to the Payment
Trigger.
(C) The Corporation shall pay to the
Executive in a lump sum in cash within the 30 day period commencing
on the 60th day following the Date of Termination, or such later
period as required by Sections 6, an amount equal to the product of
(i) the Executive’s monthly premium for health and
dental insurance continuation coverage for the Executive and the
Executive’s family under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), based on the
monthly premium rate for such coverage in effect on the Date of
Termination, multiplied by
(ii) months.
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(D) The Corporation shall, at its
sole expense as incurred, provide the Executive with outplacement
services from a recognized outplacement service provider, the scope
of which shall be selected by the Executive in his sole discretion,
provided that (i) the cost to the Corporation shall not exceed
$25,000, and (ii) in no event shall the period during which
the outplacement service expenses are incurred or the period during
which the expenses are paid, extend beyond the end of the second
calendar year that begins after the Executive’s Date of
Termination.
(E) To the extent not theretofore
paid or provided, the Corporation shall pay to the Executive all
vested benefits or other amounts that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Corporation or any of its
Subsidiaries at or subsequent to the Date of Termination in
accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this
Agreement.
Notwithstanding the foregoing, if
the Executive receives the payments and benefits in accordance with
paragraphs (A)(iii), (B), (C) and (D) of this
Section 4, the Executive shall not be entitled to any
severance pay or benefits under any severance plan, program or
policy of the Corporation or its Subsidiaries, unless otherwise
specifically provided therein in a specific reference to this
Agreement.
5. Certain Reductions in
Payments .
(A) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Corporation to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise)
(a “Payment”) would (after taking into account any
value attributable to the restrictive covenants in Section 9)
be nondeductible by the Corporation for Federal income tax purposes
because of Section 280G of the Code, then the amounts payable
or distributable to or for the benefit of the Executive pursuant to
this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as “Agreement
Payments”) shall be reduced in such a way that their
aggregate present value shall be equal to the Reduced Amount. The
Reduced Amount shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without
causing any Payment to be nondeductible by the Corporation because
of Section 280G of the Code (after taking into account any
value attributable to the restrictive covenants in Section 9).
For purposes of this Section 5, present value shall be
determined in accordance with Section 280G(d)(4) of the
Code.
(B) All determinations required to
be made under this Section 5 shall be made by an independent,
nationally recognized accounting firm designated by the Corporation
prior to a Change in Control (the “Accounting Firm”);
provided that if the Accounting Firm is not willing or able to
value the restrictive covenants in Section 9, then the
restrictive covenants shall be valued by an independent third-party
valuation specialist selected by the Corporation prior to a Change
in Control. All determinations made by the Accounting Firm (or,
with respect to the valuation of the restrictive covenants in
Section 9, to the extent applicable, the independent
third-party valuation specialist) under this Section 5 shall
be binding upon the Corporation and the Executive and shall be made
within thirty (30) business days after a termination of
the
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Executive’s employment or such earlier
date as requested by the Corporation. The reduction of the
Agreement Payments to the Reduced Amount, if applicable, shall be
made by reducing the Agreement Payments under the following
sections (and no other Payments) in the following order:
(i) Section 4(B), (ii) Section 4(A)(iii),
(iii) Section 4(C), and (iv) Section 4(D). All
fees and expenses of the Accounting Firm and the independent
third-party valuation specialist (if any) shall be borne solely by
the Corporation.
(C) As a result of the uncertainty
in the application of Sections 280G and 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Agreement Payments will have been made by the
Corporation which should not have been made
(“Overpayment”) or that additional Agreement Payments
which will have not been made by the Corporation could have been
made (“Underpayment”), in each case, consistent
wit
