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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 4th day of January, 2007, between
D&E Communications, Inc., a Pennsylvania business corporation,
having its principal office at 124 East Main Street, Ephrata, PA
17522-0458 (" D&E ") and Thomas E. Morell, having an
address of 2168 Landis Valley Road, Lancaster, PA 17601 ("
Executive ").
BACKGROUND
D&E desires to employ Executive on a contractual basis as
its Senior Vice President, Chief Financial Officer and Treasurer,
and Executive desires to accept such position, on the terms and
conditions set forth below. As additional consideration for the
execution of this Agreement, Executive has been given benefits upon
the occurrence of a Change of Control (as defined herein).
NOW THEREFORE, intending to be legally bound hereby, the parties
agree as follows:
AGREEMENT
1. Employment . D&E hereby agrees to employ the
executive for a term of years, as more particularly set forth
herein, and provide Executive with certain change in control
benefits, in exchange for which Executive accepts the terms and
conditions set forth herein governing his employment, including the
restrictive covenants set forth herein.
2. Term . Executive’s employment shall be for a two
year term, commencing as of January 4, 2007, (the " Initial
Term "). Beginning on the first anniversary date of this
Agreement (i.e. January 4, 2008), and on each anniversary date
thereafter until notice is given as set forth below, the term of
this Agreement shall be extended by one additional year (the "
Extended Term "), subject, however, to prior termination of
this Agreement as set forth below. This Agreement shall
automatically renew and extend as provided in this paragraph 2
unless at least 60 days prior to any anniversary date of this
Agreement, either D&E or Executive gives 60 days’ prior
written notice to the other of its or his intention not to extend
the Agreement. If notice is so given, the term of this Agreement
shall not be extended for an additional year, but shall instead
continue for the then remaining term. As used herein, "Term" shall
mean the Executive’s employment with D&E pursuant to this
Agreement during the Initial Term and any Extended Term.
3. Compensation .
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(a) Salary . Executive will be paid an annual salary of
$230,000, subject to adjustment as provided below (the "
Salary "), which will be payable in equal periodic
installments according to D&E’s customary payroll
practices, but no less frequently than monthly. Executive’s
salary shall be at least in the amount of his salary for the
initial year of this Agreement, with such increases (in connection
with D&E’s annual performance review procedures or
otherwise), if any, as may be established by D&E.
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(b) Benefits . Benefits for the Executive
and his family will be the same, in the aggregate, to those
provided by D&E to similarly situated D&E executive
officers ("similarly situated D&E executive officers" shall
mean the "named executive officers" in D&E’s proxy
statement), including participation in such pension, profit
sharing, bonus, life insurance, disability insurance,
hospitalization, major medical, and other employee benefit plans of
D&E that may be in effect to the extent Executive is eligible
under the terms of those plans (collectively, the " Benefits
").
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(i) Executive shall participate, from the effective date of this
Agreement, in the D&E Supplemental Retirement Plan (the "
SERP "), the form of which is attached hereto as Exhibit
A , which is a plan of deferred compensation that provides for
an annual supplemental retirement benefit equal to the additional
qualified retirement benefit the Executive would accrue under the
D&E Communications, Inc. Employee’s Retirement Plan (the
" Qualified Retirement Plan ").
(ii) Short-Term Incentive Plan . As additional
compensation for the services to be rendered by Executive pursuant
to this Agreement, Executive will be eligible to participate in
such executive level bonus/incentive programs and plans as may be
in effect from time to time as approved by the Board of Directors
of D&E. Executive shall be eligible for a targeted Short-term
Incentive Plan bonus at the end of calendar year 2007 at
twenty-five percent (25%) of his Salary as defined in
D&E’s Short-term Incentive Plan. The target is neither a
minimum nor a cap on any bonus. D&E, through its compensation
committee, will annually consider the implementation of an annual
incentive award program, for which the Executive will be
eligible.
(c) Paid Time Off . Executive shall be entitled to six
(6) weeks of paid time off per year during the term of his
employment, or such greater amount commensurate with periods of
paid time off as may from time to time be provided for similarly
situated D&E executive officers.
(d) Expense Reimbursement . D&E will reimburse
Executive for reasonable expenses incurred by Executive in the
performance of Executive’s duties pursuant to this Agreement
in accordance with D&E’s regular reimbursement policies,
as in effect from time to time and upon receipt of itemized
vouchers therefor and such other supporting information as D&E
may reasonably request.
(e) Automobile . D&E will provide Executive with
either a company car or related reimbursement, in the discretion of
D&E, similar to that provided for similarly situated D&E
executive officers.
(f) Long-Term Incentive Program . D&E, through its
compensation committee, will annually consider the implementation
of a long-term incentive program for which the Executive will be
eligible.
(g) Reservation of Right to Amend Benefit Plans .
Executive understands that from time to time it may be necessary
for economic and business reasons for
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D&E to amend any of its benefit plans, which
amendments may involve the increase, decrease or change of form of
a Benefit. Executive’s employment pursuant to this Agreement
shall be subject to any such amendments, and any such amendments
applicable to all D&E employees, or the specific class thereof
of which Executive is a member, that impacts Executive’s
Benefits hereunder shall not be a breach of this Agreement by
D&E. In no event, however, shall any such amendment deprive
Executive of any Benefit that has vested or is then otherwise owed
to Executive under this Agreement, the SERP, D&E’s
Short-term Incentive Plan, D&E’s Long-term Incentive Plan
or any of D&E’s pension, profit sharing, bonus or
short-term or long-term disability plans.
4. Duties . The Executive shall serve as the Senior Vice
President, Chief Financial Officer and Treasurer of D&E,
reporting to the Chief Executive Officer, and have the normal
duties, responsibilities and authority associated with such
position including, without limitation, those set forth in
Exhibit B attached and made a part hereof, as well as such
duties (which are reasonably consistent with Executive’s
primary duties) as shall be assigned to him from time to time by
the Chief Executive Officer or Board of Directors of D&E. In
the event Executive is assigned additional duties by either the
Chief Executive Officer or Board of Directors that result in a
material change in Executive’s duties as provided under this
Agreement, Executive shall be entitled to receive additional
compensation commensurate with the additional duties. The Executive
shall devote his entire working time and attention to
D&E’s business. During the term of this Agreement,
Executive shall not be employed by, or participate or engage in or
be a part of in any manner the management or operations of any
business enterprise other than D&E without the prior written
consent of D&E, which consent may be granted or withheld in its
sole discretion; provided, however, that Executive may, while he
remains employed by D&E, participate in reasonable charitable,
social, teaching, educational and civic activities, as well as
industry trade groups and associations and personal investment
activities, so long as such activities do not interfere with the
performance of Executive’s obligations under this Agreement,
as well as those activities set forth on Exhibit C attached
hereto.
5. Termination of Employment .
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(b) the engaging by the Executive in misconduct
injurious to D&E;
(c) the dishonesty or gross negligence of the Executive in the
performance of his duties;
(d) material violation by Executive of D&E’s Code of
Business Conduct and Ethics;
(e) use by the Executive of alcohol which interferes with the
performance of his duties;
(f) use by the Executive of illegal drugs;
(g) the breach of Executive’s fiduciary duty involving
personal profit;
(h) the violation by the Executive of any law, rule or
regulation which jeopardizes the business of D&E;
(i) moral turpitude or other conduct on the part of Executive
which brings public discredit to D&E;
(j) commission by Executive of workplace violence or harassment;
or
(k) the material violation by the Executive of any provision of
this Agreement or any policy of D&E not already addressed above
after notice from D&E and a failure to cure such violation
within thirty (30) days of the date of said notice or, if said
violation cannot be cured within such period of time, within a
reasonable time thereafter, if the Executive is diligently
attempting to cure the violation, but in no event longer than 60
days from the date of the notice.
The foregoing notwithstanding, any actions undertaken by
Executive at the specific direction of the Board of Directors or
based upon the advice of corporate counsel shall not constitute
"Cause" hereunder, even if such action is arguably within the ambit
of any of subsections (a) through (k) above.
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(ii) Death or Disability . If the Executive’s
employment shall be terminated due to Executive’s Disability,
D&E shall pay the Executive his full Salary, plus any accrued
paid time off through the date of termination, and any Benefits
that have vested or are then otherwise owed to Executive, including
but not limited to short-term and/or long-term disability benefits,
and D&E shall have no further obligation to the Executive under
this Agreement. If the Executive’s employment shall be
terminated due to Executive’s death, D&E shall pay the
Executive’s designated beneficiaries, or if no designated
beneficiaries, pay to Executive’s heirs his full Salary,
plus
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any accrued paid time off and any Benefits that
have vested or are then otherwise owed to Executive through the
date of termination and for one full month (4 weeks) following the
date of termination. All stock options and performance restricted
shares held by Executive shall immediately vest to the extent
provided in the 1999 Long-term Incentive Plan and any applicable
award agreements and D&E shall have no further obligation to
the Executive under this Agreement. " Disability " shall
have the meaning given to the term "total disability" in the
D&E Short-term Disability Program. Nothing in this provision
shall be interpreted to limit the Executive’s rights to
recover benefits under any applicable disability insurance
policy.
(iii) Without Good Reason . If Executive desires to
terminate his employment without Good Reason, Executive shall
provide D&E with at least 60 days’ prior written notice
of the effective date of such termination. Until the effective date
of termination, Executive shall continue to fulfill his duties
under this Agreement. D&E shall continue to pay Executive his
normal Salary through the effective date of termination, plus any
accrued paid time off and any Benefits that have vested or are then
otherwise owed to Executive, and D&E shall have no further
obligation to the Executive under this Agreement. D&E may, in
its discretion, request that Executive cease to perform his duties
under this Agreement at any time following its receipt of notice of
termination and prior to the effective date of termination but, in
such event, Executive shall still be entitled to be paid his normal
Salary, plus any accrued vacation, and any Benefits that have
vested or are then otherwise owed to Executive, through the
effective date of termination.
(b) Without Cause or for Good Reason . If the
Executive’s employment is terminated without Cause by
D&E, or is terminated by Executive for Good Reason, then
D&E shall pay the Executive the greater of (x) his full
Salary from the date of termination through the last day of the
then current Term; or (y) an amount equal to one year’s
Salary at his then current Salary. In addition, the Executive shall
be entitled to: (i) an additional annual retirement benefit
pursuant to the terms of the SERP such that the Executive is
treated as if he had remained employed by D&E through the end
of the then current Term. The benefit provided under the SERP is
intended to be in addition to the Qualified Retirement Plan benefit
payable to the Executive regardless of whether the Executive has
satisfied the vesting requirements of such plan(s);
(ii) payment of the amount that would have been due to the
Executive under any Short-term Incentive Plan in effect at the time
of Executive’s termination had the Executive remained
employed by D&E through the end of the incentive period
relating thereto. Any such incentive payment shall be due and
payable only at the time and in the manner provided for in the plan
relating thereto; and (iii) payment on behalf of Executive of
the fees and costs charged by a nationally recognized outplacement
firm selected by the Executive to provide outplacement services,
not to exceed a period of twelve (12) months after termination
and the amount of $12,500. Termination for " Good Reason "
shall mean termination by the Executive of his employment due
to:
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(i) any material adverse change in the position,
responsibilities, authority or duties assigned to the employee, as
contemplated by Paragraph 4, without his consent, except in
connection with the termination of the Executive’s employment
for Cause;
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(ii) failure of D&E or any successor or
assign to comply with Paragraph 3 hereof in any material
manner;
(iii) requiring the Executive to be based anywhere that is 75
miles or more distant from the Executive’s current place of
work, without his consent, except for required travel on
D&E’s business to an extent substantially consistent with
his present business travel obligations;
(iv) a requirement by D&E or its successor that Executive,
in his reasonable judgment take an action that would violate the
requirements of generally accepted accounting principles, the
regulations of the Securities and Exchange Commission, applicable
stock exchange listing standards or D&E’s Code of
Business Conduct and Ethics;
(v) failure of any successor or assign of D&E to assume this
Agreement and honor its provisions, or any material breach of this
Agreement by D&E or its successor or assign; or
(vi) notwithstanding 5(b)(ii) above, any reduction in the
Salary.
If the Executive intends to terminate his employment for Good
Reason, he must first give notice to D&E that such action or
limitation of D&E constitutes Good Reason. The
Executive’s employment shall be deemed terminated for Good
Reason if D&E fails to cure such situation within thirty
(30) days of the date of said notice or, if said situation
cannot be cured within such period, within a reasonable time
thereafter, if a diligent effort is being made to c
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