Exhibit 99.1
NOTICE OF DISCLAIMER
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Attached is a document entitled "Employment and Retention Agreement" that
Michael G. Harris, Citizens Communications Company's (the Company) Senior Vice
President, Information and New Technology, claims is a valid and binding
contract between himself and the Company, effective June 1, 2004. The Company,
however, believes that no binding contract was ever formed and has so advised
Mr. Harris. Although the Compensation Committee of the Company's Board of
Directors considered whether to enter into employment and retention agreements
with certain of the Company's senior executives as part of the
recently-completed initiative to review strategic and financial alternatives, no
such agreements were ever authorized or approved by the committee. Nevertheless,
it appears that Mr. Harris and the Company's former Chairman and Chief Executive
Officer, Leonard Tow, each signed the attached document, which is the basis for
Mr. Harris' claim that a contract exists. The Company has advised Mr. Harris
that because neither the Compensation Committee nor the full Board approved any
contract, Mr. Tow had no authority to sign the attached document and thereby
bind the Company to its terms. Because no valid contract was ever formed between
the Company and Mr. Harris, the Company believes it is not legally bound to
perform any of the obligations stated in the attached document.
EMPLOYMENT AND RETENTION AGREEMENT
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AGREEMENT made as of this 1st day of June 2004 (the "Effective Date") by
and between CITIZENS COMMUNICATIONS COMPANY, a Delaware Corporation and whose
address for the purposes of this Agreement is 3 High Ridge Park, Stamford, CT
06905 ("Citizens") and Michael G. Harris, an individual, whose address is 16
Gorge Lane, Pound Ridge, NY 10576 ("Executive").
RECITALS
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A. Executive is currently employed by Citizens in the capacity of Chief
Technology Officer.
B. Executive and Citizens are mutually desirous of, among other things,
providing for Executive's services for three years and making provision for
special bonuses and severance payments to Executive as well as payments in
the instance of Change in Control, as defined in Schedule B attached, all
as set forth herein.
NOW THEREFORE; it is agreed as follows:
1. EMPLOYMENT:
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Citizens employs Executive and Executive accepts such employment
as Chief Technology Officer of Citizens and its subsidiaries
responsible for all of its technological matters, reporting to and
subject to the authority and direction of the Chief Executive of the
ILEC Division of Citizens and reporting and subject also to the Board
of Directors (the "Board") of Citizens.
2. TERM: PLACE OF EMPLOYMENT:
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(a) The term of this Agreement shall be three years commencing June 1,
2004 and terminating May 31, 2007 (the "Term") subject to prior
termination as herein provided.
(b) Executive shall render his services in Fairfield County, CT.,
provided Executive agrees to take such trips outside said area from
time to time as shall be consistent with or reasonably necessary in
connection with his duties.
3. (a) Subject to Sections 9 and 10, as compensation for his services,
Citizens shall pay Executive (i) a base salary ("Base Salary") at the
rate of $225,000.00 per year for each year of the Term for each year
for which Executive renders his services, subject to such withholdings
required by applicable law, which shall be increased however for each
of the second and third years of the Term (each an "Applicable Year")
by the percentage increase in the Consumer Price Index prepared by the
United States Labor Department for the United States as a whole for
the last calendar month in each of the Applicable Years over the last
calendar month in the immediately preceding year, plus (ii) a bonus
for each full year of the term in an amount not less than $308,000.00,
being the bonus paid to Executive under the Citizens Incentive Plan of
Citizens for Executive's services in calendar year 2003 (the "Bonus").
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(b) As additional compensation, Citizens shall pay Executive, a bonus,
denominated a Retention Bonus, in the sum of $56,250.00, being 25% of
Executive's annual Base Salary, subject to such withholdings required
by applicable law, within five business days, immediately succeeding
the earliest to occur of the following: (i) December 31, 2004, (ii)
the date on which Citizens, which is presently exploring strategic and
financial alternatives has publicly announced that it has determined
to accept a particular alternative, (iii) the date of termination of
Executive's employment, (w) by reason of death, (x) by reason of
"Permanent Incapacity" as defined in Schedule B attached, (y) by
Citizens for other than "Good Cause", as defined in Schedule B
attached and (z) by Executive for "Good Reason" as defined in Schedule
B attached, or (iv) a Change in Control.
(c) Nothing herein shall preclude or prevent the Board or the
Compensation Committee of the Board in its sole discretion, and from
time-to-time, granting additional bonuses to the Executive, which may
take the form of cash bonuses, shares of stock, options to acquire
shares of stock or other incentive or stock related awards.
(d) All reasonable expenses incurred by Executive in the discharge and
fulfillment of his duties will be reimbursed or paid by Citizens upon
written substantiation by Executive. Executive shall be insured under
such group life, medical, dental, major medical and disability
insurance that Citizens maintains from time to time during the Term
subject to the terms, provisions and conditions of such insurance.
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4. RESTRICTED STOCK GRANT:
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Citizens confirms the prior grant and award to Executive of its
Common Stock (the "Inducing Shares") under its 2000 Equity Incentive
Plan (the "Plan") as follows:
a) 50,000 shares on March 11, 2004
b) 15,000 shares on March 11, 2004
Pursuant to the Plan, there are restrictions on the sale or
transferability of these shares which restrictions lapse cumulatively
on one third of the shares awarded, each year over a three year
period, commencing with the respective date of grant. Notwithstanding
the foregoing, all restrictions on the sale or transferability as well
as any and all other restrictions on the Inducing Shares, which have
not previously lapsed, shall lapse and be of no further force and
effect on the earliest to occur of the following: (a) termination of
Executive's Employment (i) by reason of his death, (ii) by reason of
his Permanent Incapacity, (iii) by Citizens for other than Good Cause,
and (iv) by the Executive for Good Reason, or (b) a Change in Control.
The Inducing Shares referenced in Item a) above were not certificated
but issued in book-entry form. The Inducing Shares in Item b) above
shall be treated similarly. A restricted stock agreement covering the
Inducing Shares Referenced in Item a) above has heretofore been
executed by Citizens and Executive. Simultaneous with the execution of
this Agreement, Citizens and Executive shall execute a restricted
stock agreement covering the Inducing Shares reference in Item b)
above in the form of Schedule A annexed.
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5. EXCLUSIVITY:
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(a) During the Term, Executive agrees to devote his services and his
best energies and abilities, exclusively, to the business and
activities of Citizens and its Subsidiaries, and not engage or have an
interest in or perform services for any other business or entity of
any kind or nature; provided, however, that nothing herein shall
prevent Executive from investing in (but not rendering services to)
other businesses which are not competitive in any manner with the
business then being conducted by Citizens or any of it subsidiaries,
or in investing in, but not rendering services to , other businesses
which are competitive in any manner with the business then being
conducted by Citizens provided in the latter instance that (i) the
shares of such business are listed and traded over a national
securities exchange, and (ii) Executive's stock interest or potential
stock interest (based on grants, options, warrants, or other
arrangements then in existence) in any such business which is so
traded (together with any and all interest, actual and potential, of
all members of Executive's immediate family) is not a controlling
interest.
(b) While employed by Citizens and for a period of one year after the
termination of the Executive's employment for any reason other than
termination by Citizens for other than Good Cause or by the Executive
for Good Reason, the Executive shall not personally (and shall not
personally cause others to) (i) take any action to solicit or divert
any material business or customers away from Citizens, (ii) induce
customers, potential customers, suppliers, agents or other persons
under contract or otherwise associated or doing business with Citizens
to terminate, reduce or alter any such association or business, or
(iii) induce any person employed by Citizens to (x) terminate such
employment arrangement, or (y) interfere with the customers or
suppliers or otherwise with Citizens in any manner.
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6. UNIQUENESS:
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Executive agrees that his services hereunder are special, unique
and extraordinary and that in the event of any material breach or
attempted material breach of this Agreement by Executive, Citizens
will sustain substantial injury and damage, and Executive consents and
agrees that, in the event of breach or attempted breach hereof,
Citizens shall be entitled to injunctive relief against Executive or
any third party to prevent any such breach, in addition to such other
rights or remedies available to it.
7. TRADE SECRETS:
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Executive acknowledges that his employment hereunder will
necessarily involve his understanding of and access to certain trade
secrets, technical data, know-how and other confidential information
pertaining to the businesses and activities of Citizens and its
subsidiaries, which are special, valuable and unique assets of
Citizens (such assets being referred to as "Trade Secrets").
Accordingly, Executive agrees that during the period of his employment
and at all times thereafter, he will not disclose to any unauthorized
third party and such Trade Secrets and will not (other than in
connection with carrying out his duties) for any reason remove or
retain without the express written consent of Citizens any figures or
calculations, letters, papers, records, or other information of a type
likely to be regarded as confidential. The provisions of this Section
shall survive the expiration or the termination of this Agreement or
the Executive's employment for any reason other than termination by
Citizens for other than Good Cause or by the Executive for Good
Reason.
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8. INVENTIONS; CREATIONS:
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All right, title and interest of every kind and nature whatsoever
in and to inventions, patents, trademarks, copyrights, films, scripts,
ideas, creations, intellectual property and literary, intellectual and
other properties furnished to Citizens or any of its subsidiaries
and/or used in connection with any of the activities of Citizens or
any of its subsidiaries, or with which Executive is connected or
associated in connection with the performance of his services, shall
as between the parties hereto be, become and remain the sole and
exclusive property of Citizens or any of its subsidiaries, as the case
may be, for any and all purposes and uses whatsoever, regardless of
whether the same were invented, created, written, developed,
furnished, produced or disclosed by Executive or by any other party,
and Executive shall have no right, title or interest of any kind or
nature therein or thereto, or in any results and proceeds there from.
Executive agrees that both during and after the term hereof to execute
any and all documents which Citizens may deem necessary or appropriate
to effectuate the provisions of this Section and, further, that the
provisions of this Section shall survive the expiration or the
termination, for any reason, of this Agreement or Executive's
employment.
9. TERMINATION:
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Executive's employment shall terminate on the first to occur of
the following:
a) Death of Executive.
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b) On not less than 15 days written notice to Executive in the
instance of the Permanent Incapacity of Executive, in which event
this Agreement shall terminate on the date set forth in said
notice.
c) On not less than 30 days written notice to Executive in the
event of termination of Executive's employment by Citizens for
Good Cause, in which event this Agreement shall terminate on the
date set forth in said notice. The notice shall specify the acts
or omissions constituting Good Cause. In the event such
termination is based on the Executive's willful refusal without
proper cause to perform his duties as delineated herein and
within 30 days following the giving of said notice of termination
Executive has taken reasonable efforts to perform such
obligations, the notice of termination shall be of no force and
effect. Executive shall have the right to contest or challenge
any termination for Good Cause utilizing the arbitration process
set forth in Section 17.
d) On not less than 30 days written notice from Executive to
Citizens in the event of termination of this agreement for Good
Reason in which event Executive's employment shall terminate on
the date set forth in said notice. The notice shall specify the
acts constituting Good Reason. Provided however that if, within
30 days of the giving of such notice Citizens has taken
reasonable steps to eliminate the acts or omissions constituting
the alleged Good Reason the notice of termination shall be of no
force and effect. Citizens shall have the right to contest or
challenge any termination for "Good Reason" utilizing the
arbitration process set forth in Section 17. A termination of
Executive employment by Citizens without Good Cause shall be
deemed to be equivalent to a termination by Executive for Good
Reason.
e) A Change In Control.
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10. CONSEQUENCES OF TERMINATION:
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(a) Termination Under Section 9(a) or 9(b).
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In the event Executive's employment is terminated
pursuant to either Section 9(a) or 9(b), Executive shall be
entitled to receive and Citizens shall pay Executive the
following:
(i) Payment of Base Salary to the date of termination
if not previously paid, plus the balance of payments of his
Base Salary that would otherwise have become payable to
Executive for the balance of the Term pursuant to the
provisions of this Agreement based on the rate of Base
Salary payable at the date of termination, but in no event
shall this balance be less than an amount equal to Base
Salary for a two year period.
(ii) a cash bonus for the year of termination being a
fraction of the bonus paid for the immediately preceding
calendar year, (or the minimum amount referenced in Section
3(a)(ii) in the event termination occurred in the first year
of the Term) the numerator of which is the number of days
prior to termination in the year of termination and the
denominator of which is 365, plus a cash bonus otherwise
payable for the balance of the Term (the "Cash Bonus
Balance") in the minimum amount referenced in Section
3(a)(ii), but in no event shall this Cash Bonus Balance be
less than the minimum bonus payable under Section 3(a)(ii)
for a two year period.
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(iii) if not previously paid, the Retention Bonus, as
provided in Section 3(b).
All such payments shall be made promptly but in no event
later than 10 business days immediately succeeding termination of
employment and shall be subject to such withholdings required by
applicable law.
In addition, (x) all restrictions on all shares of Citizens
Common Stock previously awarded to and then owned and held by
Executive, other than Inducing Shares (which are provided for in
Section 4) shall lapse on the date of termination, (y) all options to
acquire shares of Citizens Common Stock (whether awarded pursuant to
one of Citizens' plans or otherwise) which have not then vested, shall
be deemed to vest on the date of termination, and, (z) for the two
years immediately succeeding termination, Citizens at its sole cost
shall provide Executive with a medical, dental, hospitalization and
health plan and insurance having the same benefits and coverage with
respect to dependents as are contained in the plan of Citizens
available to Executive, including life insurance, immediately
preceding termination.
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(b) Termination For Good Cause.
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In the event the Executive's employment is terminated
for Good Cause under Section 9(C), Executive shall be
entitled to the balance of his Base Salary to the end of the
calendar year in which termination occurs and Bonus for such
year, and to no other payment or benefit; the payment shall
be paid within 20 business days immediately succeeding
termination. Effective with such termination (i) all options
to purchase shares of Citizens Common Stock heretofore
granted to Executive and which have not then vested shall be
and be deemed canceled, forfeited, null and void and of no
force and effect, and (ii) all shares of the Common Stock of
Citizens previously awarded to and then held by Executive,
including the Inducing Shares on which restrictions shall
not have then lapsed, shall be deemed canceled, forfeited
and null and void and all certificates representing said
shares shall forthwith be returned by Executive to Citizens
for cancellation and any and all entries on the books and
records of Citizens on which the issuing of said shares
shall have been recorded, shall be deemed canceled and
deleted, null and void and of no force and effect.
(c) Termination For Good Reason and Change In Control.
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In the event the Executive's employment is terminated
pursuant to Section 9(d) or 9(e) (including termination by
Citizens other than for Good Cause) Citizens shall pay and
provide Executive with all of the payments and benefits
(including lapsing of restrictions of Citizens Common Stock
and vesting of all options) provided in subsection (a) of
this Section 10. All such payments shall be made promptly
after but in no event later than 10 business days
immediately succeeding termination of employment and shall
be subject to such withholdings required by applicable law.
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(d) Mitigation.
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In the event of the termination of Executive's
employment under Section 9, Executive shall not be required
to mitigate his damages hereunder and payments and benefits
to be made in event of termination under said section shall
not be limited or reduced by any amount Executive might earn
or be able to earn from other employment or ventures, nor
shall Executive be obligated to seek other employment or
other opportunities.
11. PAYMENTS FOR STOCK AND OPTIONS:
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(a) In the event Executive's employment is terminated
pursuant to Section (9a)(b) or (d), then Citizens shall pay
Executive or his legal representatives for shares or
restricted stock of Citizens then owned and held by
Executive, including the Inducing Shares, at a price per
share obtained by taking the average closing price of such
shares over the New York Stock Exchange for the 14
consecutive trading days ending on the trading day
immediately preceding the termination date (the "Market
Price") and shall pay Executive for each of the options to
acquire shares of Citizens then held by Executive as
follows: (i) in the instance where the exercise price of
options is greater than the Market Price of the shares
underlying the Options at the date of termination of
employment the value of the options pursuant to the
Black-Scholes methodology of evaluating options historically
utilized by Citizens in determining such value; or (ii) in
the instance where the exercise price of options is less
than the Market Price of the shares underlying the options
at the date of termination of employment, the greater of (y)
the differential between the Market Price and the Exercise
Price of the Options and (z) the value of the options
utilizing the Black-Scholes methodology described in (i)
above. Said payments shall be made simultaneous with the
payments under Section 10(a).
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(b) In the event of termination of Executive's employment by
reason of a Change in Control Citizens shall pay Executive
for shares of restricted stock of Citizens, including the
Inducing Shares, and options to acquire shares of Citizens
previously awarded and then owned and held by Executive, in
the same manner as set forth in subsection (a) of this
Section 11 except that the 14 consecutive day trading period
in determining Market Price shall end on the day which is
five business days prior to the Change in Control, and
payment shall be made simultaneous with the Change in
Control.
(c) Provided however, that notwithstanding the provisions of
sub-sections (a) and (b), on written notice given to
Citizens no later than five days immediately succeeding
termination of employment, Executive or his legal
representatives as the case may be, shall have the right to
forego payment for said restricted shares including the
Inducing Shares, and options in which event Citizens shall
have no obligations of any kind to make payment to Executive
or his legal representatives for said shares and options.
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12. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY:
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(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment or distribution by Citizens or other benefits
provided to Executive hereunder (including but not limited
to acceleration of vesting of options, lapsing of
restrictions on shares of restricted stock and medical,
dental, hospitalization and health plan and insurance) 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, but determined without regard to any
additional payments required under this Section 12) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the United States Internal Revenue code of
1986, as amended (the "Code"), or any interest or penalties
are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all federal,
state, and local taxes (including any interest or penalties
imposed with respect to such taxes) including, without
limitation, any income and employment taxes (and any
interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the payment.
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(b) All determinations required to be made under this
Section 12, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such
determination, shall be made by Deloitte & Touche (the
"Accounting Firm") which shall provide detailed supporting
calculations both to Citizens and the Executive within
fifteen (15) business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier
time as is required by Citizens (collectively, the
"Determination"). All fees charged by the Accounting Firm
for its services provided in connection with this Agreement
shall be paid by Citizens. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the
Executive shall appoint PriceWaterhouseCoopers or Ernst &
Young, or their respective successors, to make the
determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder).
If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive
with a written opinion that failure to report the Excise Tax
on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or
similar penalty. The Determination by the Accounting Firm
shall be binding upon Citizens and the Executive. As a
result of the uncertainty in the application of Section 4999
of the Code at the time of the Determination, it is possible
that Gross-Up Payments which should have been made were not
made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event Executive
thereafter is required to make payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by Citizens to or for the benefit of
the Executive.
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13. INDEMNITY; DIRECTORS' INSURANCE.
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(a) Citizens agrees to and confirms its obligation, to
indemnify Executive as an officer, director, employee and
agent, and its related obligation to advance funds for
expenses to the Executive as contained in Citizens'
certificate of incorporation, by-laws and any other
instruments or provided for by law or otherwise. Such
obligation 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. Citizens
agrees that it will use its best efforts to the end that the
By-laws and Certificate of Incorporation of Citizens shall
not be amended to reduce any indemnity protection presently
available to officers and/or directors.
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(b) Citizens presently maintains Directors and Officers
Insurance in limits of Fifty Million Dollars. Citizens
agrees to maintain Directors' and Officers' Insurance (at a
minimum in such limits) covering Citizens' obligation, among
other things, to indemnify the Executive for loss, liability
and expenses resulting from litigation relating to his
activities as an officer, director, employee or agent of
Citizens and/or any of its subsidiaries, on an "occurrence
made" basis, and agrees further, following termination of
employment under this Agreement, to maintain equivalent
coverage for the Executive, for the maximum period of all
applicable periods of limitation, (or as a named former
officer and director) on a "claims made" basis for his
activities during the Term while he was an officer or
director of Citizens or any of its subsidiaries.
14. MERGER.
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(a) In the instance of a merger, consolidation or sale of
assets which does not constitute a Change in Control, this
Agreement shall not be terminated by any such merger or
consolidation of Citizens whether Citizens is or is not the
surviving or resulting corporation or as a result of any
such sale or transfer of all or substantially all of the
assets of Citizens. In the event of any such merger,
consolidation or sale or transfer of assets, the provisions
of this Agreement provided that concurrently with any
merger, consolidation or sale or transfer of assets and as a
condition thereof, Citizens will cause any successor or
transferee, unconditionally, to assume, and such successor,
transferee shall assume by written instrument delivered to
the Executive (or his beneficiary or estate), all of the
obligations of Citizens hereunder. Failure of Citizens to
obtain such assumption or such successor or transferee to
execute such assumption prior to the effectiveness of any
such merger, consolidation or transfer of assets shall be a
breach of this Agreement and shall entitle the Executive to
compensation and other benefits from Citizens in the same
amount and on the same terms as the Executive would be
entitled hereunder if the Executive's employment were
terminated by reason of a Change in Control (in the event
such merger or consolidation does not constitute a Change In
Control under the definition set forth in Schedule "B"),
with payment to Executive to be made concurrently with any
said merger, consolidation or transfer of assets and the
fourteen day period referenced in Section 11(b) shall end on
the fifth business day immediately preceding said merger,
consolidation or transfer of assets.
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(b) Without limitation, any dispute or controversy under
this section shall be settled by arbitration pursuant to
Section 17 and all legal costs as well as other costs and
expense of Executive in connection with such dispute or
controversy shall be paid by Citizens as those costs and
expenses and incurred.
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15. DISPUTE; ASSIGNMENT.
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(a) In the event of a dispute between Citizens and the
Executive in the instance of termination of Executive's
employment for Good Cause or for Good Reason then until
there is a determination pursuant to the arbitration process
set forth in Section 17, the amounts that would otherwise
have been paid to the Executive in the event there were Good
Reason for the Executive to have terminated his employment
or an absence of Good Cause as a predicate to Citizens
terminating Executive's employment, shall be placed by
Citizens in a separate fund awaiting the determination in
the arbitration process and confirmation of the arbitration
award. In the event the arbitrator finds a lack of Good
Cause or a presence of Good Reason, the applicable payments
by Citizens to Executive shall be made within five business
days immediately succeeding a final confirmation of the
award. Citizens shall pay Executive's legal fees and
expenses in connection with the aforesaid arbitration, as
same are incurred, regardless of the outcome thereof.
(b) This agreement and the Executive's rights and
obligations may not be assigned or delegated by
Executive; provided however that this Agreement shall
inure to the benefit of and be enforceable by the
Executive's personal or legal representative,
executors, administrators, successors, heirs,
distributes, devises and legatees. In the event
Executive shall die after the termination of his
employment and while amounts are still payable to him
by reason of his termination of employment, all such
amounts, unless otherwise provided for herein, shall be
paid to such person or persons appointed in writing by
the Executive to receive such amounts, or if no such
person is so appointed to the Executive's estate or
legal representatives.
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16. RELEASE.
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In exchange for the consideration provided to the
Executive pursuant to this Agreement, the Executive, with
the intention of binding himself and his heirs, executors,
administrators, assigns and legal representatives, hereby
releases and forever discharges Citizens and any subsidiary
of Citizens, and all of its or their current, former and
future officers, directors, shareholders, employees,
attorneys, agents, predecessors, successors, assigns and
legal representatives, and the pension and welfare benefit
plans in which Citizens participates and their respective
administrators, fiduciaries, trustees, and insurers, whether
acting as agents for Citizens or in an individual capacity,
from any and all claims, demands, causes of action and
liabilities whatsoever, (other than a breach by Citizens of
this Agreement), whether known or unknown, asserted or
unasserted, whether based on tort, contract or any other
legal or equitable theory, and whether for compensatory,
punitive or other damages, remedies or relief, that the
Executive ever had or now has by reason of any act,
omission, transaction or occurrence, including those on or
before the date of this Agreement, and including further
without limitation, any and all such claims arising out of
or in connection with Executive's employment with Citizens,
other than a material breach of this Agreement by Citizens,
or the termination of the Executive's employment, and any
and all such claims under state, federal, municipal,
statutory or common law, including, without limitation,
Title VII of the Civil Rights Act of 1964, 42 U.S.C. ss.
1981, the Civil Rights Act of 1866, the Civil Rights Act of
1991, the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, the American with
Disabilities Act, the Employee Retirement Income Security
Act, the Fair Labor Standards Act, the Family and Medical
Leave Act, the Delaware Fair Employment Practices Act, the
Connecticut Human Rights and Opportunities Law, the
Connecticut Family and Medical Leave Law, the Connecticut
Age Discrimination and Employee Insurance Benefits Law, the
Connecticut Smokers' Rights Law, and the Connecticut
Constitution, as such laws have been or may be amended.
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17. ARBITRATION: EQUITABLE REMEDIES.
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(a) Subject to the provisions of subsection (b) of this
section, any dispute or controversy under this agreement
shall be settled exclusively by arbitration in Stamford,
Connecticut by a single arbitrator in accordance with the
rules of the American Arbitration Association then in
effect. Judgment may be entered confirming the arbitration
award in any court having jurisdiction. Citizens shall pay
and bear all legal and other costs and expenses, (including
those of the Executive) arising in connection with any
arbitration proceeding and subsequent confirmation pursuant
to this Section. Executive's costs and expenses shall be
paid by Citizens as same are incurred.
(b) Notwithstanding any provision herein to the contrary,
the Executive acknowledges and agrees that Citizens' remedy
at law for any breach of the covenants contained in Sections
6, 7 and 8 would be inadequate and that for any breach of
such covenants Citizens, in addition to such other remedies
as may be available to it at law or in equity or as provided
for in this Agreement, shall be entitled to an injunction,
restraining order, or other equitable relief, without the
necessity or posting a bond, restraining the Executive from
committing or continuing to commit any violation of such
covenants. Any breach or alleged breach of such covenants
shall not be subject to the arbitration process set forth in
this Section 17.
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18. MISCELLANEOUS.
-------------
(a) 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 legal representatives, in
the event Citizens shall fail to make, when due, any payment
referred to in this Agreement or shall refuse to make any
such payment, Executive, at his option, may accelerate and
declare due, payable and performable all payments,
provisions or entitlement under this Agreement, provided,
however, that such acceleration shall be effected only by
written notice thereof given by Executive to Citizens
specifying in detail the basis for acceleration, and shall
be effective as of the date which is twenty (20) business
day after the receipt of such notice by Citizens; provided
further, however, that if within twenty (20) business days
following the date of receipt of such notice Citizens shall
make the payment in question or shall make provision
therefore, the acceleration shall not be effective.
Notwithstanding the foregoing, in the event of a dispute
between Executive and Citizen relating to Executive's right
to accelerate payment or Citizens' failure to make payment
the_provisions of this Section 18(a) shall be subject to the
provisions of Sections 15(a) and 17.
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(b) 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 aforesaid
invalidity, the parties shall both endeavor and negotiate in
good faith, to agree upon substitute valid provisions to
effectuate the intent of the provisions held to be invalid
in whole or in part.
-23-
(c) 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.
(d) Governing Law.
-------------
Citizens 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.
(e) Counterparts.
------------
This Agreement may be executed in two or more
counterparts, and such counterparts when taken together
shall constitute one executed instrument.
(f) Notice.
------
All notices and other communications hereunder shall be
in writing and shall be deemed given (i) when delivered
personally, (ii) when transmitted by email or facsimile
transmission to the e-mail address or 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 or UPS, on the day
delivered, addressed to the parties at the following
respective addresses (or at such other address or facsimile
for a party as shall be specified by like notice, provided
that notices of changes of address or facsimile shall be
effective only upon receipt thereof);
-24-
(i) If to Citizens at
Three High Ridge Park
Stamford, CT 06905
Attention: General Counsel
---------
Facsimile #: (203) 614-4651
With A Copy to:
--------------
David Kroenlein, Esquire
WINSTON & STRAWN, LLP
200 Park Avenue
New York, NY 10166
Facsimile #: (212) 294-4700
(ii) If to Executive at:
16 Gorge Lane
Pound Ridge, NY 10576
Facsimile #: (914) 764-0838
-25-
(g) No provision of this Agreement may be modified or waived
unless such modification is agreed to in writing and signed
by the Executive and by a duly authorized officer of
Citizens, or such waiver is signed by the waiving party. No
waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition
or provisions of this Agreement to be performed by such
other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. Failure by the Executive or
Citizens to insist upon strict compliance with any provision
of this Agreement or to assert any right the Executive or
Citizens may have hereunder, including without limitation,
the right of the Executive to terminate employment for Good
Reason, shall not be deemed to be a waiver of such provision
or right or any other provision of or right provided for in
this Agreement. The rights of, and benefits payable to, the
Executive, his estate or his beneficiaries pursuant to this
Agreement or in addition to any rights of, or benefits
payable to, the Executive, his estate or his beneficiaries
under any other employee benefit plan or compensation
program of Citizens. No agreement or representations, oral
or otherwise, express or implied, with regard to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement. The word "including"
shall be deemed to be immediately succeeded by the words
"but not limited to".
-26-
IN WITNESS WHEREOF, Citizens has caused this Agreement to be executed by a duly
authorized officer of Citizens and the Executive, both has executed this
Agreement, as of the day first above written below.
CITIZENS COMMUNICATIONS COMPANY
By: /s/ Leonard Tow
---------------------------------
Its Chairman and CEO
/s/ Michael G. Harris
- ---------------------------------------
Michael G. Harris
-27-
SCHEDULE A
RESTRICTED STOCK AGREEMENT
This Agreement is made June 1, 2004 as of March 11, 2004 ("Date of Award")
between Citizens Communications Company, a Delaware corporation (the "Company")
and Michael G. Harris (the "Grantee"). In consideration of the agreements set
forth below, the Company and the Grantee agree as follows:
1. Grant: A restricted stock award ("Award") of 15,000 shares ("Award
Shares") of the Company's common stock ("Common Stock"), is hereby
granted by the Company to the Grantee subject to the following terms
and conditions and to the provisions of the 2000 Equity Incentive Plan
(the "Plan"), the terms of which are incorporated by reference herein.
2. Transfer Restrictions: None of the Award Shares shall be sold,
assigned, pledged or otherwise transferred, voluntarily or
involuntarily by the Grantee.
3. Release of Restrictions:
(a) The restrictions set forth in Section 2 above shall lapse on
one-third (1/3) of the Award Shares on May 31, 2005, one-third
(1/3) of the Award Shares on May 31, 2006, and on the remaining
one-third (1/3) on May 31, 2007.
(b) The restrictions set forth in Section 2 above with respect to the
Award Shares, to the extent they have not lapsed in accordance
with subsection (a) of this Section 3, shall lapse on the first
to occur of the following:
(A) Termination of Grantee's employment pursuant to Grantee's
employment agreement with the Company dated June 1, 2004
(the "Employment Agreement")
(i) by reason of Grantee's death,
(ii) by reason of Grantee's Permanent Incapacity
(iii) by the Company for other than Good Cause
(iv) by Grantee for Good Reason
(B) By reason of Change in Control
All of said terms which are initial capitalized are defined in the
Employment Agreement.
4. Forfeiture: The Award Shares, with respect to which the restrictions
have not been previously lapsed pursuant to Section 3, shall be
forfeited to the Company upon the termination of Grantee's employment
with the Company for Good Cause by the Company or for other than Good
Reason by Grantee.
5. Adjustment of Shares: Notwithstanding anything contained herein to the
contrary, in the event of any change in the outstanding Common Stock
resulting from a reorganization, merger, consolidation, split-up,
spin-off, recapitalization, share split, reverse share split, share
distribution, combination of shares, exchange of shares, or the
payment of a share dividend (any such event being referred to herein
as a "Corporate Event"), the Award Shares shall be treated in the same
manner in any such transaction as other Common Stock. Any Common Stock
or other securities received by the Grantee with respect to the Award
Shares as a result of any Corporate Event shall be subject to the
restrictions and conditions set forth herein. Any cash proceeds
received with respect to the Award Shares as a result of any Corporate
Event shall be accrued as a contingent cash obligation and shall be
payable to the Grantee only upon the lapse of the restrictions herein
in accordance with Section 3.
6. Rights of Stockholder: The Grantee shall be entitled to all of the
rights of a stockholder with respect to the Award Shares including the
right to vote such shares and to receive dividends and other
distributions payable with respect to such shares shall be the same
restrictions as the underlying shares. Said restrictions shall lapse
at the same time as restrictions lapse on the underlying shares.
7. Escrow of Share Certificates: Certificates for the Award Shares shall
be issued in the Grantee's name and shall be held by the Company's
transfer agent until all restrictions lapse or such shares are
forfeited as provided herein. A certificate or certificates
representing the Award Shares as to which restrictions have lapsed
shall be delivered upon the Grantee's request upon such lapse.
8. Government Regulations: Notwithstanding anything contained herein to
the contrary, the Company's obligations to issue or deliver
certificates evidencing the Award Shares shall be subject to all
applicable laws, rules and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be
required.
9. Withholding Taxes: The Company shall have the right to require the
Grantee to remit to the Company, or to withhold from other amounts
payable to the Grantee, as compensation or otherwise, an amount
sufficient to satisfy all federal, state and local withholding tax
requirements. The Company may offer Grantee the right to have
withholding requirements satisfied by the Company's withholding of
shares upon the timely written election of Grantee to utilize shares
for withholding tax purposes.
-2-
10. Employment: Nothing in the Agreement shall confer upon Grantee any
right to continue in the employ of the Company, nor shall it interfere
in any way with the right of the Company to terminate Grantee's
employment at any time.
11. Plan: Grantee acknowledges receipt of a copy of the Plan, agrees to be
bound by the terms and provisions of the Plan, and agrees to
acknowledge, upon request of the Company, receipt of any prospectus or
prospectus amendment provided to Grantee by the Company.
12. Security Laws: Grantee agrees to comply with all applicable securities
laws upon sales or disposition of shares acquired hereunder.
13. Notices: Notices to the Company shall be addressed to it at:
3 High Ridge Park
Stamford, Connecticut 06905
and to Grantee at:
16 Gorge Lane
Pound Ridge, NY 10576
Company or Grantee may from time to time designate in
writing different addresses for receipt of notice. Notice
shall be deemed given when properly addressed and sent first
class or express mail.
14. Governing Law: The terms of this Agreement shall be binding upon
Company, Grantee and their respective successors and permitted
assigns. This Agreement shall be performed under and determined in
accordance with internal laws of the State of Connecticut.
IN WITNESS WHEREOF, the Company has caused this Award to be granted on the
date first above written.
/s/ L. Russell Mitten /s/ Michael G. Harris
- ----------------------------------- -----------------------------
L. Russell Mitten Michael G. Harris
Citizens Communications Company
-3-
SCHEDULE B
A. "Change in Control" means
-------------------------
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 33% or more of either (i) the then outstanding shares of common stock of
Citizens (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding securities of Citizens entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
in Control: (A) any acquisition by Citizens, (B) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by Citizens or any
corporation controlled by Citizens, (C) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation involving Citizens, if,
immediately after such reorganization, merger or consolidation, each of the
conditions described in clauses (i), (ii) and (iii) of subsection (3) of this
Section shall be satisfied, or (D) any acquisition by the Executive or any group
of persons including the Executive; and provided further that, for purposes of
clause (A), if any Person (other than Citizens or any employee benefit plan (or
related trust) sponsored or maintained by Citizens or any corporation controlled
by Citizens) shall become the beneficial owner of 33% or more of the Outstanding
Company Common Stock or 33% or more of the Outstanding Company Voting Securities
by reason of an acquisition by Citizens and such Person shall, after such
acquisition by Citizens, become the beneficial owner of any additional shares of
the Outstanding Company Common Stock or any additional Outstanding Voting
Securities, such beneficial ownership shall constitute a Change in Control.
(2) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
such Board; provided, however, that any individual who becomes a director of
Citizens subsequent to the date hereof whose election, or nomination for
election by Citizens' stockholders, was approved by the vote of at least
three-quarters (3/4) of the directors then comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of Citizens in
which such person is named as a nominee for director, without objection to such
nomination) shall be deemed to have been a member of the Incumbent Board; and
provided further, that no individual who was initially elected as a director of
Citizens as a result of an actual or threatened election contest, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall be deemed to have been a member
of the Incumbent Board.
(3) Consummation of a reorganization, merger or consolidation unless, in
any such case, immediately after such reorganization, merger or consolidation,
(i) more than 50% of the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation and more
than 50% of the combined voting power of the then outstanding securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals or entities who were the beneficial owners, respectively of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior or such reorganization, merger or consolidation and in
substantially the same proportions relative to each other as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than Citizens, any employee benefit
plan (or related trust) sponsored or maintained by Citizens or the corporation
resulting from such reorganization, merger or consolidation ( or any corporation
controlled by Citizens), or any Person which beneficially owned, immediately
prior to such reorganization, merger or consolidation, directly or indirectly,
33% or more of the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or indirectly
33% or more of the then outstanding shares of common stock of such corporation
or 33% or more of the combined voting power of the then outstanding securities
of such corporation entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such reorganization, merger or
consolidation; or
(4) approval by the stockholders of Citizens of a plan of complete
liquidation or dissolution of Citizens, or consummation of the sale or other
disposition of all or substantially all of the assets of Citizens other than to
a corporation with respect to which, immediately after such sale or other
disposition, (A) more than 50% of the then outstanding shares of common stock
thereof and more than 50% of the combined voting power of the then outstanding
securities thereof entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common stock and the Outstanding Company Voting
Securities immediately prior to such sale or other disposition and in
substantially the same proportions relative to each other as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (other than Citizens, any employee benefit plan (or related trust)
sponsored or maintained by Citizens or such corporation (or any corporation
controlled by Citizens), or any Person which beneficially owned, immediately
prior to such sale or other disposition, directly or indirectly, 33% or more of
the Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 33%
or more of the then outstanding shares of Common stock thereof or 33% or more of
the combined voting power of the then outstanding securities thereof entitled to
vote generally in the election of directors and (C) at least a majority of the
members of the board of directors thereof were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition.
-2-
(5) a person other than Citizens, an employee benefit plan (or related
trust) sponsored or maintained by Citizens or any corporation controlled by
Citizens or the Executive or any group of persons including the Executive,
otherwise effectively controls the operation of Citizens, whether by control of
the Board, by contract or otherwise.
Notwithstanding anything contained in this Agreement to the contrary, if
the Executive's employment is terminated prior to a Change in Control and the
Executive reasonably demonstrates that such termination (i) was at the request
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control (a "Third Party"), and who in fact
effects a Change in Control, or (ii) otherwise arose in connection with or
anticipation of a Change in Control, then for all purposes of this Agreement the
date of a Change in Control shall mean the date immediately prior to the date of
such termination of the Executive's employment.
B. "Good Cause" means:
------------------
(i) Chronic alcoholism or chronic drug addiction materially affecting
Executive's performance, (ii) Executive's conviction of a felony involving moral
turpitude, which through lapse of time or otherwise is not subject to appeal,
(iii) willful malfeasance by the Executive consisting of his refusal without
proper cause to perform his duties (iv) a breach by Executive of the Agreement
to which this Schedule B is attached or (v) Executive's deliberate, willful or
gross misconduct with respect to Citizens.
C. "Permanent Incapacity" means:
----------------------------
the executive's absence from his duties with Citizens on a full-time basis
for at least 180 consecutive days as a result of Executive incapacity due to
mental or physical illness.
D. "Good Reason" means:
-------------------
Without the Executive's consent, the occurrence of any of the following
events:
(1) (i) the assignment to the Executive on a permanent basis of duties
materially inconsistent with the Executive's position, duties, responsibilities,
or status with Citizens in accordance with this Agreement, (ii) a material,
adverse and permanent change in the Executive's reporting responsibilities,
titles, or offices with Citizens that is not in accordance with this Agreement,
or (iii) any removal or involuntary termination of the Executive by Citizens
otherwise than as permitted by a breach by Executive of the Agreement to which
this Schedule B is attached (the "Agreement") provided, however, that
notwithstanding anything in this paragraph (1) to the contrary, clauses (i) and
(ii) shall not be applicable to any occurrence that is solely attributable to
the fact that Citizens is no longer a publicly traded entity;
-3-
(2) a reduction by Citizens in the Executive's rate of annual Base Salary,
as the same may be increased from time to time, or Citizens' failure to pay the
Executive within 120 days following the end of any fiscal year the bonus
referenced in Section 3(a) of the Agreement;
(3) any requirement of Citizens that the Executive be permanently based
other than in Fairfield County, Connecticut.
(4) the failure of Citizens to (i) continue in effect any employee benefit
plan or compensation plan in which the Executive is eligible to participates of
the Effective date, unless the Executive is permitted to participate in other
plans providing the Executive substantially comparable benefits, or the taking
of any action by Citizens that would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any such
plan, (ii) provide the Executive and the Executive's dependents with medical,
dental, and health care benefits in accordance with the plans, practices,
programs and policies of Citizens as set forth in the Agreement to which this
Schedule is annexed, (iii) provide the Executive with paid vacation in
accordance with the plans, policies, programs and practices of Citizens as in
effect for the Executive as of the Effective date.
-4-