Exhibit 10.7
MANAGEMENT CONTINUITY AGREEMENT
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THIS AGREEMENT, dated February 13, 2001, is between J. Allen Layman
("Executive") and NTELOS Inc., a Virginia corporation (the "Company"), and
provides as follows.
RECITALS
The Company considers it essential to the best interests of its
shareholders to foster the continuing employment of its key management
personnel.
The Company recognizes that the possibility of a Change in Control exists
and that such possibility, and the uncertainty and questions that it may raise
among management may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.
Executive will continue to serve the Company in reliance upon the
undertakings of the Company contained herein.
The Company and the Executive have also entered into an employment
agreement (the "Employment Agreement") as of the date hereof pursuant to which
Executive will be employed by the Company upon the terms and subject to the
conditions set forth therein.
In consideration of the premises and the mutual covenants herein contained,
the Company and Executive agree as follows:
1. Term. The Term of this Agreement is the period beginning on February
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13, 2001 and ending on February 13, 2006.
2. Entitlement. Subject to Executive's compliance with paragraph 7,
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Executive will be entitled to receive the benefits described in this Agreement
if there is a Change in Control during the Term of this Agreement and either of
the following applies:
(a) Executive's employment is terminated without Cause prior to the
fifth anniversary of the Control Change Date (even if such termination
occurs after the Term of this Agreement);
(b) Executive resigns with Good Reason prior to the fifth anniversary
of the Control Change Date (even if such resignation occurs after the
Term of this Agreement);
For purposes of this Agreement, the date of a termination of Executive's
employment as described in subparagraphs (a) or (b) above is Executive's
"Termination Date."
3. Severance Pay. If Executive's Termination Date occurs within twenty-
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four months after the Control Change Date, Executive will receive a severance
benefit equal to the greater of (a) the amount Executive would receive under
such circumstances under the Employment Agreement, if the Employment Agreement
remains in effect immediately prior to Executive's Termination Date or (b) two
years' Compensation. Notwithstanding the preceding sentence, in lieu of the
severance pay described in the preceding sentence of this paragraph 3, Executive
shall receive a severance benefit equal to the severance benefit available to
employees of the Company (or its successor and any of its affiliates) who are
similarly situated to the Executive on the Executive's Termination Date if the
value of such benefit is greater than the value of the benefit described in this
paragraph.
Executive's severance benefit, less applicable withholding taxes, shall be paid
in equal monthly installments in accordance with the Company's regular payroll
policies and the period in which such amount is payable is referred to as
Executive's "Severance Period."
4. Benefit Reduction. The severance pay payable under paragraph 3 to
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Executive during any month shall not be reduced by the amount of any cash
compensation paid to Executive by another employer or business for services
rendered by Executive after Executive's Termination Date.
5. Welfare Benefits. If Executive satisfies the requirements of
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paragraph 2, Executive and Executive's dependents will be entitled to continued
participation in the "employee welfare benefit plans" (as defined in Section
3(1) of the Employee Retirement Income Security Act of 1974) in which Executive
participated on his Termination Date during the Severance Period. In lieu of
such continued coverage, Executive will be reimbursed, on a net after-tax basis,
for the cost of individual insurance coverage for Executive and Executive's
dependents under a policy or policies that provide benefits not less favorable
than the benefits provided under such employee welfare benefit plans. The
coverage provided under this paragraph shall be secondary to any coverage
provided to Executive and Executive's dependents by another employer of
Executive.
6. Other Benefits. Executive will receive all of the benefits that
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Executive is entitled to receive under the terms of the benefit plans, programs
and arrangements in which Executive currently participates, including, by way of
example and not of limitation, any pension, "401(k)" plan, "401(k)" restoration
plan, supplemental pension plan or retiree welfare benefit plan, regardless of
whether the requirements of paragraph 2 are satisfied.
7. Confidentiality and Non-Competition. Executive agrees to comply with
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the Confidential Information and Non-Compete; Non-Solicitation provisions of the
Employment Agreement and that if Executive breaches any such provision, the
Company shall, in addition to other available remedies, be entitled to
injunctive relief and shall not be required to provide any benefit to Executive
pursuant to this Agreement.
8. Excise Taxes. Executive agrees that the amounts payable and the
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benefits to be provided under this Agreement shall be reduced if such amounts or
benefits or any amount or benefit provided under any plan, program, arrangement
or agreement with the Company is subject to excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended, or any successor provision. In that
event, such payments or benefits shall be reduced to the maximum amount that may
be provided to or on behalf of Executive without liability for such excise tax.
Any reduction required by the preceding sentence shall first come from cash
payable under this Agreement, next from cash payable under other plans,
programs, arrangements or agreements and finally from noncash benefits.
9. Definitions. For purposes of this Agreement, the following
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definitions will apply:
a. Cause. The term "Cause" shall mean: (i) gross misconduct; (ii)
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willful and repeated failure to comply with the lawful directives of
the Board of Directors or any supervisory personnel; (iii) any
criminal act or act of dishonesty or willful misconduct that has a
material adverse impact on the property, operations, business or
reputation of the Company or any act of fraud, dishonesty or
misappropriation involving the Company; (iv) the material breach of
the terms of any confidentiality, non-competition, non-solicitation or
employment agreement the employee has with the Company; (v) acts of
malfeasance or negligence in a matter of material importance to the
Company; (vi) the material failure to perform the duties and
responsibilities of employee's position after written notice and a
reasonable opportunity to cure, and (vii) willful or grossly negligent
conduct or activities materially damaging to the property, operations,
business or reputation of the Company (it being understood that
conduct or activities pursuant to employee's exercise of good faith
business judgment shall not be in violation of this clause (vii).
b. Change in Control. A "Change in Control" shall be deemed to
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have occurred if:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions
as their ownership of stock of the Company), is or becomes the
owner or "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of Company securities
representing more than 30% of the combined voting power of the
then outstanding securities;
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Company's
board of directors (the "Board"), and any new director (other
than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in
clause (i), (iii) or (iv) of this Section) whose election by the
Board or nomination for election by the Company's shareholders
was approved by a vote of a majority of the directors then still
in office who either (l) were directors at the beginning of such
period or (2) were so elected or nominated with such approval,
cease for any reason to constitute at least a majority of the
Board;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other Company and such
merger or consolidation is consummated, other than (l) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation or (2) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 30% of the combined voting power of the
Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets and such liquidation or sale of assets is
consummated.
c. Compensation. "Compensation" means the sum of (i) Executive's
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annual salary as in effect on Executive's Termination Date and (ii)
Executive's target annual incentive payments for the year that
includes Executive's Termination Date.
d. Control Change Date. "Control Change Date" means the date on
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which a Change in Control occurs. If a Change in Control occurs on
account of a series of events, the "Control Change Date" shall be the
date on which the last of such events occurs.
e. Good Reason. The "Good Reason" means that (i) Executive's total
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compensation (the sum of base salary and target annual incentive
payment, based on objectives comparable to those applicable to
similarly situated Company executives) is reduced, (ii) Executive's
job duties and responsibilities are diminished, (iii) Executive is
required to relocate to a facility more than twenty-five miles from
Daleville, Virginia, (iv) Executive does not receive any previously
deferred compensation when the payment of such deferral is due, (v)
Executive is not provided benefits (e.g., health insurance) that are
comparable in all material respects to those provided to Executive on
the Control Change Date, (vi) Executive is directed by the Board of
Directors or an officer of the Company or an affiliate (or the
Company's successor or an affiliate thereof) to engage in conduct that
is unethical, illegal or contrary to the Company's (or its
successor's) good business practices or (vii) Executive is directed by
the Board of Directors or an officer of the Company or an affiliate
(or the Company's successor or an affiliate thereof) to refrain from
acting and the failure to act is unethical, illegal or contrary to the
Company's (or its successor's) good business practices; (viii)
material breach by the Company of its obligations under this Agreement
or (ix) the failure by the Company to increase (within twelve (12)
months of the Executive's last increase) the Executive's compensation
(within the salary range of his job classification) consistent with
his performance rating so that his annual compensation increase at
least equals on a percentage basis, subject to the limitations of the
salary range of his job classification, the average percentage
increase for all key employees with similar performance ratings
effected in the preceding twelve months. If any of the events occur
that would entitle the Executive to terminate his employment for Good
Reason hereunder and he does not so exercise his right to terminate
his employment, any such failure shall not operate to waive his right
to terminate his employment for that or any subsequent action or
actions, whether similar or dissimilar, that would constitute Good
Reason.
10. Governing Law. This Agreement will be governed by the laws of the
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Commonwealth of Virginia except to the extent to the extent that they would
require the application of the laws of another State.
11. Other Agreements. This Management Continuity Agreement is being
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entered into contemporaneously with an Employment Agreement of even date
herewith between Executive and the Company. The rights and obligations of the
parties under this Management Continuity Agreement are in addition to those
under the Employment Agreement. Without limiting the foregoing, it is
understood that the obligations of the Company under Sections 8 (to the extent
provided in such Employment Agreement) and 17 of such Employment Agreement will
continue after a Change in Control.
IN WITNESS WHEREOF, Executive has signed this Agreement and the Company has
caused this Agreement to be signed by its duly authorized officer.
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J. Allen Layman
NTELOS Inc.
By__________________________________
Title:______________________________