exv10w2



 





Exhibit 10.2




CYPRESS COMMUNICATIONS HOLDING CO., INC.




Key Executive Officer Retention Plan










     1. Purpose. Cypress Communications Holding Co., Inc. and its principal operating subsidiary,
Cypress Communications, Inc., (collectively, the “Company”) considers it essential to the best
interests of its stockholders to foster the continuous employment of key management personnel. The
Board of Directors of the Company (the “Board”) recognizes, however, that, as is the case with many
publicly held corporations, the possibility of a Change in Control (as defined in Section 2 hereof)
exists and that such possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel to the detriment of
the Company and its stockholders. Therefore, the Board has determined that the Cypress
Communications, Inc. Executive Officer Retention Plan (the “Plan”) should be adopted to reinforce
and encourage the continued attention and dedication of the individuals from time to time listed on
Appendix A attached hereto (each, a “Covered Employee”; collectively, the “Covered Employees”), to
their assigned duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control. Nothing in this Plan shall be construed as
creating an express or implied contract of employment and, except as otherwise agreed in writing
between the Covered Employee and the Company, the Covered Employee shall not have any right to be
retained in the employ of the Company.



     2. Change in Control. For purposes of this Plan, a “Change in Control” shall mean the
consummation of a consolidation, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a “Corporate Transaction”); excluding, however, a
Corporate Transaction in which the stockholders of the Company immediately prior to the Corporate
Transaction, would, immediately after the Corporate Transaction, beneficially own (as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the
corporation issuing cash or securities in the Corporate Transaction (or of its ultimate parent
corporation, if any).



     3. Terminating Event. A “Terminating Event” shall mean the termination of employment of a
Covered Employee in connection with any of the events provided
in this Section 3 occurring within 12 months following a Change in Control:



          (a) termination by the Company of the employment of the Covered Employee with the Company for
any reason other than for Cause or the death or Disability of such Covered Employee.



 









 




As used herein, the term “Cause” shall mean (i) the willful and continued failure of the Covered
Employee (other than any such failure resulting from incapacity or Disability) to substantially
perform the Covered Employee’s normally required duties with the Company continuing for 30
days after notice by the Company to the Covered Employee of such failure; (ii) any act of fraud,
misappropriation, embezzlement or similar conduct against the Company, as finally determined
through arbitration or final judgment of a court of competent jurisdiction (which arbitration or
judgment, due to the passage of time or otherwise, is not subject to further appeal); or (iii)
conviction of the Covered Employee for a felony or any other crime involving moral turpitude (which
conviction, due to the passage of time or otherwise is not subject to further appeal). For purposes
of clauses (i) and (iii) of this Section 3(a), no act, or failure to act, on the Covered Employee’s
part shall be deemed “willful” unless done, or omitted to be done, by the Covered Employee without
reasonable belief that the Covered Employee’s act, or failure to act, was in the best interest of
the Company.



As used herein, the term “Disability” shall have the same meaning as provided in the long-term
disability plan or policy maintained or, if applicable, most recently maintained, by the Company
for the Covered Employee. If no long-term disability plan or policy was ever maintained on behalf
of the Covered Employee, Disability shall mean that condition described in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). In the
event of a dispute, the determination of Disability will be made by the Committee in good faith and
with the advice of a physician competent in the area to which such Disability relates.



          (b) termination by the Covered Employee of the Covered Employee’s employment with the Company
for Good Reason. “Good Reason” shall mean the occurrence of any of the following events:



               (i) a substantial adverse change in the nature or scope of the Covered Employee’s
responsibilities, authorities, title, powers, functions, or duties from the responsibilities,
authorities, powers, functions, or duties exercised by the Covered Employee immediately prior to
the Change in Control; or



               (ii) a reduction in the Covered Employee’s annual base salary as in effect on the date hereof
or as the same may be increased from time to time except for across-the-board salary reductions
similarly affecting all or substantially all management employees; or



               (iii) the relocation of the Company’s offices at which the Covered Employee is principally
employed immediately prior to the date of a Change in Control to a location more than 50 miles from
such offices, or the requirement by the Company for the Covered Employee to be based anywhere other
than the Company’s offices at such location, except for required travel on the Company’s business
to an extent
substantially consistent with the Covered Employee’s business travel obligations immediately prior
to the Change in Control; or



 









 





               (iv) the failure by the Company to pay to the Covered Employee any portion of his compensation
or to pay to the Covered Employee any portion of an installment of deferred compensation under any
deferred compensation program of the Company within 15 days of the date such compensation is due
without prior written consent of the Covered Employee; or



               (v) the failure by the Company to obtain an effective agreement from any successor to assume
and agree to perform this Agreement.



               A Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely
as a result of the Covered Employee being an employee of any direct or indirect successor to the
business or assets of the Company, rather than continuing as an employee of the Company following a
Change in Control. If the Covered Employee’s employment is terminated prior to the date on which a
Change in Control event occurs, and such termination was at the request of a third party who has
taken steps to effect a Change in Control event or was otherwise caused by the Change in Control
event, then for all purposes of this Agreement, a Change in Control event shall be deemed to have
occurred prior to such termination.



     4. Special Termination Benefits. In the event of a Terminating Event with respect to a Covered
Employee, the Company shall pay to the Covered Employee an amount equal to the amount indicated for
such Covered Employee on Appendix A attached hereto. Said amount shall be paid in one lump sum
payment no later than 31 days following the Date of Termination (as such term is defined in Section
6(b)); and



     5. Withholding. All payments made by the Company under this Plan shall be net of any tax or other
amounts required to be withheld by the Company under applicable law.



     6. Notice and Date of Termination; Disputes; Etc.



          (a) Notice of Termination. Within 12 months after a Change in Control, any purported
termination of a Covered Employee’s employment (other than by reason of death) shall be
communicated by written Notice of Termination from the Company to the Covered Employee or vice
versa in accordance with this Section 6. For purposes of this Plan, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this Plan relied upon and
the Date of Termination.



          (b) Date of Termination. “Date of Termination,” with respect to any purported termination of a
Covered Employee’s employment within 12 months after a Change in Control, shall mean the date
specified in the Notice of Termination. In the case of a termination by the Company other than a
termination for Cause (which may be effective immediately), the Date of Termination shall not be
less than 30 days after the Notice of Termination is given. In the case of a termination by a
Covered Employee, the Date of
Termination shall not be less than 15 days from the date such Notice of Termination is given.
Notwithstanding Section 3(a) of this Plan, in the event that a Covered Employee



 









 







gives a Notice of
Termination to the Company, the Company may unilaterally accelerate the Date of Termination and
such acceleration shall not result in a second Terminating Event for purposes of Section 3(a) of
this Plan.



          (c) No Mitigation. The Covered Employee is not required to seek other employment or to attempt
in any way to reduce any amounts payable to the Covered Employee by the Company
under this Plan. Further, the amount of any payment provided for in this Plan shall not be reduced
by any compensation earned by the Covered Employee as the result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be owed by the covered Employee to
the Company, or otherwise.



          (d) Mediation of Disputes. The parties shall endeavor in good faith to settle within 90 days
any controversy or claim arising out of or relating to this Plan or the breach thereof through
mediation with JAMS, Endispute or similar organizations. If the controversy or claim is not
resolved within 90 days, the parties shall be free to pursue other legal remedies in law or equity.



     7. Benefits and Burdens. This Plan shall inure to the benefit of and be binding upon the Company
and the Covered Employees, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of a Covered Employee’s death after a Terminating Event but prior
to the completion by the Company of all payments due him under this Plan, the Company shall
continue such payments to the Covered Employee’s beneficiary designated in writing to the Company
prior to his death (or to his estate, if the Covered Employee fails to make such designation).



     8. Enforceability. If any portion or provision of this Plan shall to any extent be declared illegal
or unenforceable by a court of competent jurisdiction, then the remainder of this Plan, or the
application of such portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of
this Plan shall be valid and enforceable to the fullest extent permitted by law.



     9. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed
by the waiving party. The failure of any party to require the performance of any term or obligation
of this Plan, or the waiver by any party of any breach of this Plan, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.



     10. Notices. Any notices, requests, demands, and other communications provided for by this Plan
shall be sufficient if in writing and delivered in person or sent by registered or certified mail,
postage prepaid, to a Covered Employee at the last address the Covered Employee has filed in
writing with the Company, or to the Company at its main office, attention of the Board of
Directors.



 









 





     11. Effect on Other Plans. Nothing in this Plan shall be construed to limit the rights of the
Covered Employees under the Company’s benefit plans, programs or policies.



     12. Amendment or Termination of Plan. The Company may amend or terminate this Plan, including
Appendix A attached hereto, at any time or from time to time; provided, however, that no such
amendment shall, without the consent of the Covered Employees, in any material adverse way affect
the rights of the Covered Employees, and no termination shall be made without the written consent
of the Covered Employees. This Plan is subject to the Company entering into an agreement, including
but not limited to, a merger agreement or tender offer on or before December 31, 2004, that would
contemplate a Corporate Transaction. In the event that
the Company enters into an agreement contemplating a Corporate Transaction as described herein, and
a Corporate Transaction is not consummated by June, 30, 2005, then this Plan is terminated.



     13. Governing Law. This Plan and all actions taken hereunder shall be governed by, and construed in
accordance with, the laws of the State of Delaware, applied without regard to conflict of law
principles.



     14. Obligations of Successors. In addition to any obligations imposed by law upon any successor to
the Company, the Company will use its best efforts to require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company to expressly assume and agree to perform this Plan in the same
manner and to the same extent that the Company would be required to perform if no such succession
had taken place.



     Adopted: As of August 16, 2004



 









 





APPENDIX A




Covered Employees and

Special Termination Benefits









	 	 	 	 	 	 	 
	 	1.	 	 	Covered Employee:

	 	Gregory P. McGraw, President & CEO
	 	 	 	 	Special Termination Benefits:
	 	 
	 	 	 	 	Section 4(a) Benefit: $250,000.00
	 	 
	 	 	 	 	 
	 	 
	 	2.	 	 	Covered Employee:

	 	Salvatore W. Collura, EVP & COO
	 	 	 	 	Special Termination Benefits:
	 	 
	 	 	 	 	Section 4(a) Benefit: $100,000.00
	 	 
	 	 	 	 	 
	 	 
	 	3.	 	 	Covered Employee:

	 	Neal L. Miller, EVP & CFO
	 	 	 	 	Special Termination Benefits:
	 	 
	 	 	 	 	Section 4(a) Benefit: $100,000.00