UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

August 27, 2019

Date of report (Date of earliest event reported)

Nuvera Communications, Inc.

(Exact name of registrant as specified in its charter)

 

Minnesota

0-3024

41-0440990

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

27 North Minnesota Street

New Ulm, Minnesota 56073

(Address of principal executive offices, including zip code)

 

(507) 354-4111

(Registrant's telephone number, including area code)

 

New Ulm Telecom, Inc.

(Former name or former address, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR     240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).  Emerging growth company £

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

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Item 5.02         Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Appointment of Glenn Zerbe as Company Chief Executive Officer

On August 27, 2017, Nuvera Communications, Inc. (the “Company” or “Nuvera”) announced that its Board of Directors had appointed Glenn Zerbe as the Company’s Chief Executive Officer, effective September 3, 2019.

Mr. Zerbe, aged 54, most recently served as Vice President of Sales for Frontier Communications Corporation until March 2019, where he held positions of increasing responsibility since joining Frontier in 2011. Prior to his employment with Frontier, Mr. Zerbe had more than 20 years of sales, marketing and management experience in the communications industry, with companies such as Spanlink, Cisco Systems, SBC, AT&T and IBM.

The key terms of Mr. Zerbe’s appointment as are follows.

1. Salary and Incentive Compensation. 

§    Base Salary.

Mr. Zerbe will be paid an annual salary of $255,000 annually, less all legally required and authorized deductions and withholdings, paid in accordance with Nuvera’s normal payroll policies and procedures.  This base salary will be reviewed annually.

§    Short-Term Incentive Compensation.

Mr. Zerbe will be eligible for an annual short-term incentive compensation of 35% of base salary at target performance, payable pursuant to the Nuvera Communications, Inc. Management Incentive Plan.  A portion of the short-term incentive compensation, if earned, will be payable in Nuvera stock. The specific performance criteria will be determined by the Compensation Committee and approved by the Board of Directors early in each calendar year, and Mr. Zerbe must be employed through the end of the respective calendar year to be paid.

§    Long-Term Incentive Compensation.

For 2019, Mr. Zerbe will be receive a long-term incentive compensation equal to 45% of his actual base salary earned in 2019, awarded in the form of restricted stock units (RSUs) equal in value to the percentage based on the stock price on the date of grant, which will vest if he is employed with Nuvera on December 31, 2022, without any performance criteria applied. These RSUs will be issued in accordance with the terms of the Nuvera Communications, Inc. 2017 Omnibus Stock Plan administered by the Compensation Committee and the terms of the award agreement.

Beginning in 2020, Mr. Zerbe will be eligible to receive annually a long-term incentive compensation of 45% of base salary, awarded as RSUs equal in value to the percentage based on the stock price on the date of grant, to be earned over a period of three years.  One third of the RSUs (15% of base salary) will be time-based and earned if Mr. Zerbe is employed at the end of the three-year period without any performance criteria applied.  Two thirds of the RSUs (30% of base salary) will be based upon achievement at target of performance criteria to be established by the Compensation Committee at the beginning of the performance period and earned if Mr. Zerbe is employed with Nuvera at the end of the three-year period and the performance criteria have been met. The threshold performance-based award will be 50% of target and the maximum 150% of target RSUs.

 

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2. Change in Control.

If, within twelve months of a Change in Control, Mr. Zerbe’s employment is terminated by Nuvera without cause, other than due to disability or death, or if he resigns for good reason, Nuvera will pay him a lump sum award equal to twenty-four months of base salary, subject to a standard signed release of claims. Definitions of Cause, Good Reason and Change in Control are contained in the Change in Control Agreement, a copy of which is attached as Exhibit 10.2 to this Form 8-K.

3. Other Benefits

Mr. Zerbe will be entitled to participate in Nuvera’s standard employee benefit plans, subject to the eligibility terms of these plans.

4. Relocation Bonus

Mr. Zerbe is expected to purchase a home in and relocate his residence to New Ulm, Minnesota no later than March 31, 2020. Nuvera will pay Mr. Zerbe a cash bonus of $45,000 to aid in the relocation, with $22,500 payable upon his first day of employment and the remainder of $22,500 upon the date he purchases a home and move his family into the home. If he does not purchase a home and move in by March 31, 2020, or his employment ends before that date, he will forfeit the Relocation Bonus, and must immediately repay the initial bonus immediately, which Nuvera may withhold out of any other payments due to him.

5. Additional Terms; Noncompetition and Nonsolicitation; Confidentiality and Assignment of Inventions.

As a condition of his employment, Mr. Zerbe will be required to enter into a noncompetition and nonsolicitation of customers, vendors and employees during employment and for a period of 12 months following termination of his employment for any reason.  He will also be required to enter into a Confidentiality and Assignment of Inventions agreement in the form currently used by Nuvera for its employees.

Bill Otis Transition and Retirement Agreement

On August 27, 2019, the Company also entered into a Transitional and Retirement Agreement (“Transitional Agreement”) with its current CEO Bill Otis. Under the Transitional Agreement, on the first day of Mr. Zerbe’s employment, Mr. Otis will resign as CEO and all other positions within the Company, other than as a Director.  As discussed in more detail below, Mr. Otis will remain an employee with the title of Special Advisor to the Board and entitled to all employee benefits until his retirement on December 31, 2019.  Mr. Otis’s employment agreement will continue to govern until December 31, 2019 except for:

§    His change in position from CEO and retirement on December 31, 2019 will not trigger severance under his employment agreement;

§    His transition pay of $310,000 annualized will replace his Base Salary; and

§    The provisions on Confidentiality and Indemnification will continue until age 65 and his Noncompete will extend until 12 months after he attains age 65.

Upon Mr. Otis’s actual retirement on December 31, 2019:

§    Mr. Otis will be paid his accrued PTO up to 10 weeks and 50% of accrued sick leave per Nuvera policy;

§    All his 2018 and 2019 time-vested RSUs will vest 100%;

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§    All his outstanding 2018 and 2019 performance based RSUs will vest pro-rata based on target performance;

§    His 2017 RSUs and 2019 Management Bonus will be paid pursuant to their terms; and

§    Mr. Otis will retain his computer and laptop and may purchase his auto at book value.

For the period after his retirement until Mr. Otis he reaches age 65:

§    His transition pay of $310,000 annualized will continue;

§    Nuvera will continue to pay its portion of health insurance premiums until age 65 either pre-tax under COBRA continuation for the first 18 months or as a taxable benefit after COBRA ends.

§    Upon a Change in Control, all remaining payments will accelerate and be paid in a lump sum; and

§    Payments cease if Mr. Otis violates the Noncompete or Confidentiality or upon his death.

In addition, under the Transitional Agreement, Mr. Otis agreed he will not engage with others to attempt to replace the Board or acquire additional stock in Nuvera, other than to privately advocate to serve as a director after his term expires at age 65.

Stay Bonus Agreements for Chief Operating Officer Barbara Bornhoft and Chief Financial Officer Curtis Kawlewski

On August 27, 2019, the Company also entered into Stay Bonus Agreements with its current Chief Operating Officer Barbara Bornhoft and its current Chief Financial Officer Curtis Kawlewski.  Under their respective Stay Bonus Agreements, each Executive will receive lump sum payment of $100,000 if the Executive remains employed with Nuvera on the first anniversary of Mr. Zerbe commencement date.

Item 9.01         Financial Statements and Exhibits

(d) Exhibits

Exhibit Number

Exhibit Name

10.1

August 27, 2019 Nuvera Communications, Inc.  

Offer letter to Glenn Zerbe.

10.2

Nuvera Communications, Inc.  Change in Control

Agreement with Glenn Zerbe

10.3

Transitional Retirement Agreement dated August 27, 2019 between Nuvera Communications, Inc. and Bill Otis

10.4

Stay Bonus Agreement dated August 27, 2019 between

Nuvera Communications, Inc. and Barbara Bornhoft

10.5

Stay Bonus Agreement dated August 27, 2019 between

Nuvera Communications, Inc. and  Curtis Kawlewski 

99.1

August 27, 2019 Press Release

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Nuvera Communications, Inc.

Date:  August 27, 2019

By: 

/s/Bill D. Otis  

        Bill D. Otis

President and Chief Executive Officer

 

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EXHIBIT 10.1

NUVERA COMMUNICATIONS, INC.

Mr. Glenn Zerbe

5220 Larada Lane

Edina, Minnesota 55436

 

Dear Glenn:

            On behalf of the Board of Directors of Nuvera Communications, Inc. (the “Company”), I am pleased that you have accepted our offer to join the Company as its next President and Chief Executive Officer beginning on or about September 3, 2019.  This letter agreement (“Agreement”) and the other documents referred to herein will constitute the terms of your employment and your compensation and benefits with the Company.

 

1.          Position and Duties.  You will exercise all the duties and responsibilities and have all requisite authority of your position for and on behalf of the Company and its Affiliates (defined below).  You will report to the Company’s Board of Directors (the “Board”) and will perform such additional duties and responsibilities for the Company and its Affiliates as the Board shall assign to you from time to time consistent with your position.  You agree to serve the Company faithfully and to the best of your ability and shall devote your full working time, attention and efforts to the business of the Company during your employment with the Company.  You agree to follow and comply with applicable policies and procedures adopted by the Board and the Company from time to time.  For purposes of this Agreement, “Affiliate” means a partnership, a corporation, a limited liability company, a joint venture, or other unincorporated organization, that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company.

2.          No Conflict. You hereby represent and confirm that you are under no contractual or legal commitments that would prevent you from fulfilling your duties and responsibilities as set forth above. While employed with the Company, you agree not to engage in other employment or other material business activity, except as approved in writing by the Board.  You may participate in civic, religious and charitable activities and personal investment activities to a reasonable extent, so long as such activities do not interfere with the performance of your duties and responsibilities hereunder or, unless approved by the Board, conflict with the business of the Company.

3.          Compensation and Benefits. While employed with the Company, you will be entitled to the compensation and benefits set forth on Schedule A, attached hereto. You may receive other benefits commensurate with your position as may be approved from time to time by the Compensation Committee of the Board. 

4.          Expenses.  While you are employed with the Company, the Company shall reimburse you for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by you in connection with the business of the Company, subject to the Company’s normal policies and procedures for expense verification and documentation.

5.          Change in Control.  While employed with the Company, you will be entitled to severance if your employment is terminated following a Change in Control of the Company on the terms and conditions set forth in the Change in Control Agreement as presented to you, which you and the Company will execute simultaneous with the execution of this Agreement.

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6.         Confidentiality and Noncompetition Agreement.  As a condition of your employment, on or prior to your first day of employment, you will execute and be bound by the restrictive covenants and other terms and conditions set forth on the Confidentiality and Noncompetition Agreement as presented to you.

7.         At-will Employment. You and the Company acknowledge that your employment with the Company and its Affiliates is at will and may be terminated by you or the Company at any time and for any reason, with or without previous notice. Upon your termination of employment with the Company for any reason you shall automatically resign from all titles, positions and appointments you then hold with the Company and any Affiliate and you agree to take all actions necessary to effectuate such resignations.  You shall promptly deliver to the Company any and all Company records and any and all Company property in your possession or under your control, including documents, notes, reports, printouts, computer storage devices, source codes, data, tables or calculations and all copies thereof, that in whole or in part contain any Confidential Information, trade secrets, or proprietary or other secret information of the Company or any of its Affiliates, and keys, vehicles, access cards, access codes, passwords, credit cards, personal computers, telephones and other electronic equipment belonging to the Company or any of its Affiliates.  You may retain information and materials related to your personal compensation and benefits with the Company.

8.        Amendments.  No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by you and a representative of the Company who is authorized by the Board of Directors.

9.        Assignment.   Neither your or the Company may, without the written consent of the other, assign or delegate any of its rights or obligations under this Agreement, except that the Company may, without your consent, assign or delegate any of its rights or obligations under this Agreement to (a) any corporation or other business entity with which the Company may merge or consolidate, (b) any corporation or other business entity to which the Company may sell or transfer all or substantially all of its assets or capital stock.  After any such assignment, such assignee shall thereafter be deemed to be the “Company” for purposes of all terms and conditions of this Agreement.

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NUVERA COMMUNICATIONS, INC.

Date: August 27, 2019

By:     

/s/Perry Meyer

Its:  

Chairman

AGREED TO:

Date: August 27, 2019

/s/Glenn Zerbe

GLENN ZERBE

 

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Schedule A

 

Compensation and Benefits

 

1. Salary and Incentive Compensation.  

·             Base Salary. 

§    $255,000 annually, less all legally required and authorized deductions and withholdings, paid in accordance with Nuvera’s normal payroll policies and procedures.  Your base salary will be reviewed annually.

·             Short-Term Incentive Compensation.

§    You will be eligible for an annual short-term incentive compensation of 35% of base salary at target performance, payable per the Management Incentive Plan, a portion of which will be in Nuvera stock.

§    The performance criteria will be determined by the Compensation Committee and approved by the Board of Directors early in the calendar year, and you must be employed through the end of the calendar year.

·             Long-Term Incentive Compensation.

§     For 2019, you will be receive a long-term incentive compensation equal to 45% of your actual base salary earned in 2019, awarded in the form of restricted stock units (RSUs) equal in value to the percentage based on the stock price on the date of grant, which will vest if you are employed with Nuvera on December 31, 2022, without any performance criteria applied. The RSUs will be issued in accordance with the terms of the 2017 Omnibus Stock Plan (Stock Plan) administered by the Compensation Committee and the terms of the award agreement.

§     Beginning in 2020, you will be eligible to receive annually a long-term incentive compensation of 45% of base salary, awarded as RSUs equal in value to the percentage based on the stock price on the date of grant, to be earned over a period of three years. 

§     One third of the RSUs (15% of base salary) will be time-based and earned if you are employed at the end of the three-year period without any performance criteria applied.

§     Two thirds of the RSUs (30% of base salary) will be based upon achievement at target of performance criteria to be established by the Compensation Committee at the beginning of the performance period and earned if you are employed with Nuvera at the end of the three-year period and the performance criteria have been met. The threshold performance-based award will be 50% of target and the maximum 150% of target RSUs.

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2. Other Benefits

·            Employee Benefits. You will be entitled to participate in Nuvera’s standard employee benefit plans, subject to these plans’ eligibility terms.

3. Relocation Bonus

·            Relocation. You will be expected to purchase a home in and relocate your residence to New Ulm, Minnesota no later than March 31, 2020.

·            Bonus. Nuvera will pay you a cash bonus of $45,000 to aid you in the relocation, with $22,500 payable upon your first day of employment and the remainder of $22,500 upon the date you purchase a home and move your family into the home. If you do not purchase a home and move in by March 31, 2020, or your employment ends before that date, you will forfeit the Relocation Bonus, and must immediately repay the initial bonus, which Nuvera may withhold out of any other payments due you. 

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EXHIBIT 10.2

 

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) is made and entered as of August 27, 2019 (the “Effective Date”) by and among Nuvera Communications, Inc. (the “Company”), a Minnesota corporation and Glenn Zerbe (“you”).

RECITALS

WHEREAS, the Board (as defined below) has determined that appropriate steps should be taken to minimize the risk that you will depart prior to a Change in Control (as defined below), thereby leaving the Company without your services during such a critical period, and

WHEREAS, the Board desires to reinforce and encourage your continued attention and dedication to your assigned duties without distraction in circumstances arising from the possibility of a Change in Control; and

WHEREAS, the Board believes it important, should the Company or their shareholders receive a proposal for transfer of control, that you be able to continue your management responsibilities without being influenced by the uncertainties of your own personal situation.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, you and the Company hereby agree as follows:

1.                  Definitions.  The following terms will have the meaning set forth below unless the context clearly requires otherwise.  Terms defined elsewhere in this Agreement will have the same meaning throughout this Agreement.

(a)                “Accrued Obligations” means:

(i)               Your earned base salary through the Date of Termination, to the extent not theretofore paid;

(ii)              Your business expenses that are reimbursable pursuant to the Company policies and not previously reimbursed;

(iii)             Your annual bonus for the previous fiscal year, if such bonus has been determined but not paid as of the Date of Termination; and

(iv)             Any accrued vacation, sick leave or personal leave up to the limits under Company policy to the extent not theretofore paid.

(b)               “Base Salary” means your annualized base salary from the Company and its affiliates as in effect at the time of the consummation of the Change in Control.

(c)                “Board” means the board of directors of the Company, duly qualified and acting at the time in question.  On and after the date of a Change in Control, any duty of the Board in connection with this Agreement shall be exercised by the board of the Successor that assumes this Agreement in connection with the acquisition of the Company.  The duties of the Board shall be nondelegable and any attempt by the Board to delegate any such duty is ineffective.

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(d)               “Cause” means:

(i)               your conviction (including a plea of nolo contendere) of an act or failure to act constituting a felony or crime of moral turpitude under federal or state law; or

(ii)              your willful misconduct with regard to the Company having a material adverse effect on the business, financial condition or reputation of the Company; or

(iii)             your willful failure to perform substantially your duties for the Company. 

(e)                “Change in Control” means any of the following:

(i)               the sale, lease, exchange or other transfer, directly or indirectly, of all or substantially all of the assets of the Company, in one transaction or in a series of related transactions, to any Person;

(ii)              any Person is or becomes the beneficial owner directly or indirectly, of more than 50 percent of the combined voting power of the Company’s outstanding securities; or

(iii)             a merger or consolidation to which the Company is a party if the shareholders of the Company, immediately prior to the effective date of such merger or consolidation have, solely on account of ownership of securities of the Company, at such time, beneficial ownership immediately following the effective date of such merger or consolidation representing less than 50% of the combined voting power of the surviving corporation’s then outstanding securities; or

(iv)             a change in the composition of the Board such that the individuals who, as of the Effective Date, constitute the Board cease for any reason to constitute a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election, by the Company’s stockholders was approved by a vote of a least a majority of those individuals who are members of the Board and who were also members of the Board as of the Effective Date.

(f)                “Date of Termination” means:

(i)                if your employment is to be terminated by you for Good Reason, the date specified in the Notice of Termination, which in no event may be a date more than 15 days after the date on which Notice of Termination is given unless the Board agrees in writing to a later date;

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(ii)              if your employment is to be terminated by the Company for Cause, the date specified in the Notice of Termination; or

(iii)             if your employment is to be terminated by the Company for any reason other than Cause or your death, the date specified in the Notice of Termination, which in no event may be a date earlier than 15 days after the date on which a Notice of Termination is given, unless you expressly agree in writing to an earlier date.

The Company and you will take all steps necessary (including with regard to any post-termination services by you) to ensure that any termination described in this Section 1(h) shall constitute a “separation from service” within the meaning in Treas. Reg. §1.409A-1(h) and, notwithstanding anything herein to the contrary, the date on which such separation from service occurs shall be the Date of Termination.

(g)               “Disability” means mean any physical or mental condition which would qualify you for a disability benefit under the long-term disability plan of the Company.

(h)               “Good Reason” means the occurrence of any of the following events without your written consent:

(i)               a material reduction in your annual base salary or other cash compensation or your ability to participate in or to receive benefits from any welfare benefit and/or compensation plans in effect at the Company immediately prior to the Change in Control without a counter-balancing increase in another element of your welfare benefits or total compensation;

(ii)              a material reduction in your title, duties and responsibilities with the Company as in effect immediately prior to the Change in Control or the assignment of duties what are materially inconsistent with the duties or which materially impair your ability to function in your position;

(iii)             the Company requiring you to be based more than 35 miles from where your office is located immediately prior to the Change in Control, except for required travel on the Company's business, and then only to the extent substantially consistent with your business travel obligations on behalf of the Company during the 90-day period ending on the date of the Change in Control (without regard to travel related to or in anticipation of the Change in Control); or

(iv)             the failure by the Company to obtain, as specified in Section 5 hereof, an assumption of the obligations of the Company to perform this Agreement by any Successor to the Company.

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You may not terminate employment for Good Reason unless you have provided written notice to the Board of the existence of the event constituting Good Reason within 90 days of the initial existence of the event, the Company has not remedied the condition within 30 days after such notice is received, and you terminate your employment within 60 days after the end of the period of cure, if any.

 

Your Disability following the occurrence of an event described above in this Section 1(h) shall not affect your ability to terminate employment for Good Reason and your death following delivery of a Notice of Termination for Good Reason shall not affect your estate’s entitlement to payments and benefits provided hereunder upon a termination of employment for Good Reason. Notwithstanding the foregoing, none of the foregoing events shall be considered "Good Reason" if it occurs in connection with your death or disability.

 

(i)                “Notice of Termination” means a written notice given on or after the date of a Change in Control that indicates the specific termination provision in this Agreement pursuant to which the notice is given.

(j)                “Person” means any individual, corporation, partnership, group, association, other than the Company, any affiliate of the Company or any benefit plan(s) sponsored by the Company.

(k)               “Successor” means any Person that succeeds to, or has the practical ability to control (either immediately or solely with the passage of time), the Company’s business directly or indirectly, as the result of a Change in Control of the Company or otherwise.

2.                  Term of Agreement.  The term of this Agreement shall be the period (“Term”) beginning on the Effective Date hereof and terminating on December 31, 2022 unless extended as provided herein. The Term of this Agreement shall extend for an additional two year period (terminating on December 31, 2024) if between the 180th and 90th day before the end of the Term, the Board of the Company affirmatively approves such extension of the Term of this Agreement.  Notwithstanding the foregoing, in the event of a Change in Control during the Term, the Term of this Agreement shall automatically be extended until the later of: (i) the last day of the twelfth month after the effective date of the Change in Control, or (ii) the date on which the Company obligations to you arising under or in connection with this Agreement have been satisfied in full.

3.                  Eligibility for Severance.  You will become entitled to the benefits described in Section 4 if and only if: 

(a)                (i) the Company terminates your employment for any reason, other than your death, Disability or Cause; or (ii) you terminate your employment with the Company for Good Reason;

(b)               the Date of Termination occurs within the period beginning on: (i) the date the Company enters into a definitive agreement that will, if consummated, result in a Change in Control, if the termination is by the Company or (ii) on the date of the Change in Control, if the termination is by you for Good Reason, and ending on the last day of the twelfth month after the Change in Control; and

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(c)                you sign a release of claims in favor of the Company, in a form prepared by the Company, and you do not revoke or rescind your release of claims within the time period specified therein.  The Company shall provide the form of release to you on or before the 5th day following your Date of Termination.

4.                  Severance Benefit. 

(a)                Subject to the conditions set forth in Section 3 and except as provided in Section 4(b), the Company will, within 60 days of your Date of Termination, make a lump-sum cash payment to you in an amount equal to two times your Base Salary. The payment under this Section 4 shall supersede and be in lieu of any rights you may have under any other policy or program of the Company providing for severance during the Term upon or after a Change in Control.

(b)               In the event the amount to be paid under Section 4(a), together with all other payments and the value of any benefit received or to be received by you would result in all or a portion of such amount being subject to excise tax under Code §  4999 and regulations promulgated thereunder (the “Excise Tax”),  then the amount the Company shall pay you under this Section shall be such lesser amount as determined in accordance with this Section 4(b) that would result in no portion of any payment being subject to the Excise Tax. All determinations required to be made under this Section 4(b) shall be made by the Company’s outside auditor immediately prior to the Change in Control (the "Accounting Firm").  The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and you.  Notice must be given to the Accounting Firm within 15 business days after the Change in Control and the Accounting Firm's determination must be made within 30 days of such notice, which shall be final and binding on you and the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.

5.                  Other Obligations. Within 5 days of your Date of Termination, the Company will pay you your Accrued Obligations.

6.                  Successors.  The Company will seek to have any Successor, by agreement in form and substance satisfactory to you, assent to the fulfillment by the Company of the Company’s obligations under this Agreement.  Failure of the Company to obtain such assent at least three business days prior to the time a Person becomes a Successor (or where the Company does not have at least three business days’ advance notice that a Person may become a Successor, within three business days after having notice that such Person may become or has become a Successor) will constitute Good Reason for termination by you of your employment.  The date on which any such succession becomes effective will be deemed the Date of Termination, and Notice of Termination will be deemed to have been given on that date.  A Successor has no rights, authority or power with respect to this Agreement prior to a Change in Control. If the Successor to the Company fails to assume the obligations under this Agreement, then the Company shall be and remain liable for the obligations under this Agreement.

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7.                  Binding Agreement.  This Agreement inures to the benefit of, and is enforceable by, you, your personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you die while any amount would be still payable to you under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, will be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

8.                  No Mitigation.  You will not be required to mitigate the amount of any benefits the Company becomes obligated to provide to you in connection with this Agreement by seeking other employment or otherwise.  The benefits to be provided to you in connection with this Agreement may not be reduced, offset or subject to recovery by the Company by any benefits you may receive from other employment or otherwise.

9.                  No Setoff.  The Company has no right to setoff benefits owed to you under this Agreement against amounts owed or claimed to be owed by you to the Company under this Agreement or otherwise.

10.                Taxes and Withholding.  All benefits to be provided to you in connection with this Agreement will be subject to required withholding of federal, state and local income, excise and employment-related taxes.  You authorize the Company to withhold, report and transmit to each tax authority all income, employment and excise tax required to be withheld from any amounts payable under this Agreement.  You, and not the Company, will be solely responsible for any and all taxes, including but not limited to, excise taxes under Code §§ 280G and 409A, in excess of any required tax withholding under the preceding sentence.

11.                Notices.  For the purposes of this Agreement, notices and all other communications provided for in, or required under, this Agreement must be in writing and will be deemed to have been duly given when personally delivered, by overnight courier (with receipt confirmed), by facsimile transmission (with receipt confirmed by telephone or by automatic transmission report) or when mailed by United States registered or certified mail, return receipt requested, postage prepaid and addressed to each party’s respective address set forth below (provided that all notices to the Company must be directed to the attention of the Chair of the Board), or to such other address as either party may have furnished to the other in writing in accordance with these provisions, except that notice of change of address will be effective only upon receipt.

If to Nuvera Communications, Inc.:

                        Attention: Perry Meyer

27 North Minnesota Street

                        New Ulm, Minnesota 56073

If to you:

Mr. Glenn Zerbe

                        5220 Larada Lane

                        Edina, Minnesota 55436

 

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12.                Disputes/Arbitration.  Any disputes arising under or in connection with this Agreement (including without limitation the making of this Agreement) will be settled by final and binding arbitration to be held in Minneapolis, Minnesota, in accordance with the rules and procedures of the American Arbitration Association.  If any dispute is settled by arbitration, the parties will within 10 business days select a mutually agreeable single arbitrator to resolve the dispute or if they fail or are unable to do so, each side will within the following 10 business days select a single arbitrator and the two so selected will select a third arbitrator within the following 10 business days.  The arbitration award or other resolution may be entered as a judgment at the request of the prevailing party by any court of competent jurisdiction in Minnesota or elsewhere.  The arbitrator may construe or interpret, but may not ignore or vary the terms of this Agreement, and shall be bound by controlling law.  Each party will bear its own costs and attorneys’ fees in connection with the arbitration; provided, however, that the Company will pay 100% of the costs and expenses of the arbitrator(s) and any administrative or other fees associated with such arbitration.

13.                Related Agreements.  Nothing in this Agreement prevents or limits your continuing or future participation in any Benefit Plan provided by the Company and for which you may qualify, and nothing in this Agreement limits or otherwise affects the rights you may have under any Benefit Plans or other agreements with the Company.  Amounts which are vested benefits or which you are otherwise entitled to receive under any Benefit Plan or other agreement with the Company at or subsequent to the Date of Termination will be payable in accordance with such Benefit Plan or other agreement.

14.                Effect of Code §409A. Notwithstanding anything to the contrary in this Agreement, to the maximum extent permitted by applicable law, the severance payments payable to you are intended and shall be interpreted to be exempt from the requirements of Code §409A in reliance upon Treas. Reg. §1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treas. Reg. §1.409A-1(b)(4) (relating to short-term deferrals).  However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Code §409A and any payment otherwise specified in this Agreement or elsewhere would in the reasonable good faith determination of  the Company or you subject such amount or benefit to additional tax pursuant to Code §409A(a)(1)(B), you and the Company shall in good faith amend this Agreement to avoid or mitigate such additional tax, preserving, to the greatest extent possible, the economic value of the amount due under this Agreement.

15.                No Employment or Service Contract.  Nothing in this Agreement is intended to provide you with any right to continue in the employ of the Company for any period of specific duration or interfere with or otherwise restrict in any way your rights or the rights of the Company, which rights are hereby expressly reserved by each, to terminate your employment at any time for any reason or no reason whatsoever, with or without Cause.

16.                General Provisions.

(a)               This Agreement may not be amended or modified except by a written agreement signed by you and an officer of the Company duly authorized by the Board.

(b)               In the event that any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement will remain in full force and effect to the fullest extent permitted by law. In the event any provision is held to be overbroad, that provision will be deemed amended to narrow its application to the extent necessary to render the provision enforceable according to applicable law.

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(c)               This Agreement will bind and benefit the parties hereto and their respective successors and assigns.

(d)               This Agreement has been made in and will be governed and construed in accordance with the laws of the State of Minnesota without giving effect to the principles of conflict of laws of any jurisdiction.

(e)               No failure on the part of either party to exercise, and no delay in exercising, any right or remedy under this Agreement will operate as a waiver; nor will any single or partial exercise of any right or remedy preclude any other or further exercise of any right or remedy.

(f)                This Agreement contains our entire understanding and agreement with respect to these matters and supersedes and replaces all other previous agreements, discussions, or understandings, whether written or oral, between or on the same subjects.

(g)               All terms of this Agreement and intended to be observed and performed after the termination of this Agreement will survive such termination and will continue in full force and effect thereafter.

(h)               This Agreement may be executed in multiple counterparts, each of which is an original and all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, Nuvera Communications, Inc., by their officer duly authorized by the Board, and Glenn Zerbe have hereunto executed this Agreement as of the date and date entered above.

 

 

NUVERA COMMUNICATIONS, INC.

Dated:  August 27, 2019

By:  

/s/Perry Meyer

Its:  

Chairman

Dated:  August 27, 2019

/s/Glenn Zerbe

GLENN ZERBE

 

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EXHIBIT 10.3

 

NUVERA COMMUNICATIONS, INC.

TRANSITION AND RETIREMENT AGREEMENT

THIS TRANSITION AND RETIREMENT AGREEMENT  (“Transition Agreement” or “Agreement”) is made and entered into by and between Nuvera Communications, Inc., a Minnesota corporation (“Company”) and Mr. Bill Otis (“you”) and will be effective as of August 27, 2019 (“Effective Date”).

RECITALS

WHEREAS, you are currently the President and Chief Executive Officer of the Company under the terms your Employment Agreement with the Company dated as of July 1, 2006, as amended as of March 21, 2012 (“Employment Agreement”) and currently serve as a duly elected Director of the Board of Directors of the Company; and

WHEREAS, the Company and you have announced your intention to retire from your positions as President and Chief Executive Officer of the Company and the Board has commenced the process of finding a successor Chief Executive Officer (“Successor CEO”); and

WHEREAS, you and the Company mutually desire to modify your Employment Agreement and to set forth in this Transition Agreement the terms and conditions of transition and retirement from the Company, including certain transition payments and retirement benefits to you and your continued availability for services to the Company after your retirement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agrees as follows:

1.                  Transition Date; Retirement Date.  You will continue to perform your current duties as President and Chief Executive Officer of the Company until the first day of employment of the Successor CEO (“Transition Date”) and on that date, you will cease to be President and Chief Executive Officer and will be deemed to have resigned from any executive officer, board membership and fiduciary position of any employee benefit plan with the Company or any of its subsidiaries; provided, however, that you will remain a Director of the Company.  From the Transition Date until December 31, 2019 (“Retirement Date”), you will continued to be employed by the Company in the position of Senior Advisor to the Board, with such duties and responsibilities as assigned by the Board.  As of your Retirement Date, your employment with the Company will end.

2.                  Employment Agreement.

a.                   Prior to the Retirement Date, except as modified in Section 2(b) of this Agreement, your employment with the Company will continue to be governed by the terms and conditions of your Employment Agreement and the other policies of the Company then in effect, including but not limited to your eligibility for annual and long term incentive bonuses, subject to pro-ration in accordance with Section 5(d) of this Agreement.

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b.                  Company and you mutually agree that, as of the Effective Date:

i.                    The Transition Payment set forth in Section 4 of this Agreement shall be substituted for the base salary under Section 3.A. of the Employment Agreement during the Term of the Employment Agreement and for severance benefit, if applicable, under Section 5.D. or E. of the Employment Agreement;

ii.                  Section 2 and 5 of your Employment Agreement are modified to provide that the Employment Agreement shall terminate on your Retirement Date, without further notice or consent of either party, and except as provided in this Agreement, the Employment Agreement is of no further force and effect.

iii.                With respect to the transition of your position, duties and responsibilities from Chief Executive Officer to Senior Advisor on the Transition Date and the termination of your employment on your Retirement Date, neither you nor the Company will assert that either event constitutes Good Reason or a termination without Cause under the Employment Agreement. 

c.                   The following Sections of the Employment Agreement are hereby incorporated in this Agreement and will continue in full force and effect under this Agreement without limitation: Section 6, Confidentiality and Section 9, Indemnification.

d.                  Section 7 of the Employment Agreement is hereby incorporated in this Agreement and modified to continue in full force and effect under this Agreement for the period beginning on the Retirement Date and ending on the date 12 months after the date you attain age 65.

e.                   After your Retirement Date, you will only be entitled to the continuation of the Transition Payment set forth in Section 4 and the benefits set forth in Section 5 of this Agreement, and will no longer have any rights with respect to the Employment Agreement, except as expressly provided for in this Agreement. If your actual employment is extended by mutual written consent after your Retirement Date, you will be an at-will employee and not under the terms of your Employment Agreement.

3.                  Post Retirement Services.  On your retirement Date, you will cease to be a regular, active employee of the Company.  After your Retirement Date and continuing for the period until you attain age 65, in consideration for the continuation of the Transition Payment set forth in Section 4 and other benefits set forth in Section 5, you agree to render additional services as requested jointly by the Successor CEO and the Board, after consultation with you and upon reasonable efforts to schedule such assistance so as not to materially disrupt your business and personal affairs, which services will not exceed an average of more than 20% of the hours you previously worked for the Company.

a.                   You will work with the Successor CEO, the Board, shareholders, employees (without asserting direct influence over senior management members), customers, an appropriate industry leaders and groups to facilitate an effective transition of the leadership of the Company to the Successor CEO. 

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b.                  At the Company’s request, and subject to your right to indemnification, you will cooperate and provide assistance to the Company in any pending or future claims or lawsuits involving the Company or any of its subsidiaries where you have knowledge of the underlying facts.

c.                   While you are performing these services, you are an independent contractor and are not an employee, partner, or co-venturer of, or in any other service relationship with the Company.  The manner in which you render these services will be within your sole control and discretion.  Without limiting the foregoing, you are not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner without the prior express written authorization from the Company.

d.                  The Company will pay or reimburse you in accordance with its policies for any reasonable, documented business expenses incurred in performing such services, provided the Successor CEO or the Board has agreed to such expenses in advance of any expense incurred.  Expenses that qualify for reimbursement will be paid by the Company in accordance with its current practices.

4.                  Transition Payment. In consideration for your obligations under your Employment Agreement prior to your Retirement Date and this Agreement, the Company will pay you at a rate of $310,000 annually (“Transition Payment”), in equal installments on each regular payroll date beginning with the Company’s first regular payroll after the Effective Date, and ending with the last regular payroll in which occurs the date you attain age 65, without regard to your actual Retirement Date, subject to earlier termination as set forth in Section 4(c). For the avoidance of doubt, such Transition Payment shall be made prior to and after, and shall not be conditioned upon, a “separation from service” (within the meaning of Treas. Reg. § 1.409A-1(h)) with the Company.

a.                   Notwithstanding anything to the contrary, during the period in which the Transition Payments under are made and during which you serve as a Director of the Company, you agree that you shall not be eligible for, and will not receive, any compensation otherwise due to non-executive Board members under any plan or program of the Company.

b.                  You shall not be required to mitigate the Transition Payment by seeking other employment or otherwise, nor shall the Transition Payment be reduced by any compensation you earn after your Retirement Date as the result of employment by another employer or otherwise except as provided in Sections 4(c) of this Agreement.

c.                   The Transition Payment shall cease, and the Company shall have no further obligations to you under this Section 4, upon the earliest of the following to occur:

i.                    Prior to your Retirement Date, your voluntary resignation or the termination of your employment by the Company for Cause as defined in the Employment Agreement;

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ii.                  You fail to comply with or are in breach of the conditions set forth in Sections 6 and 7 of this Agreement; and

iii.                Your death prior to your attainment of age 65.

d.                  In the event there is a “Change in Control” of the Company (as defined in the Employment Agreement, whether or not then in effect) prior to your attainment of age 65, then the Company will, within 30 days of the consummation of the Change in Control, pay you, in a single lump sum, less any required withholding for taxes, the aggregate of:

i.                    remaining installments of the Transition Payment; and

ii.                  the unpaid amounts set forth in Section 5(a), (b) and (d) of this Agreement.

5.                  Payments and Benefits upon Retirement. 

a.                   Accrued Amounts. Upon your Retirement Date, the Company will pay you your accrued but unpaid Personal Time Off (“PTO”) up to a maximum of 10 weeks and 50% of your accrued but unpaid sick leave as of your Retirement Date, under the Company’s policies for employee retirements.

b.                  Health Care Continuation Coverage.  Upon your Retirement Date, you will be eligible to elect continued group health care coverage, as otherwise required under the Consolidated Omnibus Budget Reconciliation Act of 1986, 29 U.S.C. §§ 1161-1168; 26 U.S.C. § 4980B(f), as amended, all applicable regulations (referred to collectively as “COBRA”) and applicable state continuation law under any group health care plan maintained by the Company for which you are enrolled on your Retirement Date.

i.                    Upon your election of COBRA and subject to the conditions set forth in Section 6, after your Retirement Date the Company will continue to pay its share of the health care premiums for your continuation coverage, and you will be obligated to pay your share of the premiums associated with such coverage as if you were still actively employed by the Company. Provided you continue to be eligible for such COBRA coverage, the Company’s obligation under this subsection (i) will continue for a period of 18 months after the Retirement Date but not later than the earlier of the month you attain age 65 or your death, and only to the extent such payment does not result in any additional tax or other penalty being imposed on the Company or you or violate any nondiscrimination requirements then applicable with respect to such payments.

ii.                  If, during the 18-month period, you become employed by a third party and eligible for any health care coverage provided by that third party, the Company will not, thereafter, be obligated to continue to pay the amount in subsection (i) above. You must notify the Company of any subsequent employment and provide information with respect to any third party health care coverage for which you are eligible.

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iii.                If, after the 18-month period and before you attain age 65, you are not employed by a third party and are not eligible for any health care coverage provided by that third party, the Company will, in addition to the Transition Payment, pay to you as taxable compensation each payroll period, an amount equal to the Company portion of the premium cost for similar health insurance coverage for active employees (including any increase or decrease) during the period up to and including the month you attain age 65.  Other than this continued subsidy, you will be responsible for obtaining and paying the full cost of any health care coverage after the end of the 18-month period.

c.                   Other Insurance. All other insurance and benefits provided by the Company, including but not limited to, Business Travel Accident Insurance, Accidental Death and Dismemberment Insurance, and Short-Term and Long-Term Disability Insurance will terminate at midnight on the Retirement Date.

d.                  Incentive Compensation.  On your Retirement Date, you will continue to be eligible for the following awards, which shall be paid to you within 30 days of your Retirement Date:

i.                    your 2017 time based and performance based, at target, restricted stock unit awards, if unpaid; and

ii.                  your 2019 annual cash bonus under the Management Incentive Plan, at target, if unpaid; and

iii.                100% of your 2018 and 2019 time-based restricted stock awards; and

iv.                a pro-rata portion of 2018 and 2019 performance-based restricted stock awards and any future incentive awards based upon the ratio of the number of days in the applicable performance period up to the later of: (x) December 31, 2019 or (y) your Retirement Date, over the total number of days in the applicable performance period and assuming target performance, waiving any condition for continuous employment.

Except as provided in this Section 5(d), all other unvested and unearned restricted stock units and annual bonus will immediately terminate and be forfeited without payment therefor. After your Retirement Date, you will no longer be eligible for any new annual or long term incentive compensation.

e.                   401(k) Retirement Savings Plan. You will be entitled to a distribution from your account in the Company’s qualified 401(k) Retirement Savings Plan and Trust.  You will receive information and forms for this purpose from Human Resources within two weeks of the Retirement Date.

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f.                   Other Benefits.  Except as provided in the Agreement, your rights following termination of employment with respect to any other benefits pursuant to the terms of any plan, program or arrangement not addressed in this Agreement shall be subject to the terms of such plan, program or arrangement.

g.                  Retention of Devices.  You may retain for your personal use, at no purchase cost to you, the iPad, cell phone and laptop currently in your possession, provided you make those available to the Company at your Retirement Date, to allow the Company to remove any Company confidential information and access to Company computer systems and data, as required of terminated employees generally.

h.                  Purchase of Auto.  You may elect to purchase your current Company-provided auto at the then current book value reported on the Company’s financial statements.

6.                  Conditions to Payments.

a.                   The payments and benefits provided in Sections 4 and 5(b) after your Retirement Date will only be payable to you if you have executed the General Release of Claims set forth in Exhibit A to this Agreement at the time of your Retirement Date and you have not rescinded the General Release of Claims during the recession period set forth in the Agreement.

b.                  Notwithstanding anything herein to the contrary, the Company will have the right to reduce amounts payable to you or to recover amounts previously paid by the Company to you, whether pursuant to this Agreement or otherwise, to the extent required under any federal or state law or regulation regarding clawbacks of payments to certain executive officers, or pursuant to any policy of the Company in effect on your Retirement Date.

c.                   In the event you are in breach of any provision of this Agreement, including but not limited to the restrictions under Sections 6 and 7 of the Employment Agreement (as modified by this Agreement), then in addition to any other remedies available to the Company, you will forfeit any further payments under Sections 4 and 5(b) and the Company may seek repayment of any amounts previously paid to you under Sections 4 and 5(b) with respect to any prior period in which such breach existed.

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7.                  Standstill Provisions; Nondisparagement.

a.                   You agree that, until the date you attain age 65, unless invited (on an unsolicited basis) by the Board of Directors of the Company in writing and other than in your fiduciary capacity as a Director, you will not:

i.                    acquire, offer or propose to acquire, or agree or seek to acquire, directly or indirectly, by purchase or otherwise, any additional securities or direct or indirect rights or options to acquire any securities of the Company or any subsidiary thereof, or of any successor to or Person (defined to include any natural person, governmental authority, corporation, company, limited liability company, partnership, joint venture, trust, or other entity of any kind) in control of the Company, or any assets of the Company or any subsidiary or division thereof, or of any successor to or Person in control of the Company;

ii.                  enter into or agree, offer, propose or seek to enter into, or otherwise be involved in or part of, directly or indirectly, any acquisition transaction or other business combination relating to all or part of the Company or its subsidiaries or any acquisition transaction for all or part of the assets of the Company or any subsidiary of the Company  or any of their respective businesses;

iii.                 make or in any way participate in directly or indirectly any “solicitation” or “proxy” (as such terms are used in the rules of the Securities and Exchange Commission) to vote, or seek to advise or influence any Person with respect to the voting of, any voting securities of the Company; provided, however, that nothing in this Section 7 shall prohibit you from private discussions with then current Board members, including members of the Nominations Committee, concerning your interest in or future nomination or election as a Board member at or after your current term as a Board member expires;

iv.                form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) with respect to any voting securities of the Company or any of its subsidiaries;

v.                  seek or propose, alone or in concert with others, to influence or control the management or policies of the Company or any of its subsidiaries;

vi.                directly or indirectly enter into any discussions, negotiations, arrangements or understandings with any other Person with respect to any of the foregoing activities or propose any such activities to any other Person;

vii.              advise, assist, encourage, act as a financing source for or otherwise invest in any other Person in connection with any of the foregoing activities; or

viii.            disclose any intention, plan or arrangement inconsistent with any of the foregoing restrictions. 

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b.                  You also agree that, during the period referred to in Section 7(a), neither you nor any of your affiliates will:

i.                    request the Company or its advisors, directly or indirectly, to (A) amend or waive any provision of this Section 7 (including this sentence) or (B) otherwise consent to any action inconsistent with any provision of this paragraph (including this sentence); or

ii.                  take any initiative with respect to the Company or any of its affiliates that could require the Company or any of its affiliates to make a public announcement regarding (A) such initiative, (B) any of the activities referred to in the first sentence of this paragraph, (C) the possibility of you or any other Person acquiring control of the Company, whether by means of a business combination or otherwise.

c.                   You agree not to do anything that would damage the Company’s business reputation or goodwill, and will refrain from making any negative, critical or disparaging statements, express or implied, concerning the Company or its officers or directors.

d.                  You acknowledge that irreparable damage may occur to the Company in the event any of the provisions of this Section 7 were not performed in accordance with their specific terms or were otherwise breached.  Accordingly, the Company will  be entitled to seek an injunction or injunctions to prevent breaches or threatened breaches of the provisions of this Agreement and to seek to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States of America, in addition to any other remedy to which the Company may be entitled at law or in equity.

8.                  Legal and Financial Planning Expenses.  The Company will pay you, upon reasonable documentation in accordance with the Company policies, up to $5,000, for expenses you incur for personal financial planning and legal advice in connection with the negotiations of this Agreement, subject to tax withholding, if applicable.

9.                  General Provisions.

a.                   Amendments.  This Agreement may not be amended or modified except by a written agreement signed by both parties.

b.                  Severability.  In the event that any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, the remaining provisions of this agreement will remain in full force and effect to the fullest extent permitted by law.

c.                   Successors and Assigns.  This Agreement will bind and benefit the parties hereto and their respective successors and assigns, but none of your rights or obligations hereunder may be assigned by either party hereto without the written consent of the other, except by operation of law upon your death.

d.                  Dispute Resolution. Any disputes arising under or in connection with this Agreement must be resolved by final and binding arbitration as provided for in Section 8 of the Employment Agreement, which is incorporated in this Agreement.

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e.                   Tax Withholding; Code 409A.  The Transition Payment shall be reported as compensation and to the extent required, as “nonqualified deferred compensation” subject to Code § 409A and regulations promulgated thereunder.  The Transition Payment and other benefits to be provided to you in connection with this Agreement may be subject to required withholding of federal, state and local income, excise and employment-related taxes, and other deductions for benefits and other expenses. This Agreement and the payments and benefits provided, shall, to the greatest extent permitted by law be exempt from the requirements applicable to deferred compensation under Code § 409A and regulations promulgated thereunder, and to the extent not otherwise exempt,  you and the Company intend that this Agreement comply with the requirements of Code § 409A and agree to administer and interpret this Agreement in manner consistent with, and that gives effect to, such intention.

f.                   Notices.  Any notice or other communication under this Agreement must be in writing and will be deemed given when delivered in person, by overnight courier (with receipt confirmed), or upon receipt if sent by certified mail, return receipt requested, as follows (or to such other persons or addresses as may be specified by written notice to the other party):

If to the Company:

 

Nuvera Communications, Inc.

Attention:  Chairman of the Board of Directors

27 North Minnesota Street

New Ulm, Minnesota 56073

 

If to you:

 

Mr. Bill Otis

19712 KC Road

New Ulm, Minnesota 56073

 

g.                  Entire Agreement.  Except as expressly provided for in this Agreement, the Agreement constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes and terminates the Employment Agreement in the times and in the manners hereinabove and supersedes and terminates all other prior agreements with respect to the subject matter hereof.

h.                  Governing Law.  This Agreement has been made in and will be governed and construed in accordance with the laws of the State of Minnesota without giving effect to the principles of conflict of laws of any jurisdiction.

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IN WITNESS WHEREOF, you and a duly authorized officer by and on behalf of the Company have executed this Agreement as of the dates set forth below.

 

NUVERA COMMUNICATIONS, INC.

By: 

/s/Perry Meyer

/s/Bill Otis

Its Chairman

Bill Otis

Date: August 27, 2019

Date: August 27, 2019

 

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Exhibit A

 

GENERAL RELEASE OF CLAIMS

THIS GENERAL RELEASE OF CLAIMS (“Release”) is made and entered into by Mr. Bill Otis (“you”) upon your Retirement Date (as set forth in the Transition and Retirement Agreement between you and Nuvera Communications, Inc. (“Company”), dated as of                              , 2019 (“Agreement”)) and will be effective as set forth below.

1.                General Release of Claims.  In consideration for the payment and benefits provided in Sections 4 and 5(b) of the Agreement, you agree to release, agree not to sue, and discharge the Company, its affiliates, and its related entities, officers, directors, shareholders, agents, employees, successors and assigns, from any and all manner of claims, demands, actions, causes of action, administrative claims, liability, damages, claims for punitive or liquidated damages, claims for attorneys’ fees, costs and disbursements, individual or class action claims, or demands of any kind whatsoever, you may have or might have against them or any of them, whether known or unknown, in law or equity, contract or tort, arising out of or in connection with your employment, or the termination of that employment, or otherwise, and however originating or existing, from the beginning of time through the date of your signing this Release.  This Release includes, without limiting the generality of the foregoing, any claims you may have for wages, bonuses, commissions, penalties, deferred compensation, vacation pay, separation pay and/or benefits, defamation, improper discharge (based on contract, common law, or statute, including any federal, state or local statute or ordinance prohibiting discrimination or retaliation in employment), the Minnesota Human Rights Act, Title VII of the Civil Rights Act of 1964, as amended;  the Age Discrimination in Employment Act as amended by the Older Workers Benefit Protection Act; the Americans with Disabilities Act, as amended; and any claim for discrimination or retaliation based on a protected class under state or federal law.  You hereby waive any and all relief not provided for in the Agreement.

2.                Pending or Future Proceedings.  You affirm that you have not caused or permitted, and to the full extent permitted by law will not cause or permit, to be filed (to the extent that you are able to control such filing), any charge, complaint, or action of any nature or type against Company and its successors and assigns, including but not limited to any action or proceeding raising claims arising in tort or contract, or any claims arising under federal, state or local laws, including discrimination laws.

3.                Exclusions.  Notwithstanding the release of claims otherwise provided for in this Release, you expressly understand that nothing in the Agreement or this Release will prevent you from filing a charge of discrimination with the EEOC or any of its state or local deferral agencies, or participating in any investigation by the EEOC or any of its state or local deferral agencies, although you understand that by signing this Release you are waiving the right to recover any damages or to receive other monetary relief or reinstatement to employment with Company in any claim or suit brought by or through the EEOC or any other state or local deferral agency on your behalf. Notwithstanding anything in this Release, you are not waiving the right to report possible securities law violations to the Securities and Exchange Commission or other governmental agencies or the right to receive any resulting whistleblower awards.

A - 1

 

Exhibit A

 

4.                Exceptions.  Nothing in this Release shall limit or otherwise impair your right to receive pension or similar benefit payments under any tax qualified plan or any other benefits accrued as of your Retirement Date or to which you are entitled in accordance with the terms of such benefit plan, to any rights you have under the Agreement, nor to indemnification in accordance with Section 9 of your Employment Agreement.

5.                Representations.  You affirm that you are not presently aware of any injury for which you may be eligible for workers’ compensation benefits.  You have not made any claim for illness or injury against the Corporation, and you are not aware of any facts supporting any claim against Company for medical expenses that have been or may be incurred by you.  You represent and warrant that you are is not enrolled in the Medicare program, have not been enrolled in the Medicare program at the time during employment with Company, and have not received Medicare benefits for medical services or items related to any claims arising out of employment with Company.  You further represent and warrant that no Medicaid payment have been made to or on behalf of you, and no liens, claims, demands, subrogated interests, or causes of action of any nature or character exist or have been asserted arising from or related to employment with Company.  You agree that you, and not Company, is responsible for satisfying all such liens, claims, demands, subrogated interests, or causes of action that may exist or have been asserted or that may in the future exist or be asserted.  You represent and warrant that you have not assigned or transferred or purported to assign or transfer any claim against Company.

6.                Recession. You acknowledge that you have a right to rescind within seven (7) calendar days of signing this Release to reinstate federal claims under the Age Discrimination in Employment Act and within fifteen (15) days of signing this Release to reinstate claims under the Minnesota Human Rights Act.  In order to be effective, the rescission must: (a) be in writing; and (b) delivered to  Nuvera Communications, Inc. – Attn: Human Resources Manager, by hand or by mail at 27 North Minnesota Street, New Ulm, Minnesota 56073 within the required period; and (c) if delivered by mail, the rescission must be postmarked within the required period, properly addressed to Company and sent by certified mail, return receipt requested. This Release will be effective upon the expiration of the fifteen (15) day period without rescission.  You understand that if you rescind this Release, you will not receive the amounts described in Section 4 of the Agreement.

7.                Consideration Period.  You have the right to review this Release with an attorney of your choosing.  You have twenty-one (21) days from the date you receive this Release to consider whether you wish to sign it.  You acknowledge that if you sign this Release before the end of the twenty-one (21) day period, it is your voluntary decision to do so, and you waive the remainder of the twenty (21) day period.  Notwithstanding the foregoing, you must not sign this Release prior to your Retirement Date.

8.                Governing Law.  The parties agree that Minnesota law will govern the construction and interpretation of this Release.

A - 2

 

Exhibit A

IN WITNESS WHEREOF, Bill Otis has executed and delivered this General Release as of the date set forth below.

 

 

 /s/Bill Otis

Bill Otis

Date: 

August 27, 2019

 

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EXHIBIT 10.4

 

STAY BONUS AGREEMENT

This Agreement is made as of August 27, 2019 by and between Nuvera Communications, Inc. (the “Company”) and Barbara Bornhoft (the “Executive”).

WHEREAS, Executive is currently employed by the Company as its Chief Operating Officer pursuant to the terms of that certain Employment Agreement dated as of July 2006, as amended March 2012 (the “Employment Agreement”); and

WHEREAS, the Company and Bill Otis, currently serving as the Chief Executive Officer (“CEO”) of the Company, have announced a succession plan with respect to Mr. Otis’ employment whereby the Company will conduct a search and appoint a new CEO (the “Successor CEO”); and

WHEREAS, the Company desires that the Successor CEO benefit from the knowledge, experience and expertise of Executive for a period of 12 months (the “Transition Period”) following the first day of the Successor CEO’s employment (the “Transition Date”); and

WHEREAS, the Company wishes to retain Executive’s services through the Transition Period; and

WHEREAS, the purpose of this Agreement is to provide an incentive to Executive to remain with the Company and to use Executive’s best efforts to assist the Successor CEO in a successful transition into the leadership role in the Company through and after the Transition Period;

NOW, THEREFORE, in consideration of the foregoing and the mutual terms and conditions set forth herein, the parties agree as follows:

1.                  Transition Period Employment.  During the period prior to the Transition Date and for the Transition Period, Executive shall continue to perform the job duties and responsibilities of Executive’s position with the Company under the current terms of the Employment Agreement with Company and the Company’s policies and procedures as directed by the CEO and the Board.  Nothing herein changes the terms of employment or the Employment Agreement.  Executive agrees to perform additional job duties and responsibilities as are assigned to Executive to assist in the transition by the Successor CEO during the Transition Period. Executive also agrees that the Successor CEO may in good faith reassign or reduce the duties and responsibilities of Executive during the Transition Period as the Successor CEO may determine, subject to any rights of the Executive under the Employment Agreement.

2.                  Stay Bonus.  Subject to the terms and conditions hereof and conditioned upon the appointment of a Successor CEO, if Executive continues to be employed by Company for the Transition Period, Executive will be paid a total bonus of One Hundred Thousand and no/100 Dollars ($100,000.00) (the “Stay Bonus”), reduced by applicable withholdings for taxes and other legally required items. The Stay Bonus will be paid on the next regular payroll date following the last day of the Transition Period. This Stay Bonus will be in addition to, and not in lieu of, any other payment of regular base salary or incentives under the Employment Agreement or any other plan or program of the Company.

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3.                  Separation During Transition Period.  If during the Transition Period, Executive’s employment with the Company is terminated for any reason, including death, disability, with or without Cause, or with or without Good Reason, then Executive shall forfeit any right to payment of the Stay Bonus and thereafter, this Agreement shall terminate and be of no further force and effect.

4.                  Nondisparagement.  Executive agrees not to do anything that would damage the Company’s business reputation or goodwill, and will refrain from making any negative, critical or disparaging statements, express or implied, concerning the Company or its officers or directors.

5.                  Conflicts.  Executive may serve on the boards of other business enterprises so long as these activities do not interfere with the performance of Executive’s duties and responsibilities hereunder or pose a conflict with the business of the Company.  If there is an issue whether any activities could interfere with the performance of Executive’s duties and responsibilities hereunder or pose a conflict with the business of the Company, the Executive may serve only if approved in advance by the Board.

6.                  Taxes.  The Company will deduct or withhold from the Stay Bonus all federal, state and local taxes that the Company is required by law to withhold or deduct. Notwithstanding the foregoing, in no event will the Company be liable for any additional tax, interest, or penalties that may be imposed on Executive other than the Company’s withholding obligations.

7.                  Assignment.  Company may in its sole discretion assign this Agreement to any entity or individual which succeeds to some or all of the business of Company through merger, consolidation, a sale of some or all of the assets of Company, or any similar transaction and assignment shall not be deemed a termination of Executive’s employment with the Company for purposes of this Agreement. Executive acknowledges that the services to be rendered by Executive to Company are unique and personal, and that Executive therefore may not assign any of Executive’s rights or obligations under this Agreement to anyone.

8.                  Successors; Survival.  Subject to Section 7 (Assignment), the provisions of this Agreement shall be binding on the parties hereto, on any successor of Company or Company, and on Executive’s heirs or any personal representative of Executive or Executive’s estate. The provisions of Sections 4 (Nondisparagement) and 5 (Conflicts) of this Agreement shall survive the termination of this Agreement.

9.                  Merger Clause.  This Agreement and the Executive’s Employment Agreement, as amended, constitutes the final written expression of all terms of the agreement among the parties relating to the subject matter of this Agreement, and supersedes all prior agreements, understandings or arrangements between them relating to the subject matter hereof. 

10.              Amendment.  This Agreement may be amended only in writing, signed by all parties hereto. This Agreement is intended to be exempt from the requirements of Code § 409A and Treasury regulations promulgated thereunder as a short-term deferral, and the parties will interpret the Agreement accordingly. Notwithstanding the foregoing, the Board reserves the right, without the consent of Executive, to amend the Agreement to comply with Code §409A and regulations promulgated thereunder, preserving to the greatest extent possible, the economic benefits provided under the Agreement to Executive. 

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11.              Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of Minnesota.

IN WITNESS HEREOF, the parties have executed this Agreement effective as of the date set forth above.

 

EXECUTIVE:

NUVERA COMMUNICATIONS, INC.

/s/Barbara Bornhoft

By

/s/Perry Meyer     

Barbara Bornhoft

Its

Chairman

 

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EXHIBIT 10.5

 

STAY BONUS AGREEMENT

This Agreement is made as of August 27, 2019 by and between Nuvera Communications, Inc. (the “Company”) and Curtis Kawlewski (the “Executive”).

WHEREAS, Executive is currently employed by the Company as its Chief Financial Officer pursuant to the terms of that certain Employment Agreement dated as of March 2012 (the “Employment Agreement”); and

WHEREAS, the Company and Bill Otis, currently serving as the Chief Executive Officer (“CEO”) of the Company, have announced a succession plan with respect to Mr. Otis’ employment whereby the Company will conduct a search and appoint a new CEO (the “Successor CEO”); and

WHEREAS, the Company desires that the Successor CEO benefit from the knowledge, experience and expertise of Executive for a period of 12 months (the “Transition Period”) following the first day of the Successor CEO’s employment (the “Transition Date”); and

WHEREAS, the Company wishes to retain Executive’s services through the Transition Period; and

WHEREAS, the purpose of this Agreement is to provide an incentive to Executive to remain with the Company and to use Executive’s best efforts to assist the Successor CEO in a successful transition into the leadership role in the Company through and after the Transition Period;

NOW, THEREFORE, in consideration of the foregoing and the mutual terms and conditions set forth herein, the parties agree as follows:

1.                  Transition Period Employment.  During the period prior to the Transition Date and for the Transition Period, Executive shall continue to perform the job duties and responsibilities of Executive’s position with the Company under the current terms of the Employment Agreement with Company and the Company’s policies and procedures as directed by the CEO and the Board.  Nothing herein changes the terms of employment or the Employment Agreement.  Executive agrees to perform additional job duties and responsibilities as are assigned to Executive to assist in the transition by the Successor CEO during the Transition Period. Executive also agrees that the Successor CEO may in good faith reassign or reduce the duties and responsibilities of Executive during the Transition Period as the Successor CEO may determine, subject to any rights of the Executive under the Employment Agreement.

2.                  Stay Bonus.  Subject to the terms and conditions hereof and conditioned upon the appointment of a Successor CEO, if Executive continues to be employed by Company for the Transition Period, Executive will be paid a total bonus of One Hundred Thousand and no/100 Dollars ($100,000.00) (the “Stay Bonus”), reduced by applicable withholdings for taxes and other legally required items. The Stay Bonus will be paid on the next regular payroll date following the last day of the Transition Period. This Stay Bonus will be in addition to, and not in lieu of, any other payment of regular base salary or incentives under the Employment Agreement or any other plan or program of the Company.

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3.                  Separation During Transition Period.  If during the Transition Period, Executive’s employment with the Company is terminated for any reason, including death, disability, with or without Cause, or with or without Good Reason, then Executive shall forfeit any right to payment of the Stay Bonus and thereafter, this Agreement shall terminate and be of no further force and effect.

4.                  Nondisparagement.  Executive agrees not to do anything that would damage the Company’s business reputation or goodwill, and will refrain from making any negative, critical or disparaging statements, express or implied, concerning the Company or its officers or directors.

5.                  Conflicts.  Executive may serve on the boards of other business enterprises so long as these activities do not interfere with the performance of Executive’s duties and responsibilities hereunder or pose a conflict with the business of the Company. If there is an issue whether any activities could interfere with the performance of Executive’s duties and responsibilities hereunder or pose a conflict with the business of the Company, the Executive may serve only if approved in advance by the Board.

6.                  Taxes.  The Company will deduct or withhold from the Stay Bonus all federal, state and local taxes that the Company is required by law to withhold or deduct. Notwithstanding the foregoing, in no event will the Company be liable for any additional tax, interest, or penalties that may be imposed on Executive other than the Company’s withholding obligations.

7.                  Assignment.  Company may in its sole discretion assign this Agreement to any entity or individual which succeeds to some or all of the business of Company through merger, consolidation, a sale of some or all of the assets of Company, or any similar transaction and assignment shall not be deemed a termination of Executive’s employment with the Company for purposes of this Agreement. Executive acknowledges that the services to be rendered by Executive to Company are unique and personal, and that Executive therefore may not assign any of Executive’s rights or obligations under this Agreement to anyone.

8.                  Successors; Survival.  Subject to Section 7 (Assignment), the provisions of this Agreement shall be binding on the parties hereto, on any successor of Company or Company, and on Executive’s heirs or any personal representative of Executive or Executive’s estate. The provisions of Sections 4 (Nondisparagement) and 5 (Conflicts) of this Agreement shall survive the termination of this Agreement.

9.                  Merger Clause.  This Agreement and the Executive’s Employment Agreement, as amended, constitutes the final written expression of all terms of the agreement among the parties relating to the subject matter of this Agreement, and supersedes all prior agreements, understandings or arrangements between them relating to the subject matter hereof. 

10.              Amendment.  This Agreement may be amended only in writing, signed by all parties hereto. This Agreement is intended to be exempt from the requirements of Code § 409A and Treasury regulations promulgated thereunder as a short-term deferral, and the parties will interpret the Agreement accordingly. Notwithstanding the foregoing, the Board reserves the right, without the consent of Executive, to amend the Agreement to comply with Code §409A and regulations promulgated thereunder, preserving to the greatest extent possible, the economic benefits provided under the Agreement to Executive. 

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11.              Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of Minnesota.

IN WITNESS HEREOF, the parties have executed this Agreement effective as of the date set forth above.

 

EXECUTIVE:

NUVERA COMMUNICATIONS, INC.

/s/ Curtis Kawlewski

By

/s/Perry Meyer     

Curtis Kawlewski

Its

Chairman

 

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EXHIBIT 99.1

 

FOR RELEASE: Immediate

 

FROM:  Nuvera Communications, Inc.   

              27 N. Minnesota

              New Ulm, MN 56073

  Phone 507-354-4111

           

CONTACT:  Bill Otis

         Nuvera

                     507-354-4111

                     E-mail: billotis@nuvera.net

 

Nuvera Announces Hiring of Glenn H. Zerbe as Chief Executive Officer

NEW ULM, Minnesota (August 27, 2019) – Nuvera Communications, Inc. (OTC: NUVR), a diversified communications company headquartered in New Ulm, Minnesota, announced today that it has hired Glenn H. Zerbe as Chief Executive Officer of the company effective Tuesday, September 3, 2019. 

Mr. Zerbe most recently served as Vice President of Sales for Frontier Communications Corporation, where he held positions of increasing responsibility since joining Frontier in 2011. Prior to his employment with Frontier, Mr. Zerbe had more than 20 years of sales, marketing and management experience in the communications industry, with companies such as Spanlink, Cisco Systems, SBC, AT&T and IBM.

In connection with Mr. Zerbe‘s hiring as new CEO of the Company, the Company has entered into a Transitional and Retirement Agreement with its current CEO Bill Otis.  Mr. Otis will step down as CEO of Nuvera on September 3, 2019, and remain an employee until December 31, 2019, with the title of Special Advisor to the Board of Directors.  Mr. Otis will continue as a member of the Board of Directors. On April 15, 2019, Nuvera announced that Mr. Otis would be retiring after 40 years with the Company but would remain with the Company in his current role until a successor was named and then would provide consulting services to ensure a smooth and successful leadership transition.

“The Board of Directors engaged a search firm to conduct the executive search and have successfully hired Mr. Zerbe as Nuvera’s new CEO,” Board Chair Perry Meyer said.  “We are confident that Mr. Zerbe’s extensive background in sales leadership and management will position our company for continued growth.”

“We appreciate the contributions made by Mr. Otis and recognize his continued presence with the company will be valuable during the transition and into the future.”

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Cautionary Statement Regarding Forward-Looking Statements.

From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements are typically preceded by the words “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “targets”, “projects”, “will”, “may”, “continues”, and “should”, and variations of these words and similar expressions. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. These risks and uncertainties may include, but are not limited to: i) unfavorable general economic conditions that could negatively affect our operating results; ii) substantial regulatory change and increased competition; iii) our possible pursuit of acquisitions could be expensive or not successful; iv) we may not accurately predict technological trends or the success of new products; v) shifts in our product mix may result in declines in our operating profitability; vi) possible consolidation among our customers; vii) a failure in our operational systems or infrastructure could affect our operations; viii) data security breaches; ix) possible replacement of key personnel; x) elimination of governmental network support we receive; xi) our current debt structure may change due to increases in interest rates or our ability to comply with lender loan covenants and xii) possible customer payment defaults.

In addition, forward-looking statements speak only as of the date they are made, which is the filing date of this Form 8-K. With the exception of the requirements set forth in the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

About Nuvera


Nuvera is a well-established communications company with headquarters in New Ulm, MN that provides Internet, digital TV, voice, hosted and managed services, computer sales and computer repair services. Nuvera sells and services cellular phones and accessories and customer premise equipment. Nuvera has customer solutions centers in the Minnesota communities of New Ulm, Glencoe, Goodhue, Hutchinson, Litchfield, Prior Lake, Redwood Falls, Sleepy Eye and Springfield as well as Aurelia, Iowa. Nuvera also operates TechTrends, a technology retail store, located in New Ulm. In addition, Nuvera offers television and Internet services in Cologne, Mayer, New Germany and Plato MN. Nuvera also holds partial ownership in FiberComm, LC, based in Sioux City, Iowa.

 

Nuvera Communications, Inc. is a publicly held corporation. For more information on the company or purchasing stock, visit www.nuvera.net.

 

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