EXHIBIT 10.5
EXECUTIVE RETENTION BONUS AGREEMENT
THIS EXECUTIVE RETENTION BONUS AGREEMENT (this "Agreement") is by and
between Allegiance Telecom Company Worldwide (the "Company") and Xxxx Xxxxx (the
"Employee"), effective as of the date set forth under the signature of the
Company below.
WHEREAS, Employee is an employee of the Company or an Affiliate of the
Company; and WHEREAS, the Compensation Committee of Allegiance Telecom, Inc.'s
Board of Directors recognizes the uncertainty and questions that may arise in
the context of a recapitalization transaction which could result in the
departure or distraction of key employee personnel to the detriment of
Allegiance Telecom, Inc., its Affiliates and its stakeholders; and WHEREAS, the
Company has determined that it is in the best interests of the Company, its
Affiliates and its stakeholders to incentivize key employees to remain at the
Company or its Affiliates during the process of, and for a reasonable time
after, the recapitalization transaction.
NOW, THEREFORE, in consideration for the promises and mutual covenants
herein contained, it is hereby agreed by the parties as follows:
1. RETENTION PAYMENT. Employee will be entitled to an aggregate retention
bonus equal to $375,000 (the "Retention Payment"), provided that Employee
has been continuously employed by the Company or any Affiliate through
December 31, 2004 and subject to the other terms and conditions of this
Agreement. The entire Retention Payment will be advanced to Employee on
March 20, 2003.
2. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH, DISABILITY OR BY COMPANY WITHOUT CAUSE.
Notwithstanding anything herein to the contrary, if, prior to December 31,
2004, Employee's employment with the Company and all Affiliates is
terminated because of (i) death of Employee, (ii) Disability of Employee or
(iii) termination by the Company or any Affiliate without Cause, then
Employee will be entitled to the FULL AMOUNT of the Retention Payment.
(b) TERMINATION BY COMPANY FOR CAUSE. If, prior to December 31, 2004,
Employee's employment with the Company and all Affiliates is terminated by
the Company or any Affiliate for Cause, then Employee will (i) immediately
repay all Net Retention Payment received and (ii) not have any rights to
any Retention Payment.
(c) TERMINATION BECAUSE OF EMPLOYEE RESIGNATION FOR ANY REASON PRIOR TO
DECEMBER 31, 2003. If, prior to December 31, 2003, Employee's employment
with the Company and all Affiliates is terminated because of Employee's
resignation for any reason, then Employee will (i) immediately repay all
Net Retention Payment received and (ii) not have any rights to any
Retention Payment.
(d) TERMINATION BECAUSE OF EMPLOYEE RESIGNATION FOR ANY REASON BETWEEN
JANUARY 1, 2004 AND DECEMBER 31, 2004. Notwithstanding anything herein to
the contrary, if, between January 1, 2004 and December 31, 2004, Employee's
employment with the Company and all Affiliates is terminated because of
Employee's resignation for any reason, then Employee shall (i) keep an
amount equal to (A) 50% of the Net Retention Payment plus (B) 50% of the
Net Retention Payment multiplied by the Pro-Rata Fraction (with respect to
clauses (A) and (B), such amounts rounded up to the nearest dollar and in
any event not to exceed the amount of Net Retention Payment) and (ii)
immediately repay the difference between the Net Retention Payment less the
amount calculated in clause (i) preceding.
"Pro-Rata Fraction" means: The number of days continuously employed by the
Company and all Affiliates starting January 1, 2004 through Employee's
termination date (that date to be determined by the Company in its good
faith discretion) divided by 365 days.
EXAMPLE - Employee receives $375,000, but after taxes and governmental
charges of 30%, his net amount is $262,500. Employee resigns on January 31,
2004. Employee would be entitled to keep $131,250 plus $11,148 (50% of
$262,500 times 31 days/365 days) and would be required to repay $120,102
(which is the $262,500 Net Retention Payment less $142,398).
3. REPAYMENT OF LOAN FROM COMPANY. Employee agrees that promptly after receipt
of the Retention Payment (but in no event later than five business days),
Employee will repay all outstanding amounts (including
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accrued but unpaid interest) under that certain Secured Promissory Note
issued by Employee payable to Allegiance Telecom, Inc. dated December 6,
1999.
4. NO SPECIAL EMPLOYMENT RIGHTS. Nothing in this Agreement will (a) be deemed
to confer on Employee any right to employment or continued employment with
the Company or any Affiliate, or (b) affect any right that the Company or
any Affiliate may have to terminate the employment of Employee at any time.
5. OTHER EMPLOYEE BENEFITS. No payments made hereunder shall be includible as
an annual or long-term bonus or other compensation in creditable
compensation in computing benefits under any employee benefit plan of the
Company or any Affiliate.
6. WITHHOLDINGS. The Company may withhold from all payments due to Employee
(or his/her beneficiary or estate) hereunder all taxes or other amounts
which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.
7. RIGHT TO WITHHOLD FROM PAYCHECK. In the event Employee is required to repay
any Net Retention Payment, Employee authorizes the Company and its
Affiliates to deduct any amount of such payment from any salary, bonus,
vacation pay, commissions or any other compensation earned by Employee and
Employee specifically authorizes the Company and its Affiliates to deduct
any amount of such payment from Employee's paycheck(s), including
Employee's final paycheck (to the extent lawful). Any such deductions shall
not relieve Employee of his/her obligation to pay any remaining amounts
owing under this Agreement. CONSENT TO SUCH DEDUCTION(S) SHALL BE EVIDENCED
BY EMPLOYEE'S SIGNATURE ON THIS AGREEMENT.
8. CONFIDENTIAL INFORMATION. Employee shall keep the existence and contents of
this Agreement in strictest confidence and shall not disclose it to anyone
other than Employee's tax and financial advisors, attorneys and immediate
family members, provided that Employee advises such persons that the
information is confidential. Employee may discuss this Agreement with the
Company's Human Resources or Legal departments or the head of Employee's
department.
9. DEFINITIONS. As used in this Agreement, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" means any entity that directly or indirectly is controlled
by, controls or is under common control with the Company.
(b) "Cause" means (i) embezzlement or misappropriation of funds of the
Company, any of its Affiliates or their successors; (ii) use of
illegal drugs or alcohol that materially impairs Employee's ability to
fulfill his duties as an employee; (iii) willful disclosure of trade
secrets or confidential information of or any material violation of
any other material published policy of the Company, any of its
affiliates or their successors; or (iv) conviction or confession of a
criminal felony.
(c) "Company" means Allegiance Telecom Company Worldwide, a Delaware
corporation and the successor to, or transferee of all or
substantially all of the assets of, the Company.
(d) "Disability" means "disability" as defined in the Company's Long-Term
Disability Insurance Plan.
(e) "Net Retention Payment" means the Retention Payment less any
withholdings taken by the Company or any Affiliate for taxes and other
governmental charges.
10. SUCCESSORS; BINDING AGREEMENT. (a) This Agreement is personal to Employee
and without the prior written consent of the Company, shall not be
assignable by Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Employee's legal representatives. (b) This Agreement shall
inure to the benefit of and be binding upon the Company and its successors.
The Company agrees that, for so long as it has any obligations under this
Agreement, it will cause any successor or transferee (if other than the
Company) to unconditionally assume, by written instrument delivered to
Employee (or his/her beneficiary or estate), all of the obligations of the
Company hereunder.
11. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been given when personally delivered
or on the fifth day after being sent via U.S. certified or registered mail,
return receipt requested:
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TO THE COMPANY:
Allegiance Telecom Company Worldwide,
Attn: Xxxx Xxxxxx, Human Resources Department
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
TO EMPLOYEE: at Employee's office location or primary residence listed
in the Company's records
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Notwithstanding anything herein to the contrary, the Company may provide
Employee with written notice by sending Employee an email.
12. GOVERNING LAW; VALIDITY. The validity, interpretation, and enforcement of
this Agreement shall be governed by the laws of the State of Texas as to
all matters, including, but not limited to, matters of validity,
construction and performance, without regard to principles of conflict of
laws. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
13. CONSENT TO JURISDICTION; AGENT FOR SERVICE OF PROCESS; LIMITATION OF
LIABILITY. Employee consents to the non-exclusive jurisdiction and venue in
the state and federal courts located in Dallas County, Texas and waives any
defense of forum non conveniens. Service of legal process on the Company
with respect to a claim under this Agreement shall be made upon the General
Counsel of Allegiance Telecom, Inc. IN NO EVENT SHALL THE COMPANY OR ANY
AFFILIATE BE LIABLE UNDER OR RELATING TO THIS AGREEMENT FOR ANY AMOUNT IN
EXCESS OF THE RETENTION PAYMENT. NOTWITHSTANDING ANY OTHER PROVISION
HEREOF, THE COMPANY SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES.
14. INTEREST; PAYMENT OF COLLECTION FEES. Employee agrees to repay all amounts
due under this Agreement to the Company within ten (10) days of Employee's
termination date. Any amounts due to the Company under this Agreement and
not paid shall accrue interest at 1.5% per month (or if less, the maximum
rate permissible under law) starting from the 11th day after Employee's
termination date until paid. Employee agrees to pay all of Company's costs
of collection relating to or in connection with this Agreement, including
reasonable attorneys' fees.
15. WAIVER. Employee's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right Employee or the Company may
have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
16. ENTIRE AGREEMENT; NO AMENDMENT. This Agreement contains the entire
agreement and supersedes all prior and contemporaneous oral or written
communications and agreements between the parties relating to the subject
matter of this Agreement. Neither this Agreement, nor any of its terms, may
be changed, added to, amended, waived or varied except in writing signed by
Employee and by either the CEO of the Company, the General Counsel of the
Company or the General Counsel of Allegiance Telecom, Inc.
17. COUNTERPARTS; DELIVERY BY FACSIMILE. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument. This Agreement
any amendments hereto to the extent signed and delivered by means of a
facsimile machine, will be treated in all manner and respects as an
original agreement and will be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in
person. At the request of any party, each other party hereto will reexecute
original forms thereof and deliver them to all other parties. No party
hereto will raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever
waives any such defense.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
dates set forth below.
BY SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS (A) READ THIS AGREEMENT;
AND (B) UNDERSTANDS THE TERMS AND CONDITIONS OF THIS AGREEMENT.
ALLEGIANCE TELECOM COMPANY WORLDWIDE
By: _____________________________________
Name: Xxxxx X. Xxxxxxx
Its: Chairman and Chief Executive Officer
Effective Date: _________________________
EMPLOYEE: _______________________________
Printed Name: ___________________________
Date: ___________________________________
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