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Exhibit 10.21
Employment Agreement
THIS EMPLOYMENT AGREEMENT, is made and entered into as of the first day of
April, 1996, by and between GTS Group, Inc., a Delaware corporation (the
"Corporation"), and Xxxxx Xxxxxxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has substantial experience in operating
telecommunications ventures, specifically in Russia and the CIS; and
WHEREAS, the Corporation has telecommunications ventures, operations,
or businesses in Russia, the CIS and Eastern Europe (the "Territory"), and
desires to employ the Executive, and the Executive desires to be employed by
the Corporation, in accordance with the terms and provisions herein contained;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment.
(a) The Corporation hereby employs the Executive, and the Executive hereby
accepts such employment, on the terms, and subject to the conditions herein
contained.
(b) The Executive shall be the Chief Executive Officer in the Territory
for the Corporation. In this capacity as Chief Executive Officer, the Executive
shall report to and perform such duties and exercise such power and authority
as may from time to time be delegated to the Executive by the Chief Executive
Officer and the Board of Directors of the Corporation.
(c) The Executive shall devote all of the Executive's business time and
attention and dedicate with the Executive's best efforts toward the fulfillment
and execution, including performance criteria, of the Executive's defined
duties pursuant to this Employment Agreement.
(d) Initially, the Executive shall be required to reside in Moscow and work
from the Corporation's Moscow offices. The Corporation reserves the right to
require that the Executive will move to and reside in and operate from the
Corporation's office in another major city within the Territory, should the
Corporation deem such a move to be appropriate and necessary in light of the
Corporation's operations from time to time.
(e) From time to time, the Corporation may, at its discretion, and with
the agreement of the Executive, change the Territory of Operations.
2. Term.
(a) The initial term of the employment of the Executive under this
Employment Agreement shall be three years commencing on April 1, 1996, and
continuing, unless sooner terminated pursuant to Section 9.
(b) Thereafter this Agreement shall be automatically renewed annually,
unless either party hereto shall deliver written notice in accordance with
Section 15 to the other party at least 180 days prior to the date termination
of the initial term or any extension or
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renewal there (the "Term") of its desire to terminate such employment (a
"Notice of Termination").
3. Compensation.
(a) During the initial 12 month consecutive period of service, the
Executive shall be paid a salary at the rate of two hundred ten thousand dollars
($210,000) per annum, payable in accordance with the Corporation's customary
payroll practices for Executives.
(b) At the end of each fiscal year the Corporation shall review the salary
of the Executive, and shall make such adjustments to base salary as the
Corporation shall, in its sole and absolute discretion, deem appropriate.
(c) For the purposes of this Agreement, "Salary" shall mean any payment by
the Corporation to the Executive pursuant to this Section 3.
4. Bonus Opportunities.
(a) As additional compensation opportunities for the Executive hereunder,
the Corporation shall provide to the Executive a bonus program which allows for
possible incentive compensation (the "Bonus") in respect of each fiscal year of
the Corporation. Subject to the provisions of Section 4(b), the basis for such
bonus, shall be based on performance achievements by the Corporation and the
Executive. Incentive award opportunities may range up to 30% of the Salary of
the Executive in any fiscal year. The Bonus plan will be reviewed and adjusted
on an annual basis, if deemed appropriate, by the Corporation in coordination
with the Compensation Committee of the Board of Directors in its sole and
absolute discretion.
(b) The formula or other methods for determining the Bonus for the
Executive in each fiscal year shall be determined by the Corporation in
coordination with the Compensation Committee of the Board of Directors, and
shall be based upon the performance of the Corporation and the Executive in
such fiscal year as compared with the projected expected performance of the
Corporation for such fiscal years. The actual amount of the Bonus paid to the
Executive in respect to the performance of any fiscal year of the Corporation
shall be subject to the sole and absolute discretion of the Board of Directors
of the Corporation.
(c) All bonuses with respect to any fiscal year of the Corporation shall
be paid as soon as practical subsequent to the issuance of the consolidated
financial statements of the Corporation.
5. Stock Option Plan.
(a) The Corporation has adopted the 1992 Stock Option Plan, as amended
(the "Plan") for its employees. Subject to the provision of the Plan, a copy of
which is annexed hereto as Exhibit A, and the execution and delivery of an
option agreement (the "Option Agreement"), in the form annexed hereto as
Exhibit B, the Executive is eligible for the Corporation to grant to the
Executive options to purchase Common Stock of the Corporation ("Common Stock").
The specific number and terms of the options are presented in the Plan and the
Option Agreement annexed hereto.
(b) In the event that the Corporation establishes one or more additional
stock option plans for its Executives, the Executive may be eligible to receive
options under
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such plans, as determined by the Compensation Committee of the Board of
Directors of the Corporation.
6. Benefits. During the Term, the Executive shall be entitled to receive
such benefits and to participate in such employee group benefit plans as are
generally provided by the Corporation, or made available by the Corporation, to
its Executives, including without limitation, but subject to the conditions
imposed by the carriers, any medical, health, disability and life insurance
policies.
(a) Additional Benefits. During the Term, the Corporation shall provide to
the Executive, at the Corporation's expense, use of a late model automobile
appropriate in the geographic location of Executive's residence, and acceptable
to the Corporation.
(b) During the Term, the Corporation shall provide business class
transportation to and from the United States for one trip per annum for
Executive and Executive's immediate family living with Executive in Moscow.
(c) During the Term, the Corporation shall provide housing residence, at a
suitable international standard, in the city of residence of the Executive.
(d) The Corporation shall pay to the Executive during the Term the sum of
ninety six thousand ($96,000) per annum as compensation for tax equalization,
foreign service and hardship pay (hereinafter, "Compensation Premium" in
connection with the requirement that the Executive reside in Moscow for so long
as the Executive is required to live in Moscow. This amount shall be paid at
the same time as the Executive's salary.
(e) The Executive and the Corporation will develop and agree upon a formal
Compensation Premium, which will be reviewed and adjusted periodically, in
conformance with international practices for employing executives overseas.
7. Expense Reimbursement.
(a) During the Term, the Corporation shall reimburse the Executive for all
reasonable expenditures actually and necessarily paid or incurred by the
Executive in the course of and pursuant to the business of the Corporation.
Such reimbursement shall be subject to the submission to the Corporation by the
Executive of appropriate documentation and/or vouchers, and shall be made in
accordance with the customary procedures of the Corporation for expense
reimbursement, as may from time to time be established.
(b) Should the Corporation provide Executive with a credit card, Executive
acknowledges complete personal responsibility for all charges made on such
credit card. Any charges received by the Corporation for expenses not documented
on an approved expense report may be deducted by the Corporation from the
Executive's payroll check. Upon termination of this Agreement, non approved
charges shall be deducted from the last payroll check issued to the Executive.
8. Vacation. In each fiscal year during the Term, the Executive shall be
entitled to 4 weeks vacation time, which shall not he cumulative from year to
year without the prior written consent of the Corporation or unless the
Executive shall be unable to take such vacation due to Executive's duties under
this Agreement; provided, however, that to the extent the Executive cannot take
vacation time during the Term due to his responsibilities under this Agreement,
upon termination, Executive shall be entitled to be compensated for accrued but
unused vacation time.
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9. Termination.
(a) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation shall at all times have the right to terminate immediately this
Agreement and the employment of the Executive hereunder for "Cause" by written
notice to the Executive in accordance with Section 15. For the purpose of this
Agreement, the term "Cause" shall mean any action of the Executive or any
failure to act by the Executive which constitutes:
(i) fraud, embezzlement or any felony in connection with the
Executive's duties as an Executive of the Corporation or any subsidiary or
affiliate of the Corporation, or willful misconduct or the commission of
any other act which causes or may reasonably be expected to cause
substantial economic or reputational injury to the Corporation or any such
subsidiary or affiliate of the Corporation, including any violation of the
Foreign Corrupt Practices Act, as described in Section 13 of this
Agreement;
(ii) a continuing conflict of interest or continuing failure to
follow reasonable directions or instructions of the Board of Directors or
Chief Executive Officer of the Corporation. A conflict of interest or a
failure to follow directions of the Corporation shall be deemed to be
continuing if the Executive shall have received written notice thereof and
shall have not terminated the conflict of interest or failure to follow
directions within thirty days after receipt of such notice;
(iii) an extended period of absence by the Executive from the
performance of the obligations of the Executive provided hereunder, which
absence shall be for a reason other than a disability, and which has not
been approved in writing in advance by the Corporation; or
(iv) a failure to MEET MINIMUM satisfactory performance
requirements for a performance period. For this purpose, the Corporation
and the Executive will agree in a separate, written document to the terms
of each performance period and the minimum satisfactory performance
requirements applicable to each such performance period. This document may
be modified or extended only by the mutual consent of both parties.
(b) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation, by written notice to the Executive, shall at all times have
the right to terminate this Agreement and the employment of the Executive
hereunder if the Executive shall experience a "Total Disability". For the
purpose of this Agreement, the term "Total Disability" shall mean any mental or
physical illness, condition, disability or incapacity as shall:
(i) prevent the Executive from reasonably discharging required
services and employment duties hereunder;
(ii) be attested to in writing by a physician or a group of
physicians acceptable to the Corporation; and
(iii) continue during any period of three consecutive months or for
periods aggregating three months in any eighteen month period.
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A Total Disability shall be deemed to have occurred on the last day of such
applicable three month period.
(c) This Agreement shall terminate automatically upon the date of the
death of the Executive.
(d) The Executive may terminate the Agreement at any time by giving 180
days' written notice to the Corporation in accordance with Section 15. Upon
giving such notice, the Executive shall be continued in employment with the
Corporation for the full 180 days) of the notice period, be continued in
employment with the Corporation without the existence of an employment
agreement, or at the discretion of the Corporation may be paid his/her salary
and have applicable benefits hereunder continued for such 180 day period in
lieu of continued employment. Failure of the Executive to provide the full 180
days notice shall be deemed a breach of the agreement by the Executive and
permit the Corporation to cease immediately the compensation and benefits
provided herein, and if deemed necessary, to take remedial action to prohibit
any further damages as may occur from the breach by the Executive
10. Payments Upon Termination.
(a) If the Corporation shall terminate the employment of the Executive
under this Agreement pursuant to Section 9(a) hereof, or if the employment of
the Executive hereunder shall be terminated by the executive other than in
accordance with Section 2 or Section 9(d), then, in any such event, the
Corporation shall have no obligation to pay to the Executive base salary or any
other compensation or benefits provided under this Agreement for any period
after the date of such termination, or to pay any Bonus for the year in which
such termination occurs; provided, however, that the Corporation shall pay all
Salary earned by the Executive prior to the date of such termination and the
reimbursement of all expenses incurred by the Executive prior to the date of
such termination in accordance with Section 7 hereof. Upon termination pursuant
to Section 9(a) or by the Executive other than in accordance with Section 2 or
Section 9(d), all options granted to the Executive pursuant to Section 5 shall
immediately be canceled and no further options shall vest.
(b) If the employment of the Executive hereunder shall terminate pursuant
to subsections 9(b) or (c) hereof, if the employment of the Executive shall be
terminated by the Corporation in accordance with Section 2 hereof, or if the
Executive shall be terminated by the Corporation other than in accordance with
the provisions of this Agreement, the Corporation shall pay to the Executive or
the Executive's Estate, as the case may be, the Salary and target Bonus for the
fiscal year in which the termination occurs, prorated for the number of weeks
during which the Executive was employed by the Corporation during such fiscal
year.
(c) In the event that the Corporation terminates the employment of the
Executive by delivering notice in accordance with Section 2, or for any reason
other than those set forth in Section 9, the Executive shall receive as
severance an amount equal to number of months/days of the notice period, (e.g.,
nine months Salary); provided, however, that in the event that the Executive is
subject to the covenants and agreements set forth in Section 11, the amount of
the severance payable to the Executive shall be equal to the number of
months/days during which the Executive remains subject to the covenants and
agreements set forth in Section 11. Such severance pay shall be paid in equal
monthly installments, commencing the month following such termination, and
shall be payable in accordance with the Corporation's customary payroll
practices for Executive officers.
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(d) In the event that the employment of the Executive is
terminated due to a Total Disability or the death of the Executive in
accordance with Section 9(b) or 9(c) hereof, then the Executive or his
designated beneficiary, as the case may be, shall receive such amounts as are
provided for in the disability policy or life insurance policy provided by the
Corporation for the benefit of the Executive.
11. Covenants of the Executive. In order to induce the Corporation
to enter into this Agreement and employ the Executive hereunder, the Executive
hereby covenants and agrees as follows:
(a) During the term and for a period of nine months thereafter,
the Executive shall not, without the prior written consent of the Corporation,
directly or indirectly, own, acquire, manage, operate, join, control, finance
or participate in the ownership, management, operation, control or financing
of, or be connected as an officer, director, employee, partner, principal,
agent, representative, consultant or otherwise with or use or permit his/her
name to be used in connection with:
(i) any business or enterprise engaged in the business of
communications, telecommunications and related industries operating in
the geographic area of Russia which is defined as the CIS/EE, (this
subparagraph shall include any business operations and activities the
Corporation will expand into after the date this agreement is
extended).
It is recognized by the Executive that the business of the Corporation
and its affiliates and the Executive's connection there with is or will be
involved in activity throughout the Geographic Area and that more limited
geographical limitations on this non-competition covenant are therefore not
appropriate.
The foregoing provisions of this Section 11(a) shall not prevent the
Executive from acquiring and/or owning not more than nine per cent of the
equity or debt securities of any company which has securities listed for
trading on a recognized securities exchange or are regularly traded in the
National Association of Securities Dealers Automated Quotation System.
(b) The Executive shall not at any time, other than in the
ordinary course of business of the Corporation, when and if required, disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity, any confidential information concerning the
financial condition, suppliers, customers, lessors, lessees, sources of leads
for and methods of obtaining new business or the methods generally of doing and
operating the respective businesses of the Corporation, its affiliates and
subsidiaries, except that such information is a matter of public knowledge or
is required to be disclosed by law or judicial or administrative process.
(c) During the Term and for a period of nine months thereafter,
the Executive shall not, without the prior written consent of the Corporation,
directly or indirectly through any other individual or entity:
(i) solicit, entice, persuade or induce any individual
who currently is, or at any time during the Term shall be, an employee
of the Corporation, or any of its affiliates, to terminate or refrain
from renewing or extending such person's employment with the
Corporation or such subsidiary or affiliate, or to become employed by
or enter into contractual relations with any other individual or
entity, and the Executive shall not approach any such employee for any
such purpose or
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authorize or knowingly cooperate with the taking of any such actions
by any other individual or entity; or
(ii) except in accordance with the Executive's duties
hereunder on behalf of the Corporation, solicit, entice, persuade, or
induce any individual or entity which currently is, or at any time
during the Term shall be, a customer, supplier, lessor or lessee of
the Corporation, or any of its subsidiaries or affiliates, to
terminate or refrain from renewing or extending its contractual or
other relationship with the Corporation or such subsidiary or
affiliate, and the Executive shall not approach any such customer,
supplier, lessor or lessee for such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other individual
or entity.
(d) In the event that the Corporation terminates the employment of
the Executive by delivering notice in accordance with Section 2, or for any
reason other than those set forth in Section 9, the Corporation may, in its
sole discretion, elect to waive the application of the covenants and agreements
set forth in Section 11 to the Executive.
12. Specific Performance. The Executive acknowledges that a
breach or violation by the Executive of the covenants or agreements contained
in Sections 11 and 13 of this Agreement would cause irreparable harm and damage
to the Corporation if such provisions are not specifically enforced, the
monetary amount of which would be impossible to ascertain. Therefore, the
Corporation shall be entitled to enforce such provisions in a court of equity
by a decree of specific performance and to obtain an injunction from any court
of competent jurisdiction enjoining and restraining any breach or violation of
any or all of the covenants and agreements contained in Sections 11 and 13 of
this Agreement by the Executive and/or his employees, associates, partners or
agents, or entities controlled by one or more of them, either directly or
indirectly. Such remedies shall be cumulative and not exclusive and shall be in
addition to whatever other rights or remedies the Corporation shall have for
damages for a breach by the Executive of the covenants or agreements contained
in Section 11 or elsewhere in this Agreement. Notwithstanding anything herein
to the contrary, the Corporation hereby expressly reserves the right to seek
damages and other economic remedies for a breach by the Executive of the
covenants or agreements contained in Section 11 or elsewhere in this Agreement.
13. Foreign Corrupt Practices Act. You agree to comply in all
respects with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), as
amended, which provides generally that: under no circumstances will foreign
officials, representatives, political parties or holders of public offices be
offered, promised or paid any money, remuneration, things of value, or provided
any other benefit, direct or indirect, in connection with obtaining or
maintaining contracts or orders hereunder. Your failure to comply in all
respects with the provisions of the FCPA shall constitute a material breach by
you of your obligations hereunder and shall entitle Global TeleSystems Group,
Inc. to terminate this Agreement immediately. A copy of the Corporation's FCPA
policy is annexed hereto as Exhibit C.
14. No Delegation. The Executive shall not delegate his
employment obligations under this Agreement to any other person.
15. Notices. Any notice required or permitted must be
approved by the Corporation according to the terms of this Agreement and must
be approved in writing
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and with appropriate confirmation of receipt, certified mail, return receipt
requested, or overnight courier to the following addresses:
If to the Corporation: Global TeleSystems Group, Inc.
Attn: General Counsel
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx 00xx Xxxxx
XxXxxx, XX 00000 XXX
If to the Executive: Xxxxx Xxxxxxxxxxx
Posledny Per.19, Apt. 6
Moscow, Russia
Either party may change the address to which notices, requests,
demands and other communications to such party shall be delivered personally or
mailed by giving notice thereof to the other party hereto in the manner herein
provided. Renewal notices shall be deemed approved at the time when such are
approved by the Compensation Committee of Board at an official meeting.
16. Binding Effect. This Agreement shall be for the benefit of and
binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns.
17. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings and arrangements, both oral
and written, between the parties hereto with respect to such subject matter.
This Agreement may not be modified, amended, altered or rescinded in any
manner, except by written instrument signed by both of the parties hereto;
provided, however, that the waiver by any party of compliance by any other
party with respect to any provision hereof or of any breach by such other party
need be signed only by the party waiving such provision or breach; provided,
further, that the waiver by either party hereto of a breach or compliance with
any provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or compliance.
18. Severability. In case any one or more of the provisions of
this Agreement shall be held by any court of competent jurisdiction to be
illegal, invalid or unenforceable in any respect, such provision shall be not
force and effect, but the illegality, invalidity or unenforceability of any
other provision of this Agreement, but this Agreement shall be construed as if
such illegal, invalid or unenforceable provision had never been contained
herein.
19. Choice of Laws. The Executive and the Corporation intend and
hereby acknowledge that jurisdiction over disputes with regard to this
Agreement shall be exclusively in the courts of the Commonwealth of Virginia,
and this Agreement shall be governed by the laws of the Commonwealth of
Virginia as to the validity, interpretation, and enforcement thereof.
20. Arbitration. Any and all disputes, controversies and claims
arising out of or relating to this Agreement, shall be settled and determined
by arbitration conducted before a panel of three arbitrators in Virginia in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrators' award shall be final and
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binding upon the Corporation and the Executive, and judgement confirming such
arbitration may be entered thereon in any court having jurisdiction over such
proceedings.
21. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any manner
the meaning or interpretation of this Agreement.
22. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Global TeleSystems Group, Inc.
by: /s/ Xxxxxx X. Xxxxx
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Title:
[/s/ XXXXX XXXXXXXXXXX]
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Xxxxx Xxxxxxxxxxx
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