EMPLOYMENT AGREEMENT
This Employment Agreement is entered into by and between Xxxxxx
Xxxxxxx ("Executive") and NEXTLINK Communications, Inc., a Delaware
corporation ("Employer" or the "Company"), to be effective on and as of
September 21, 1999.
WITNESSETH:
WHEREAS, Employer is engaged in the business of providing
high-quality, non-mobile telecommunications services to the rapidly growing
business market.
WHEREAS, Executive has skills and experience in telephony generally
and with the technology associated with NEXTLINK; and
WHEREAS, Employer desires to obtain Executive's services for the
conduct of its Business, and Executive desires to be employed in such
Business by and for Employer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive as Chief
Executive Officer, and agrees to appoint Executive Chairman of the
Board of Directors, and Executive hereby accepts such employment upon
the terms and conditions hereinafter set forth.
2. DUTIES.
a. Executive shall serve as Chief Executive Officer
and Chairman of the Board of Directors of Employer, and shall perform his
services as such within the framework of the policies, objectives and Bylaws
of Employer. In such capacity, Executive (i) shall exercise general
supervisory responsibility and management authority over Employer and all of
its controlled affiliates and (ii) shall perform such other duties
commensurate with his position as may be assigned to him from time to time by
the Board of Directors. Promptly following the effective date hereof,
Employer shall take or cause to be taken any and all corporate action
necessary or advisable to cause the appointment of Executive to a vacant
position on Employer's Board of Directors,. Executive shall continue to serve
as a member of the Board of Directors throughout the Employment Term.
b. Executive shall devote substantially all his
business time, attention and energies to the performance of his duties and
functions under this Employment Agreement and shall not during the term of
his employment hereunder be engaged in any other substantial business
activity for gain, profit or other pecuniary advantage. Executive shall
faithfully, loyally and diligently perform his assigned duties and functions
and shall not engage in any activities whatsoever which conflict with his
obligations to Employer during the term of his employment hereunder.
Notwithstanding the foregoing, (i) Executive may continue to serve as a
director of America Online, Inc., American Express Company, American Express
Bank Limited, and Nextel Communications, Inc.,
(ii) Executive may serve as a director of other corporations with the consent
of the Board and (iii) nothing in the foregoing shall be construed so as to
limit or prohibit personal investments by Executive; provided that such
investments shall not amount to a controlling interest in any entity (other
than trusts, limited partnerships or other entities adopted by Employee for
estate planning purposes).
c. Employer shall furnish Executive with such
facilities at Employer's corporate headquarters location and services as are
suitable to his position and adequate for the performance of his duties and
functions hereunder.
3. TERM. The term of this Employment Agreement shall commence
on the date hereof (the "Commencement Date") and, unless terminated earlier
pursuant to paragraph 12 hereof, shall continue through September 20, 2002
(the "Initial Term"), and thereafter shall continue unless and until such
time as (i) either party hereto notifies the other, upon sixty (60) days
prior written notice, that this Employment Agreement will be terminated at
the end of the Initial Term or the later expiration of such sixty day notice
period, or (ii) Executive's employment is otherwise terminated pursuant to
paragraph 12 hereof (the "Extended Term") (the Initial Term, together with
the Extended Term, if any, being referred to herein as the "Employment Term").
4. COMPENSATION. Employer shall pay to Executive, in
consideration of and as compensation for the services agreed to be rendered
by Executive hereunder, the following:
a. BASE SALARY. During the Employment Term, the Company
shall pay to Executive a base salary of $500,000 per annum; PROVIDED THAT the
amount of such base salary shall be reviewed at least annually and may, in
Employer's sole discretion, be increased by Employer from time to time during
the Employment Term (with the first such review to occur during September,
2000) in light of the conditions then existing and the services then being
rendered by Executive, in which case Executive's base salary shall be such
higher amount as may be determined by Employer (such annual base salary, as
in effect from time to time, being referred to herein as the "Base Salary").
The Base Salary shall be payable in accordance with Employer's normal payroll
schedule, less appropriate deductions for federal, state and local income
taxes, FICA contributions and any other deductions required by law or
authorized by Executive.
b. ANNUAL PERFORMANCE BONUS. In addition to the Base
Salary, Executive shall be entitled to receive an annual performance bonus
(the "Annual Bonus") for each year of service (or any part thereof in the
event of termination of Executive's employment hereunder, in which case the
Annual Bonus shall be prorated for such partial year) during the Employment
Term (each such year or any partial such year being referred to as an "Annual
Bonus Period"), in an amount, if any, as may be determined by the
Compensation Committee and/or the Board of Directors in their complete
discretion, up to a maximum of 100% of the Base Salary payable during such
Annual Bonus Period, based on Executive's performance against objectives for
the prior year of service. Such objectives shall be determined by mutual
agreement of Executive and Employer. Notwithstanding the foregoing, the
Annual Bonus for 1999 may be paid, at Employer's discretion, on a full
calendar year basis rather than based on an Annual Bonus Period.
Each Annual Bonus shall be payable in accordance with
Employer's normal annual bonus payment schedule, less
appropriate deductions for federal, state, and local
income taxes, FICA contributions and any other deductions
required by law or authorized by Executive.
c. OPTIONS.
(i) GRANT OF COMPENSATORY OPTIONS. Employer agrees to
grant to Executive, pursuant to Employer's Stock Option Plan ("Plan") and
subject to the terms and conditions set forth in this paragraph 4(c), an option
to acquire 1,500,000 shares (the "Compensatory Options") of Employer's Class A
voting common stock ("Common Stock") on the terms set forth in Annex A hereto.
The shares of Employer's Common Stock that will be issued on exercise of the
Compensatory Options are among the Shares covered by the Form S-8 Registration
Statement previously filed and currently in effect covering awards made under
the Plan, such that, upon issuance and distribution of such shares to Executive,
there are no restrictions under federal or state securities laws on the further
transfer of such shares, other than restrictions imposed by virtue of
Executive's status as an officer or director of the Company or as may otherwise
be imposed by law with respect to unrestricted shares. In addition, the Company
shall ensure that the provisions of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended ("Exchange Act") are applicable to the grant and
distribution of the Compensatory Options, and that the distribution of the
Compensatory Options shall not constitute a "purchase" of the Common Stock
pursuant to Section 16(b) of the Exchange Act.
(ii) GRANT OF INDUCEMENT OPTIONS. At or prior to the
execution of this Agreement and subject to the terms and conditions set forth in
this paragraph 4(c), the Employer shall grant to Executive, pursuant to the
Plan, an option to acquire another 1,500,000 shares of Employer's Common Stock
on the terms set forth in Annex A hereto (the "Inducement Options"). The shares
of Employer's Common Stock that will be issued on exercise of the Inducement
Options are among the shares covered by the Form S-8 Registration Statement
previously filed and currently in effect covering awards made under the Plan,
such that, upon issuance and distribution of such shares to Executive, there are
no restrictions under federal or state securities laws or regulations on the
further transfer of such shares, other than restrictions imposed by virtue of
Executive's status as an officer or director of the Company or as otherwise may
be imposed by law with respect to unrestricted shares. In addition, the Employer
shall exercise its best efforts to ensure that the provisions of Rule 16b-3
under the Exchange Act are applicable to the grant of the Inducement Options and
any subsequent distribution of the shares issued upon exercise thereof, and that
the distribution of such shares to Executive shall not constitute a "purchase"
of Common Stock pursuant to Section 16(b) of the Exchange Act. The Compensatory
Options and the Inducement options are collectively referred to as the
"Options".
(iii) VESTING. The Options shall be subject to vesting s
chedules, as follows:
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NUMBER OF YEARS OF CONTINUOUS SHARES AVAILABLE
EMPLOYMENT FROM THE EFFECTIVE UPON EXERCISE OF THE
DATE OF THIS AGREEMENT COMPENSATORY OPTION
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
1 500,000
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
2 1,000,000
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
3 1,500,000
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Executive may, in his sole discretion, elect to defer
vesting of the Compensatory Options by delivering to the Employer a written
notice of such election no later than December 31 of the calendar year
immediately preceding the calendar year in which such vesting would otherwise
occur. Any such election shall be irrevocable and shall set a specific date for
the vesting of such Compensatory Options; PROVIDED that Executive may also
specify that the applicable Compensatory Options shall vest on the earlier of
such specified date or the termination of Executive's employment hereunder. In
the event of such election, Executive shall indemnify and hold harmless Employer
from any and all withholding amounts and penalties and interest associated
therewith that may be assessed by the Internal Revenue Service or any relevant
state of local taxing authority in connection with any such deferral by
Executive in the vesting of any of the Compensatory Options and the recognition
of income associated therewith.
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NUMBER OF YEARS OF CONTINUOUS SHARES AVAILABLE
EMPLOYMENT FROM THE EFFECTIVE UPON EXERCISE OF THE
DATE OF THIS AGREEMENT INDUCEMENT OPTIONS
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
1 375,000
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2 750,000
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--------------------------------------- -------------------------------------
3 1,125,000
--------------------------------------- -------------------------------------
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4 1,500,000
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(iv) TERMINATION. Upon termination of employment for any
reason other than (X) permanent disability (as defined below) or (y) death or
(z) by Executive upon establishment of Constructive Termination or upon a Change
in Control, the unvested portion (if any) of the Options shall immediately
expire and be forfeited. If termination of employment occurs because of
permanent disability or death, Executive shall be deemed to have one additional
year of continuous employment from the date of death or permanent disability for
purposes of applying the vesting schedules. If termination of employment occurs
upon establishment of Constructive Termination or upon a Change in Control,
vesting of the Options shall occur upon the consummation of such Change in
Control, or upon final effectiveness of such Constructive Termination.
(v) EXERCISE OF OPTIONS. The Compensatory Options may not be
exercised before the third anniversary of this Agreement unless the employment
of executive is terminated before that date. If employment is terminated before
that date, Executive shall have 90 days after the date of termination to
exercise any vested Compensatory Options. Except as modified by this
subparagraph (v), Executive's right to exercise the Options shall be governed by
the terms of the Employer's Stock Option Plan and the individual option letter
agreements issued to Executive.
(vi) WITHHOLDING. Upon the vesting of any Compensatory
Options, or in connection with the exercise of any Inducement Options, Executive
shall pay to Employer an amount equal to such amount as Employer shall be
obligated to remit to the Internal Revenue Service or any relevant state or
local taxing authority as withholding attributable to the compensation evidenced
by the Compensatory Options that have vested. At the discretion of the
Compensation Committee, Executive may pay such amount either in cash or by
delivery to the Company of a number of shares of Common Stock (or proceeds from
the sale thereof) having a Fair Market Value equal to such withholding amount
(which delivery may be made by an instruction to the Company to retain a portion
of the shares available upon exercise of the Compensatory Options, or shares
available upon exercise of Inducement Options, otherwise distributable to
Executive or by an instruction to the selling broker to remit such sales
proceeds, otherwise distributable to Executive, to the Company).
(vii) ADJUSTMENTS. In the event that the Common Stock is
changed into or exchanged for a different number or kind of securities of
Employer or of another entity (by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, stock
combination or otherwise), or if there is a distribution of cash, securities or
other property made to the holders of the Common Stock (other than cash
dividends made out of current earnings of Employer) then an appropriate and
equitable adjustment shall be made in the number and kind of securities issuable
upon exercise of the Options hereunder, with a view towards preserving the value
to Executive of the rights granted pursuant to this paragraph 4(c). Without
limiting the generality of the foregoing, in the event that an adjustment is
required pursuant to the terms of any options, warrants or convertible
securities of Employer pursuant to any event of the kind specified above, at
least an equivalent adjustment shall be required pursuant to this paragraph
4(c)(vii). In the event any adjustment is required under this paragraph
4(c)(vii), appropriate conforming adjustment shall be made to the exercise price
of the Inducement Options, as appropriate, to all references to numbers of
Compensatory Options and/or to the number of shares covered by the Inducement
Options, as appropriate, contained in this paragraph 4(c), to the definition of
Common Stock, and to any other provisions of this paragraph 4(c) as necessary to
accomplish the intent of this subparagraph (vii).
5. CERTAIN DEFINITIONS. For purposes of this
Agreement:
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(A) The Company is merged or consolidated or
reorganized into or with another company or other legal entity, and as a result
of such merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such company or
person immediately after such transaction is held directly or indirectly in the
aggregate by the holders of voting securities of the Company immediately prior
to such sale or transfer, including voting securities issuable upon exercise or
conversion of options, warrants or other securities or rights, PROVIDED,
HOWEVER, that no change in control shall result from a merger, consolidation or
reorganization of the Company with any entity in which Eagle River Investments,
L.L.C. has invested at least $10,000,000 in equity;
(B) The Company sells or otherwise transfers all or
substantially all of its assets to any other company or other legal entity, and
as a result of such sale or other transfer of assets, less than a majority of
the combined voting power of the then-outstanding securities of such company or
person immediately after such sale or transfer is held directly or indirectly in
the aggregate by the holders of voting securities of the Company immediately
prior to such sale or transfer, including voting securities issuable upon
exercise or conversion of options, warrants or other securities or rights;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) other than Xxxxx X. XxXxx and
his affiliates has become the beneficial owner (as the term "beneficial owner"
is defined under Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of securities representing 50% or more of the voting
securities of the Company, including voting securities issuable upon exercise or
conversion of options, warrants or other securities or rights;
(D) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in control of the Company has
occurred;
(E) Notwithstanding the foregoing provisions of
subparagraphs (C) and (D) hereof, a "Change of Control" shall not be deemed to
have occurred solely because (x) the Company, (y) an entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities,
or (z) any Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company, either files or becomes obligated to file a report
or proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of voting
securities, whether in excess of 50% or otherwise, or because the Company
reports that a change of control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.
"FAIR MARKET VALUE" of a share of Common Stock shall mean, as
of any given date, (i) the closing price of a share of Common Stock on the
principal exchange on which Common Stock then trades, if any, on the day
previous to such date, or, if shares were not traded on the day previous to such
date, then on the next preceding trading day during which a sale occurred; or
(ii) if such Common Stock is not traded on an exchange but is quoted on NASDAQ
or a successor quotation system, (1) the last sales price (if the Common Stock
is then listed as a National Market Issue under the NASDAQ National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Common Stock on the day previous to such date (or,
if shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred), as reported by NASDAQ or
such successor quotation systems.
"CAUSE" shall have the meaning ascribed in Paragraph
12(b) below.
"PERMANENT DISABILITY" shall have the same meaning as
"permanent and total disability," as defined in the Employer's Stock Option
Plan.
6. ADDITIONAL OPTIONS The Compensation Committee of the Board of
Directors of Employer may, in its discretion, grant to Executive, pursuant to
Employer's Stock Option Plan, additional options to acquire shares of Employer's
Common Stock ("Additional Options").Except as otherwise provided herein, the
terms and conditions of such Additional Options shall be as determined by
Employer in its sole discretion. Executive's rights with respect to any
Additional Options shall be separate from (and in addition to) the rights set
forth in paragraph 4(c) above with respect to the Compensatory Options and
Inducement Options.
7. BENEFITS. During the Employment Term, Executive shall be
entitled to participate in all group health, major medical, pension and profit
sharing, 401(k) and other benefit plans maintained by Employer and provided
generally to its executive officers, on the same terms as apply to participation
therein by management generally (except as otherwise provided herein). Further,
during the Employment Term, Executive shall be entitled to participate in all
fringe benefit programs and shall receive all perquisites if and to the extent
that Employer establishes and makes such benefits and perquisites available to
management generally, including, but not limited to, Employer-paid long-term
disability insurance and life insurance coverage.
8. EXPENSES. During the Employment Term, Employer shall
reimburse Executive for all reasonable travel, entertainment and other
business expenses incurred or paid by Executive in performing his duties and
functions hereunder. During the Employment Term, Employer shall reimburse
Executive, on an annual basis, for legal, accounting and other expenses
incurred for any investment, financial, estate and/or tax planning in
connection with this Agreement up to a maximum of $25,000.
9. VACATIONS. Executive shall be entitled to such holidays,
sick leave and personal time off as is allowed under the policies of Employer
to management generally (except as otherwise provided herein). In addition,
Executive shall be entitled to such vacations, taken at such time or times,
as Executive shall determine in his reasonable discretion, consistent with
the performance of Executive's obligations hereunder and the direction of the
Board of Directors.
10. NON-COMPETITION. During the Employment Term and (except as
provided in paragraph 12 herein) for a period of two years thereafter,
Executive shall not enter into or participate in any business competitive to
the Business carried on by Employer. The provisions of this paragraph 10
shall survive the expiration and/or termination of this Employment Agreement.
11. CONFIDENTIAL INFORMATION. During the Employment Term and
for a period of two years thereafter, Executive will not use for his own
advantage or disclose any
proprietary or confidential information relating to the business operations
or properties of Employer, any affiliate of Employer or any of their
respective customers, suppliers, landlords, licensors or licensees. Upon the
expiration or termination of the Employment Term, upon Employer's request,
Executive will surrender and deliver to Employer all documents and
information of every kind relating to or connected with Employer and its
affiliates and their respective businesses, customers, suppliers, landlord,
licensors and licensees. The foregoing confidential information provisions
shall not apply to information which: (i) is or becomes publicly known
through no wrongful act of the Executive, (ii) is rightfully received from
any third party without restriction and without breach by Executive of this
Employment Agreement; or (iii) is independently developed by Executive after
the term of his employment hereunder or is independently developed by a
competitor of Employer at any time. The provisions of this paragraph 11 shall
survive the expiration and/or termination of this Employment Agreement.
12. TERMINATION.
A. AUTOMATIC TERMINATION UPON DEATH. In the event of
Executive's death during the Employment Term, Executive's employment
hereunder shall be automatically terminated upon the date of death. As soon
as reasonably practicable following Executive's death, Employer shall pay to
Executive's Representative (defined below in paragraph 22)(i) Executive's
accrued but unpaid Base Salary and Annual Bonus, through the last day of the
month of his death, and (ii) any amount due hereunder for accrued but unused
vacation time as of the date of death. In addition, Executive's
Representative shall be entitled to exercise Executive's rights with respect
to the Compensatory Options and/or the Inducement Options, as appropriate, as
set forth in Paragraph 4(c) above, and Executive's rights with respect to the
Options (other than the Inducement Options), as provided herein and in the
stock option agreement(s) pertaining thereto.
B. TERMINATION BY EMPLOYER. During the Initial Term,
Employer shall be entitled to terminate Executive's employment hereunder only
upon the establishment of "Cause" or the "Permanent Disability" of Executive
(as those terms are defined below) by giving written notice to that effect to
Executive. During any Extended Term, Employer shall be entitled to terminate
Executive's employment hereunder (i) upon the establishment of Cause or the
Permanent Disability of Executive, by giving written notice to that effect to
Executive or (ii) for any other reason or for no reason upon 60 days prior
written notice to Executive.
For purposes hereof, the term "Cause" means either
(1) Executive's failure to substantially perform his duties and functions as
contemplated hereunder, if such failure constitutes gross neglect or willful
malfeasance; (2) Executive's committing fraud or embezzlement or otherwise
engaging in conduct that results in Executive being convicted of a felony
from which all appeals have been exhausted; (3) Executive's intentionally
acting in a manner which is materially detrimental or damaging to Employer's
reputation, business, operations or relations with its employees, suppliers
or customers, without taking reasonable steps to remedy such actions promptly
after receiving written notice thereof from Employer; (4) Executive's chronic
or habitual abuse of alcohol or prescription drugs or controlled substances;
or (5) Executive's committing
any other material breach of this Employment Agreement without taking
reasonable steps to cease or remedy such breach within thirty (30) days after
Executive's receipt of written notice from Employer specifically identifying
the nature of and circumstances relevant to any such claimed material breach
by Executive.
For purposes hereof the term "Permanent
Disability" means: (i) Executive's failure to devote full normal working time
as required herein to his employment hereunder for a period of at least 90
consecutive normal business days (or for at least a majority of the normal
business days in any consecutive 180-day period); and (ii) the existence of
an illness or incapacity (either physical or mental) affecting Executive
which, in the reasonable opinion of a Qualified Physician, is likely to be of
such character or severity that Executive would be unable to resume devoting
his full normal working time, as required herein, to his employment hereunder
for a period of at least nine consecutive months; the term "Qualified
Physical" means an impartial physician competent to diagnose and treat the
illness or condition which Executive is believed to be suffering, selected by
Employer and reasonably acceptable to Executive (or if Executive is then
incapable of acting for himself, Executive's Representative), who shall have
personally examined Executive and shall have personally reviewed Executive's
relevant medical records; provided Employer shall bear the costs of such
Qualified Physician's services and Executive agrees to submit to an
examination by such Qualified Physician and to the disclosure of Executive's
relevant medical records to such Qualified Physician.
The date upon which any termination effected
pursuant to this subparagraph 12(b) shall be effective is set forth in
subparagraph 12(d), and the effect of any such termination shall be as
described in subparagraphs 12(e) and (f).
C. TERMINATION BY EXECUTIVE. During the Initial Term,
Executive shall be entitled to terminate his employment hereunder only upon
the establishment of "Constructive Termination" (as that term is defined
below) or upon a Change of Control, by giving written notice to that effect
to Employer. During any Extended Term, Executive shall be entitled to
terminate his employment hereunder (i) upon the establishment of Constructive
Termination or upon a Change of Control, by giving notice to that effect to
Employer or (ii) for any other reason or for no reason upon twelve months
prior written notice to Employer.
For purposes hereof, "Constructive Termination"
shall mean Executive's termination of his employment hereunder as a direct
result of (i) a reduction in Executive's initial Base Salary or in the
maximum permitted Annual Bonus percentage, (ii) a material change in the
nature or extent of Executive's responsibilities that is inconsistent with
Executive's intended position and status hereunder, or (iii) the material
breach by the Employer of any provision of this Agreement which continues
without reasonable steps being taken to cure such breach for a period of 30
days after written notice thereof by Executive to Employer.
The date upon which any termination effected
pursuant to this subparagraph 12(c) shall be effective is set forth in
subparagraph 12(d), and the effect of any such termination shall be as
described in subparagraphs 12(f) and (g).
D. TERMINATION DATE. In the event Executive's employment
hereunder is terminated for circumstances constituting Cause, Permanent
Disability, Change of Control or Constructive Termination, such termination
shall take effect upon the termination date set forth in the written notice
to that effect given by Executive to Employer or by Employer to Executive, as
the case may be (PROVIDED THAT if either party disputes the propriety of such
termination, the effective date of termination shall be as established by
final resolution of such dispute, whether by agreement of the parties or
award of an arbitrator as contemplated herein, in favor of the propriety of
such termination), and in any other case termination of Executive's
employment hereunder shall take effect on the date specified in the written
notice thereof delivered by Executive to Employer or by Employer to
Executive, as the case may be (the date on which any such termination takes
effect being referred to herein as the "Termination Date"). Employer, at its
option, may require Executive to continue to perform his duties hereunder
until the Termination Date or pay to Executive such amount of compensation
and benefits otherwise due hereunder in accordance with Employer's then
existing salary payment schedule or in one lump sum payment.
E. EFFECT OF TERMINATION BY EMPLOYER FOR CAUSE. In the
event Executive's employment is terminated by Employer for Cause at any time
during the Employment Term, then (i) Employer shall pay to Executive
Executive's accrued but unpaid Base Salary and Annual Bonus through the
Termination Date; (ii) notwithstanding any of the provisions of Employer's
Stock Option Plan or of any option agreement with respect thereto to the
contrary, any and all of the Options (other than the Inducement Options) that
theretofore have vested may be exercised at any time on or before the
thirtieth day following such Termination Date and, if not so exercised,
thereupon automatically shall be canceled; and (iii) Executive's rights with
respect to the Compensatory Options and/or the Inducement Options, as
appropriate, shall be as stated in paragraph 4(c) above.
F. EFFECT OF TERMINATION UPON PERMANENT DISABILITY. In the
event Executive's employment is terminated by Employer upon the permanent
disability of Executive at any time during the Employment Term, then:
(i) Employer shall pay to Executive (x)
Executive's accrued but unpaid Base Salary and Annual Bonus through the
Termination Date, (y) Executive's then existing Base Salary for 12 months
from the date written notice of the termination of Executive's employment is
given by Employer, and (z) any amount due hereunder for accrued but unused
vacation time as of the Termination Date.
(ii) Employer, at its expense, shall make all
benefit payments, on behalf of Executive and Executive's dependents, for such
benefits Executive otherwise would have been entitled to receive hereunder,
for 12 months following the date written notice of the termination of
Executive's employment is given by Employer.
(iii) With respect to any of the Options (other
than the Inducement Options) which remain unvested upon such Termination
Date, notwithstanding any provision to the contrary in Employer's Stock
Option Plan and/or any
stock option agreement with respect thereto, there shall be immediate vesting
of that portion of such unvested Options which would have vested within 12
months of the date written notice of the termination of Executive's
employment is given by Employer. After giving effect to the foregoing
sentence, any Options (other than the Inducement Options) which remain
unvested shall automatically terminate.
(iv) Executive's rights with respect to the
Compensatory Options and/or the Inducement Options, as appropriate, shall be as
stated in paragraph 4(c) above.
G. EFFECT OF WRONGFUL OR CONSTRUCTIVE TERMINATION OR
TERMINATION UPON A CHANGE OF CONTROL.
(i) In the event Executive's employment is
terminated during the Employment Term by Executive in circumstances constituting
Constructive Termination or upon a Change of Control, then, from and after such
Termination Date:
(A) Executive shall not be subject to
the non-competition provisions set forth in paragraph 10 hereof.
(B) Executive shall be entitled to
receive the Base Salary, Annual Bonus, and benefits, which Executive
reasonably would have expected to receive in the period from the termination
Date to the expiration of the Initial Term (if such Termination Date occurs
more than 60 days prior to the expiration of the Initial Term) or during the
60 days following the date written notice of the termination of Executive's
employment is given by Employer or executive, as the case may be, (if such
Termination Date occurs after the Initial Term or 60 days prior to the
expiration of the Initial Term), all of which shall become effective upon the
Termination Date. The treatment of any Options other than the Inducement
Options shall be governed by the terms of the applicable granting documents.
(C) Executive's rights with respect
to the Compensatory Options and/or the Inducement Options, as appropriate,
shall be as stated in paragraph 4(c) above.
The foregoing shall be Executive's sole and exclusive remedy for any such
termination of his employment under this subparagraph 12(g).
H. EXCESS PARACHUTE PAYMENT. In the event that Employer
treats any portion of Executive's payments or benefits hereunder (including,
without limitation, under the foregoing subparagraphs 12(f) and (g)) as an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code ("Code") or any comparable provision of state or local tax law,
or it is otherwise asserted (including on an audit of either Employer or
Executive) that any portion of such payments or benefits is such an "excess
parachute payment," Employer shall prior to the date on which any amount of
excise tax (or penalty or interest) must be paid in respect thereof, promptly
make an additional lump sum payment in cash to Executive in an amount
sufficient, after giving effect to all federal, state and other taxes and
charges (including interest and penalties, if
any) with respect to such payment to make Executive whole
for all taxes (including withholding and social security
taxes) imposed under Section 4999 of the Code, or any
comparable provision of state or local tax law, with
respect to the "excess parachute payment" and all
associated interest and penalty amounts. Executive
shall cooperate in all reasonable respects with Employer
to attempt to minimize any such tax liability.
I. MISCELLANEOUS. In the event of any termination or
attempted termination hereof: (i) if multiple events, occurrences or
circumstances are asserted as bases for such termination or attempted
termination, the event, occurrence or circumstance that is earliest in time,
and any termination or attempted termination found to be proper hereunder
based thereon, shall take precedence over the others; (ii) no termination of
this Employment Agreement shall relieve or release either party from
liability hereunder based on any breach of the terms hereof by such party
occurring prior to the Termination Date; (iii) the terms of this Employment
Agreement relevant to performance or satisfaction of any obligation hereunder
expressly remaining to be performed or satisfied in whole or in part at the
Termination Date shall continue in force until such full performance or
satisfaction has been accomplished and otherwise neither party hereto shall
have any other or further remaining obligations to other party hereunder; and
(iv) the vesting and exercise provisions set forth in Employer's Stock Option
Plan and/or any option agreement with respect to the Options (other than the
Inducement Options) shall continue to apply except to the extent otherwise
expressly provided in this paragraph 12 .
J. NO SET-OFF; NO DUTY OF MITIGATION. There shall be no
right of setoff or counterclaim, in respect of any actual or alleged claim,
debt or obligation, against any payments or benefits required to be made or
provided to Executive hereunder (including, without limitation, pursuant to
subparagraphs 12(f) and (g) above). In the event of any termination of
Executive's employment under this paragraph 12, Executive shall be under no
obligation to seek other employment and shall be entitled to all payments or
benefits required to be made or provided to Executive hereunder, without any
duty of mitigation of damages and regardless of any other employment obtained
by Executive.
13. INJUNCTIVE RELIEF. It is agreed that the services of
Executive are unique and that any breach or threatened breach by Executive of
any provision of this Employment Agreement cannot be remedied solely by
damages. Accordingly, in the event of a breach by Executive of his
obligations under this Employment Agreement, Employer shall be entitled to
seek and obtain interim restraints and permanent injunctive relief without
proving the inadequacy of damages as a remedy, restraining Executive and any
business, firm, partnership, individual, corporation or entity participating
in such breach or attempted breach. Nothing herein, however, shall be
construed as prohibiting Employer from pursuing any other remedies available
at law or in equity for such breach or threatened breach, including the
recovery of damages and the termination of the services of Executive.
14. ARBITRATION. Any dispute or controversy arising out of or
relating to this Employment Agreement or any claimed breach hereof shall be
settled, at the request of
either party, by an arbitration proceeding conducted in accordance with the
rules of the American Arbitration Association ("AAA"), with the award
determined to be appropriate by the arbitrator therein to be final,
non-appealable and binding on the parties hereto, and with judgment upon such
award as is rendered in any such arbitration proceeding available for entry
and enforcement in any court having jurisdiction of the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed
within 15 days after the initial request for arbitration of such disputed
matter, each of the parties promptly shall designate a person qualified to
serve as an arbitrator in accordance with the rules of the AAA, and the two
persons so designated promptly shall select the arbitrator from among those
persons qualified to serve in accordance with the rules of the AAA. The
arbitration shall be held in the greater Seattle metropolitan area, or in
such other place as may be agreed upon at the time by the parties. The
expenses of the arbitration proceeding shall be borne by Employer, but the
arbitrator's award may provide that Executive shall reimburse Employer for an
equitable share of such expenses if Executive is not the prevailing party on
any of the issues involved in such arbitration. The Employer shall pay for
and bear the cost of its own and Executive's experts, evidence and counsel in
such arbitration proceeding, but the arbitrator's award may provide that, in
addition to any other amounts or relief due to Employer, Executive shall
reimburse Employer on demand for all of such costs of Executive's experts,
evidence and counsel initially incurred by Employer, to the extent the award
finds such costs properly allocable to any issue(s) in dispute as to which
the award indicates the Employer to be the prevailing party.
15. INDEMNIFICATION.
a. Employer shall indemnify Executive to the fullest extent
permitted by Delaware law as in effect on the date hereof against all costs,
expenses, liabilities and losses (including, without limitation, attorneys'
fees, judgments, penalties and amounts paid in settlement) reasonably
incurred by Executive in connection with any action, suit or proceeding,
whether civil, criminal, administrative or investigative in which Executive
is made, or is threatened to be made, a party to or a witness in such action,
suit or proceeding by reason of the fact that he is or was an officer,
director, consultant, agent or Executive of the Employer or of any of
Employer's controlled affiliates or is or was serving as an officer,
consultant director, member, Executive, trustee, agent or fiduciary of any
other entity at the request of the Employer (a "Proceeding").
b. Employer shall advance to Executive all reasonable costs
and expenses incurred by him in connection with a proceeding within 20 days
after receipt by Employer of a written request for such advance, accompanied
by an itemized list of the costs and expenses and Executive's written
undertaking to repay to Employer on demand the amount of such advance if it
shall ultimately be determined that Executive is not entitled to be
indemnified against such costs and expenses.
c. The indemnification provided to Executive hereunder is
in addition to, and not in lieu of, any additional indemnification to which
he may be entitled pursuant to Employer's Certificate of Incorporation or
Bylaws, any insurance maintained by Employer from time to time providing
coverage to Executive and other officers and directors of
Employer, or any separate written agreement with Executive.
The provisions of this paragraph 15 shall survive any
termination of this Employment Agreement.
16. AMENDMENT AND MODIFICATION. This Employment Agreement
contains the entire agreement between the parties with respect to the subject
matter hereof, and supersedes any and all prior agreements, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof, whether written or oral Subject to applicable law and upon the
consent of the Board of Directors of Employer, this Employment Agreement may
be amended, modified and supplemented by written agreement of Employer and
Executive with respect to any of the terms contained herein.
17. WAIVER OF COMPLIANCE. Any failure of either party to comply
with any obligation, covenant, agreement or condition on its part contained
herein may be expressly waived in writing by the other party, but such waiver
or failure to insist upon strict compliance shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Employment Agreement requires or permits consent by or on behalf of any
party, such consent shall be given in writing.
18. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered by hand, sent by registered or
certified U.S. Mail, postage prepaid, commercial overnight courier service or
transmitted by facsimile and shall be deemed served or delivered to the
addressee at the address for such notice specified below when hand delivered,
upon confirmation of sending when sent by fax, on the day after being sent
when sent by overnight delivery or five (5) days after having been mailed,
certified or registered, with postage prepaid:
IF TO EMPLOYER IF TO EXECUTIVE:
NEXTLINK Communications, Inc. Xxxxxx Xxxxxxx
Xxxx Xxxxxx Xxxxxx 0000 Xxxx Xxxxx
000 000xx Xxxxxx XX, Xxxxx 0000 XxXxxx, XX 00000
Xxxxxxxx, XX 00000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
or, in the case of either such party, to such substitute address as such
party may designate from time to time for purposes of notices to be given to
such party hereunder, which substitute address shall be designated as such in
a written notice given to the other party addressed as aforesaid.
19. ASSIGNMENT. This Employment Agreement shall inure to the
benefit of Executive and Employer and be binding upon the successors and
general assigns of Employer. This Employment Agreement shall not be
assignable, except to the extent set forth in paragraph 22.
20. ENFORCEABILITY. In the event it is determined that this
Employment Agreement is unenforceable in any respect, it is the mutual intent
of the parties that it be
construed to apply and be enforceable to the maximum extent permitted by
applicable law.
21. APPLICABLE LAW. This Employment Agreement shall be
construed and enforced in accordance with the laws applicable to contracts
executed, delivered and fully to be performed in the State of Washington.
22. BENEFICIARIES: EXECUTIVE'S REPRESENTATIVE. Executive shall
be entitled to select (and to change, from time to time, except to the extent
prohibited under any applicable law) a beneficiary or beneficiaries to
receive any payments, distributions or benefits to be made or distributed
hereunder upon or following Executive's death. Any such designation shall be
made by written notice to Employer. In the event of Executive's death or of a
judicial determination of Executive's incompetence, references in this
Agreement to Executive shall be deemed, as appropriate, to refer to his
designated beneficiary, to his estate or to his executor or personal
representative ("Executive's Representative") solely for the purpose of
providing a clear mechanism for the exercise of Executive's rights hereunder
in the case of Executive's death or Permanent Disability.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement to be effective on and as of the day and year first above written.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxx
---------------------------------
Title: Director
---------------------------------
/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
ANNEX A
TO
EMPLOYMENT AGREEMENT
BETWEEN
NEXTLINK COMMUNICATIONS, INC.
AND
XXXXXX XXXXXXX
DATED: SEPTEMBER 21, 1999
The Compensatory Options shall be granted as follows:
Non-qualified Options to acquire 1,500,000 shares for Employer Class A
Common Stock awarded on September 21, 1999. The Compensatory Options
shall vest annually in three equal amounts on the first, second and
third anniversary dates of the effective date of the Employment
Agreement. The exercise price of the Compensatory Options is $.01 per
share.
The Inducement Options shall be granted as follows:
Non-qualified options to acquire 1,500,000 shares of Employer Class A
Common Stock awarded on September 21, 1999. The Inducement Options
shall vest annually in four equal amounts on the first, second, third
and fourth anniversary dates of the effective date of the Employment
Agreement. The exercise price of the Inducement Options is the closing
sale price on September 21, 1999, as reported by NASDAQ.
All Options shall, to the extent not theretofore vested in
accordance with their normal terms, vest on an automatic and accelerated
basis (i) in the circumstances set forth in paragraphs 12(f) and (g) of the
Employment Agreement, or (ii) upon the occurrence of a Change of Control
Event.
All Options (upon vesting) will have an exercise period of ten (10)
years after the relevant grant date subject to earlier termination of the
exercise period in the event of termination of Executive's employment either
(i) by Employer in circumstances constituting Cause or (ii) by Executive
other than in circumstances constituting Constructive Termination; in either
of which case, the Options shall be canceled if not exercised within 90 days
following the Termination Date with respect to such termination.
All Options (and all shares issued on exercise of such Options) will
be subject to an effective Form S-8 (or other appropriate form) registration
statement and will be qualified for the treatment afforded under Rule 16b-3.
To the extent not otherwise provided above, or in the Employment
Agreement of which this Annex A forms a part, the terms applicable to all of
the Options (and of any option agreement entered into in connection
therewith) shall be the standard terms
normally applicable to a grant of "non-qualified" stock options granted
pursuant to the NEXTLINK Communications, Inc. Stock Option Plan.
