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EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated and effective the 22nd day of February,
1999 (the "Effective Date") is made by and between Global TeleSystems Group,
Inc., a Delaware corporation (the "Company") and Xxxxxx X. Xxxxxxxxxxx (the
"Executive").
RECITALS:
A. It is the desire of the Company to assure itself of the
services of Executive by engaging Executive as its Executive Vice-President and
Chief Corporate Development Officer; and
B. Executive desires to commit to serve the Company on the
terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below, the parties hereto agree as
follows:
1. Certain Definitions.
(a) "Annual Base Salary" shall have the meaning
set forth in Section 5(a).
(b) "Board" shall mean the Board of Directors of
the Company.
(c) "Bonus" shall have the meaning set forth in
Section 5(b).
(d) The Company shall have "Cause" to terminate
Executive's employment hereunder upon Executive's
(i) failure to follow a legal order of the
Board or the Chief Executive Officer of the Company, other
than any such failure resulting from Executive's Disability,
after notice and reasonable opportunity for cure,
(ii) fraud, embezzlement, or any other similar
illegal act committed by the Executive in connection with the
Executive's duties as an executive of the Company or any
subsidiary or affiliate of the Company,
(iii) conviction of any felony or crime
involving moral turpitude which causes or may reasonably be
expected to cause substantial economic injury to or
substantial injury to the reputation of the Company or any
subsidiary or affiliate of the Company, or
(iv) willful or grossly negligent commission
of any other act or failure to act which causes or may
reasonably be expected (as of the time of such occurrence) to
cause substantial economic injury to or substantial injury to
the reputation of the Company or any subsidiary or affiliate
of the Company,
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including, without limitation, any material violation of the
Foreign Corrupt Practices Act, as described herein below.
(e) "Change in Control" shall mean any of the
following vents:
(i) a report shall be filed with the
Securities and Exchange Commission pursuant to the Exchange
Act of 1934 (the "Act"), or successor law or provision,
disclosing that any "Person" (within the meaning of Section
13(d) of the Act), other than the Company or a subsidiary of
the Company, or an employee benefit plan sponsored by the
Company or a subsidiary of the Company is, or becomes the
beneficial owner (as such term is defined in Exchange Act Rule
13d-3), directly or indirectly of, 25% or more of the
outstanding voting stock of the Company (or securities
convertible into Company Stock) (calculated as provided in
Exchange Act Rule 13d-3(d) in the case of rights to acquire
Company Stock),
(ii) any such "Person", other than the Company
or a subsidiary of the Company, or a employee benefit plan
sponsored by the Company or a Subsidiary of the Company, shall
purchase shares pursuant to a tender offer or exchange offer
to acquire any Company Stock (or securities convertible into
Company Stock) for cash, securities or any other
consideration, provided that after consummation of the offer,
the person in question is the beneficial owner (as such term
is defined in Exchange Act Rule 13d-3), directly or
indirectly, of 20% or more of the outstanding voting stock of
the Company (calculated as provided in Exchange Act Rule
13d-3(d) in the case of rights to acquire Company Stock),
(iii) the stockholders of the Company shall
approve (A) any consolidation, share exchange or merger of the
Company (a "Change of Control Transaction") (1) in which the
stockholders of the Company immediately prior to such Change
of Control Transaction do not own at least a majority of the
voting power of the entity which survives/results from such
Change of Control Transaction, or (2) in which a shareholder
of the Company immediately before such Change of Control
Transaction, but who does not own a majority of the voting
stock of the Company immediately prior to such Change of
Control Transaction, owns a majority of the Company's voting
stock after such Change of Control Transaction; or (B) any
sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all
the assets of the Company, including stock held in subsidiary
corporations or interests held in subsidiary ventures, or
(iv) there shall have been a change in a
majority of the members of the Board within a 24-month period
unless the election or nomination for election by the
Company's stockholders of each new director during such
24-month period was approved by the vote of two-thirds of the
directors then still in office who were directors at the
beginning of such 24-month period; or
(v) the Company shall file a report with the
Securities and
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Exchange Commission on Form 8-K (or any successor thereto),
that a change in control of or over the Company has occurred.
(f) "Closing Price" shall mean the closing price in
United States Dollars ("$") of a share of Company Stock on the
principal exchange on which such shares are traded on the day in
question; if such exchange is in the United States, as reported in the
Wall Street Journal or, if such exchange is in Europe, as reported in
the Financial Times, with such price converted to $ utilizing the mean
of the bid and offered prices for $ in the local currency for the day
in question as reported in the Wall Street Journal.
(g) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(h) "Committee" shall mean either the Compensation
Committee or a SubCommittee of such Committee duly appointed by the
Board.
(i) "Company" shall have the meaning set forth in
the preamble hereto.
(j) "Company Stock" shall mean the $.10 par value
common stock of the Company.
(k) "Contract Year" shall mean each twelve month
period beginning on the Effective Date or an annual anniversary
thereof.
(l) "Date of Termination" shall mean (i) if
Executive's employment is terminated by Executive's death, the date of
Executive's death and (ii) if Executive's employment is terminated
pursuant to Section 6(a)(ii)-(vi) the date specified in the Notice of
Termination.
(m) "Deemed Bonus" shall mean seventy-five percent
(75%) of the rate of Executive's Annual Base Salary for such year.
(n) "Disability" shall mean the absence of
Executive from Executive's duties to the Company on a full-time basis
for a total of six months during any 12-month period as a result of
incapacity due to mental or physical illness which is determined to be
reasonably likely to extend beyond the completion of the Term and which
determination is made by a physician selected by the Company and
acceptable to Executive or Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). A
Disability shall not be "incurred" hereunder until, at the earliest,
the last day of the sixth month of such absence.
(o) "Executive" shall have the meaning set forth in
the preamble hereto.
(p) "Extension Term" shall have the meaning set
forth in Section 2.
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(q) "Good Reason" shall mean any of the following
events which is not cured by the Company within 15 days after written
notice thereof is given to the Company by Executive: (i) any failure to
pay Executive's Base Salary or Bonus when due to Executive; (ii) any
other material breach by the Company of any material term of this
Agreement; or (iii) any material adverse change in Executive's job
titles, duties, responsibilities, status, reporting responsibilities or
perquisites granted hereunder, without Executive's consent. "Good
Reason" shall cease to exist for an event on the 30th day following the
later of its occurrence or Executive's knowledge thereof, unless
Executive has given the Company notice thereof prior to such date.
(r) "Grant Date" shall mean the date on which the
Committee acts to grant to Executive the Options described herein.
(s) "Initial Term" shall have the meaning set forth
in Section 2.
(t) "Notice of Termination" shall have the meaning
set forth in Section 6(b).
(u) "Options" shall have the meaning set forth in
Section 5(c).
(v) "Stock Option Plan" shall mean Fourth Amended
and Restated 1992 Stock Option Plan of Global TeleSystems Group, Inc.
or any successor plan.
(w) "Term" shall have the meaning set forth in
Section 2.
2. Employment Term. The Company hereby employs the
Executive, and the Executive hereby accepts his employment, under the terms and
conditions hereof, for the period (the "Term") beginning on the effective date
hereof and ending upon Termination as set forth herein.
3. Position and Duties. Executive shall serve as Executive
Vice-President and Chief Corporate Development Officer of the Company, reporting
to the Chief Executive Officer, with such responsibilities, duties and authority
as are customary for such role. Executive shall devote all necessary business
time and attention, and employ Executive's reasonable best efforts, toward the
fulfillment and execution of all assigned duties, and the satisfaction of
defined annual and/or longer-term performance criteria.
4. Place of Performance. In connection with Executive's
employment during the Term, Executive shall be based at the Company's offices in
or near McLean, Virginia, except for necessary travel on the Company's business,
but may be reassigned during the Term hereof to another location identified as
the principal executive or operational headquarters of the Company.
5. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive
shall receive a base salary at a rate not less than $375,000 per annum
(the "Annual Base Salary"), less
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standard deductions, paid in accordance with the Company's general
payroll practices for executives, but no less frequently than monthly.
The Annual Base Salary shall compensate Executive for any official
position or directorship that Executive is asked to hold in the Company
or its affiliates as a part of Executive's employment responsibilities.
No less frequently than annually during the Term, the Committee on
advice of the Company's Chief Executive Officer shall review the rate
of Annual Base Salary payable to Executive, and may, in their
discretion, increase the rate of Annual Base Salary payable hereunder;
provided, however, that any increased rate shall thereafter be the rate
of "Annual Base Salary" hereunder.
(b) Bonus. Except as otherwise provided for herein,
for each fiscal quarterly compensation period (or other period
consistent with the Company's then-applicable normal employment
practices) during which Executive is employed hereunder on the last
day, Executive shall be eligible to receive a Bonus in an amount up to
one-quarter (or other pro-rata portion as appropriate) of 75% of
Executive's Base Salary pursuant to, and as set forth in, the terms of
the GTS Senior Executive Bonus Plan as such Plan may be amended from
time to time, plus such other bonus payments, if any, as shall be
determined by the Compensation Committee in its sole discretion
(i) Stock Options. The Company has granted to
Executive options (Options") to purchase 250,000 shares
("Option Shares") in the Company pursuant to the terms of the
Stock Option Plan and an associated Stock Option Agreement.
(d) Restricted Shares. The Company has granted to
Executive, pursuant to the Company Equity Compensation Plan, 30,000
Restricted Shares, which shall be subject to restrictions on their sale
as set forth in an associated Restricted Shares Grant Letter.
(e) Benefits. Executive shall be entitled to
receive such benefits and to participate in such employee group benefit
plans, including life, health and disability insurance policies, and
financial planning services as are generally provided by the Company to
its executives of comparable level and responsibility in accordance
with the plans, practices and programs of the Company.
(f) Expenses. The Company shall reimburse Executive
for all reasonable and necessary expenses incurred by Executive in
connection with the performance of Executive's duties as an employee of
the Company. Such reimbursement is subject to the submission to the
Company by Executive of appropriate documentation and/or vouchers in
accordance with the customary procedures of the Company for expense
reimbursement, as such procedures may be revised by the Company from
time to time hereafter.
(g) Vacations. Executive shall be entitled to paid
vacation in accordance with the Company's vacation policy as in effect
from time to time. However, in no event shall Executive be entitled to
less than four (4) weeks vacation per Calendar Year. Executive shall
also be entitled to paid holidays and personal days in accordance with
the Company's practice with respect to same as in effect from time to
time.
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(h) Relocation. The Company acknowledges that you
will retain your principal residence in Chicago until at least August
1, 2000 and the Company will pay the expenses of required travel
between your principal residence and the company's corporate offices in
Virginia until that time or a later date that is mutually agreed-upon
by the Company and the Executive. Upon relocation, you will relocate
your principal residence to the area immediately surrounding either the
Company's executive headquarters in Virginia or the operational
headquarters in London, as specified by the Chief Executive Officer.
Should your family remain in Chicago at the time of your relocation,
the Company will provide you the use of a furnished corporate apartment
near the relevant office. Should your family relocate with you at that
time, or agree to relocate with you at a later time mutually agreed
between you and the Company, the Company will pay the expense of moving
your family and normal household goods in accordance with the normal
relocation programs of the Company and you will receive a one-time-only
payment equal to three times your normal monthly compensation,
including all taxes normally due thereon. In addition, if you relocate
pursuant to the Company's request to London, you will receive benefits
normally made available to ex-patriate employees, including a housing
allowance, a car allowance, tuition reimbursement and tax equalization
in accordance with the Company's normal programs.
6. Termination.
(a) Executive's employment hereunder may be
terminated by the Company, on the one hand, or Executive, on the other
hand, as applicable, without any breach of this Agreement, under the
following circumstances
(i) Death. Executive's employment hereunder
shall terminate upon Executive's death.
(ii) Disability. If Executive has incurred a
Disability, the Company may give Executive written notice of
its intention to terminate Executive's employment. In such
event, Executive's employment with the Company shall terminate
effective on the 14th day after receipt of such notice by
Executive, provided that within the 14 days after such
receipt, Executive shall not have returned to full-time
performance of Executive's duties.
(iii) Cause. The Company may terminate
Executive's employment hereunder for Cause.
(iv) Good Reason. Executive may terminate
Executive's employment for Good Reason.
(v) Without Cause. The Company may terminate
Executive's employment hereunder without Cause.
(vi) Resignation without Good Reason.
Executive may resign Executive's employment without Good
Reason upon 90 days written notice to the Company.
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(b) Notice of Termination. Any termination of
Executive's employment by the Company or by Executive under this
Section 6 (other than termination pursuant to Paragraph 6(a)(i)) shall
be communicated by a written notice (the "Notice of Termination") to
the other party hereto indicating the specific termination provision in
this Agreement relied upon, setting forth in reasonable detail any
facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated, and specifying
a Date of Termination which, except in the case of termination for
Cause or Disability, shall be at least ninety (90) days following the
date of such notice ( the "Notice Period"); provided that the Company
may pay to Executive all Salary, benefits and other rights due to
Executive during such Notice Period instead of employing Executive
during such Notice Period.
(c) Upon Executive's Termination of employment with
the Company for whatever reason, he shall be deemed to have effectively
resigned from all executive, director or other positions with the
Company or its affiliates at the time of Termination, and shall return
all property owned by the Company and in Executive's possession at that
time.
7. Severance Payments. Other than as set forth below, no
payments or benefits shall be due to Executive in connection with a termination
of this Agreement other than Salary and Benefits earned prior to the date of
termination.
(a) Termination without Cause or for Good Reason.
If Executive's employment shall be terminated by the Company without
Cause (pursuant to Section 6(a)(v)), or by the Executive for Good
Reason (pursuant to Section 6(a)(iv)), and subject to the Company's
receipt of a general release in its customary form, the Company shall
(i) pay to Executive (A) all base Salary due
for the period prior to termination, plus (B) either a lump
sum cash payment as soon as practicable following the Date of
Termination, or, in the Company's discretion, in twenty-four
(24) monthly installments in accordance with the Company's
normal payroll practices, an amount equal to two (2) times the
sum of (i) Executive's then-current rate of Annual Base Salary
and (ii) the Bonus Executive was awarded in the prior year
(the "Bonus Portion"), provided that such Bonus Portion shall
not be less than 60% of Executive Deemed Bonus and provided
further that, if Executive's employment shall be so terminated
by the Company within two years after a Change of Control,
such Bonus Portion shall not be less than two (2) times
Executive's Deemed Bonus;
(ii) accelerate the vesting of the Options
referred to in Paragraph 5(c) hereof as are necessary to
result in Executive's having after such acceleration, when
considered with such Options vesting prior to such
acceleration, not less than the greater of (a) 125,000 or (b)
the sum of (x) that portion already vested and (y) an
additional 83,250 options;
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(iii) accelerate the removal of restrictions
on the Restricted Shares referred to in Paragraph 5(d) hereof
as are necessary to result in Executive's having after such
acceleration, when considered with such Restricted Shares
having had their restriction removed prior to such
acceleration, a minimum of 24,000 Restricted Shares no longer
subject to such restrictions;
(iv) continue to provide Executive with all
employee benefits and perquisites which Executive was
participating in or receiving at the time of termination of
employment until the earlier of two years from the Date of
Termination or Executive's receipt of comparable benefits from
a successor employer;
(v) pay the cost of up to 24 months, as
required, of executive-level out-placement services (including
the use of an office and secretarial support); and
(v) if Executive has relocated his primary
residence as set forth in Paragraph 5(h) hereof, pay the cost
of relocating the household furnishings and personal effects
of Executive (and, if applicable, his family) to Chicago at
any time up to six (6) months after termination.
(b) Termination by Reason of Disability or Death.
If Executive's employment shall terminate by reason of Executive's
Disability (pursuant to Section 6(a)(ii)) or death (pursuant to Section
6(a)(i)), and subject (is the case of a termination due to Executive's
disability) to the Company's receipt of a general release in its
customary form, the Company shall pay to Executive, in a lump sum cash
payment as soon as practicable following the Date of Termination, all
unpaid Base Salary due for the period prior to Termination plus the
prorated portion of the unpaid Bonus to which Executive would otherwise
be entitled for the compensation period of termination and, if there is
a period of time during which Executive is not being paid Salary and
not receiving long-term disability insurance payments, the Committee
may, in its discretion, determine that the Company shall make interim
payments to Executive until commencement of disability insurance
payments.
(c) Survival. The expiration or termination of the
Term shall not impair the rights or obligations of any party hereto
which shall have accrued hereunder prior to such expiration.
8. Parachute Payments.
(d) If it is determined (as hereafter provided)
that by reason of any payment or Option vesting occurring pursuant to
the terms of this Agreement (or otherwise under any other agreement,
plan or program) upon a Change in Control (collectively a "Payment")
the Executive would be subject to the excise tax imposed by Code
Section 4999 or successor provision (the "Parachute Tax"), then the
Executive shall be entitled to receive an additional payment or
payments (a "Gross- Up Payment") in an amount such that, after payment
by the Executive of all taxes (including any Parachute Tax) imposed
upon the Gross- Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Parachute Tax imposed upon the Payment.
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(e) Subject to the provisions of Section 8(a)
hereof, all determinations required to be made under this Section 8,
including whether a Parachute Tax is payable by the Executive and the
amount of such Parachute Tax and whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by the
nationally recognized firm of certified public accountants (the
"Accounting Firm") used by the Company prior to the Change in Control
(or, if such Accounting Firm declines to serve, the Accounting Firm
shall be a nationally recognized firm of certified public accountants
selected by the Executive). The Accounting Firm shall be directed by
the Company or the Executive to submit its preliminary determination
and detailed supporting calculations to both the Company and the
Executive within 15 calendar days after the determination date, if
applicable, and any other such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any
Parachute Tax is payable by the Executive, the Company shall pay the
required Gross-Up Payment to, or for the benefit of, the Executive
within five business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Parachute Tax
is payable by the Executive, it shall, at the same time as it makes
such determination, furnish the Executive with an opinion that he has
substantial authority not to report any Parachute Tax on his federal
tax return. Any good faith determination by the Accounting Firm as to
the amount of the Gross-Up Payment shall be binding upon the Company
and the Executive absent a contrary determination by the Internal
Revenue Service or a court of competent jurisdiction; provided,
however, that no such determination shall eliminate or reduce the
Company's obligation to provide any Gross-Up Payments that shall be due
as a result of such contrary determination. As a result of the
uncertainty in the application of Code Section 4999 at the time of any
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should
have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
or fails to pursue its remedies pursuant to Section 8(f) hereof and the
Executive thereafter is required to make a payment of any Parachute
Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company
and the Executive as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to, or for the benefit of, the
Executive within five business days after receipt of such determination
and calculations.
(f) The Company and the Executive shall each
provide the Accounting Firm access to and copies of any books, records
and documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determination contemplated by Section 8(b) hereof.
(g) The federal tax returns filed by the Executive
(or any filing made by a consolidated tax group which includes the
Company) shall be prepared and filed on a basis consistent with the
determination of the Accounting Firm with respect to the
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Parachute Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Parachute Tax, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service, and such other documents reasonably requested by the
Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, the Accounting Firm determines
in good faith that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(h) The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by Sections 8(b) and (d) hereof shall be borne by the
Company. If such fees and expenses are initially advanced by the
Executive, the Company shall reimburse the Executive the full amount of
such fees and expenses within five business days after receipt from the
Executive of a statement therefor and reasonable evidence of his
payment thereof.
(i) In the event that the Internal Revenue Service
claims that any payment or benefit received under this Agreement
constitutes an "excess parachute payment" within the meaning of Code
Section 280G(b)(1), or successor provision, the Executive shall notify
the Company in writing of such claim. Such notification shall be given
as soon as practicable but not later than 10 business days after the
Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to
the expiration of the 30 day period following the date on which the
Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action
in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company and reasonably
satisfactory to the Executive; (iii) cooperate with the Company in good
faith in order to effectively contest such claim; and (iv) permit the
Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest
and penalties and related legal, consulting or other similar fees)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for and against for any
Parachute Tax or income tax or other tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
(j) The Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
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and xxx for a refund or contest the claim in any permissible manner and
the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after tax basis, from
any Parachute Tax (or other tax including interest and penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided,
further, that if the Executive is required to extend the statue of
limitations to enable the Company to contest such claim, the Executive
may limit this extension solely to such contested amount. The Company's
control of the contest shall be limited to issues with respect to which
a corporate deduction would be disallowed pursuant to Code Section 280G
or successor provision, and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority. In addition, no position
may be taken nor any final resolution be agreed to by the Company
without the Executive's consent if such position or resolution could
reasonably be expected to adversely affect the Executive unrelated to
matters covered hereto.
(k) If, after the receipt by Executive of an amount
advanced by the Company in connection with the contest of the Parachute
Tax claim, the Executive receives any refund with respect to such
claim, the Executive shall promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after
taxes applicable thereto); provided, however, if the amount of that
refund exceeds the amount advanced by the Company the Executive may
retain such excess. If, after the receipt by the Executive of an amount
advanced by the Company in connection with a Parachute Tax claim, a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest the denial of such refund
prior to the expiration of 30 days after such determination such
advance shall be deemed to be in consideration for services rendered
after the Date of Termination.
9. Competition.
(a) Executive shall not, at any time during the
Term, or for one year thereafter, without the prior written consent of
the Board, directly or indirectly through any other person or entity:
(i) own, acquire in any manner any ownership
interest in (except as purely passive investments amounting to
no more than five percent of the voting equity), or serve as a
director, officer, employee, counsel or consultant of any
person, firm, partnership, corporation, consortia, association
or other entity that competes with the Company or any of its
affiliates or subsidiaries, in any geographic market in which
the Company either (A) offers or provides telecommunications
(which term hereafter shall be deemed to include voice, data
or internet communications) services to customers; (B)
operates or manages a
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provider of telecommunications services; (C) has investments
in a provider of telecommunications services; or (D), to
Executive's knowledge, has plans to either operate a
telecommunications carrier, offer a telecommunications
service, or invest in a telecommunications carrier within the
next twelve months,
(ii) solicit, entice, persuade or induce any
individual who currently is, or at any time during the
preceding twelve months shall have been, an officer, director
or employee of the Company, or any of its affiliates, to
terminate or refrain from renewing or extending such person's
employment with the Company or such subsidiary or affiliate,
or to become employed by or enter into contractual relations
with or consultant for any other individual or entity, and
Executive shall not approach any such employee for any such
purpose or authorize or knowingly cooperate with the taking of
any such actions by any other individual or entity, or
(iii) except in accordance with Executive's
duties on behalf of the Company, solicit, entice, persuade, or
induce any individual or entity which currently is, or at any
time during the preceding twelve months shall have been, a
customer, consultant, vendor, supplier, lessor or lessee of
the Company, or any of its subsidiaries or affiliates, to
terminate or refrain from renewing or extending its
contractual or other relationship with the Company or such
subsidiary or affiliate, and Executive shall not approach any
such customer, vendor, supplier, consultant, lessor or lessee
for such purpose or authorize or knowingly cooperate with the
taking of any such actions by any other individual or entity.
(b) Executive shall not at any time:
(iv) other than when required in the ordinary
course of business of the Company, disclose, directly or
indirectly, to any person, firm, corporation, partnership,
association or other entity, any trade secret, or confidential
information concerning the financial condition, suppliers,
vendors, customers, lessors, or lessees, sources or leads for,
and methods of obtaining, new business, or the methods
generally of doing and operating the respective businesses of
the Company or its affiliates and subsidiaries to the degree
such secret or information incorporates information that is
proprietary to, or was developed specifically by or for, the
Company, except such information that is a matter of public
knowledge, was provided to Executive (without breach of any
obligation of confidence owed to the Company) by a third party
which is not an affiliate of the Company, or is required to be
disclosed by law or judicial or administrative process, or
(v) make any oral or written statement about
the Company and/or its financial status, business, compliance
with laws, personnel, directors, officers, consultants,
services, business methods or otherwise, which is intended or
reasonably likely to disparage the Company or otherwise
degrade its reputation in the business or legal community in
which it operates or in the telecommunications industry;
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provided that nothing in this Section 9(b) shall be construed
so as to prevent Executive from using, in connection with his
employment for himself or an employer other than the Company,
knowledge that was acquired by him during the course of his
employment with the Company and which is generally known to
persons of his experience in other companies in the same
industry;
(c) Executive hereby represents that (i) Executive
is not restricted in any material way from performing Executive's
duties hereunder as the result of any contract, agreement or law; and
(ii) Executive's due performance of Executive's duties hereunder does
not and will not violate the terms of any agreement to which Executive
is bound.
(d) In the event any agreement in Section 9 hereof
shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period of time
or over too great a geographical area or by reason of its being too
extensive in any other respect, it will be interpreted to extend only
over the maximum period of time for which it may be enforceable, and/or
over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.
10. Injunctive Relief. It is recognized and acknowledged by
Executive that a breach of the covenants contained in Section 9 hereof will
cause irreparable damage to the Company and its goodwill, the exact amount of
which will be difficult or impossible to ascertain, and that the remedies at law
for any such breach will be inadequate. Accordingly, Executive agrees that in
the event of a breach of any of the covenants contained in Section 9 hereof, in
addition to any other remedy which may be available at law or in equity, the
Company will be entitled to specific performance and injunctive relief.
11. Mutual Non-Disparagement. Neither the Company nor
Executive shall make any oral or written statement about the other party which
is intended or reasonably likely to disparage the other party, or otherwise
degrade the other party's reputation in the business or legal community or in
the telecommunications industry.
12. Foreign Corrupt Practices Act. Executive agrees to
comply in all material respects with the applicable provisions of the U.S.
Foreign Corrupt Practices Act of 1977 ("CPA"), 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. When any representative, employee, agent, or other individual or
organization associated with Executive is required to perform any obligation
related to or in connection with this Agreement, the substance of this section
shall be imposed upon such person and included in any agreement between
Executive and any such person. Failure by Executive to comply with the
provisions of the CPA shall constitute a material breach of this Agreement and
shall entitle the Company to terminate Executive's employment for Cause.
Additionally, Executive hereby acknowledges that as a condition for the Company
to continue this Agreement, Executive shall execute an
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acknowledgment that Executive has read "An Explanation of the Foreign Corrupt
Practices Act" and "Global TeleSystems Group, Inc. Policy on Foreign
Transactions," copies of which have been provided to Executive. Executive also
acknowledges that a condition precedent to the effectiveness of this Agreement
shall be the execution by Executive of the "Addendum to the Global TeleSystems
Group, Inc. Policy on Foreign Transaction," a copy of which has been provided to
Executive. Additionally, and as a condition for the Company to continue this
Agreement, Executive shall be required from time to time at the request of the
Company to execute a certificate of Executive's compliance with the
aforementioned laws and regulations.
13. Purchases and Sales of the Company's Securities.
Executive has read and agrees to comply in all respects with the Company's
Policy Regarding the Purchase and Sale of the Company's Securities by Employees,
as such Policy may be amended from time to time. Specifically, and without
limitation, Executive agrees that Executive shall not purchase or sell stock in
the Company at any time (a) that Executive possesses material non-public
information about the Company or any of its businesses; and (b) during any
"Trading Blackout Period" as may be determined by the Company as set forth in
the Policy from time to time.
14. Indemnification. Executive shall be entitled to
indemnification set forth in the Company's Certificate of Incorporation to the
maximum extent allowed under the laws of the Commonwealth of Virginia and the
State of Delaware Corporations Act, and Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers against all costs, charges and
expenses incurred or sustained by Executive in connection with any action, suit
or proceeding to which Executive may be made a party by reason of Executive's
being or having been a director, officer or employee of the Company or any of
its subsidiaries or Executive's serving or having served any other enterprise as
a director, officer or employee at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement).
15. Notices. Any written notice required by this Agreement
will be deemed provided and delivered to the intended recipient when (a)
delivered in person by hand; or (b) three days after being sent via U.S.
certified mail, return receipt requested; or (c) the day after being sent via by
overnight courier, in each case when such notice is properly addressed to the
following address and with all postage and similar fees having been paid in
advance:
If to the Company: Global TeleSystems Group, Inc.
Attn.: Senior Vice President for Human Resources
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx 00xx Xxxxx
XxXxxx, XX 00000 XXX
If to Executive: to Executive at the address set forth below under
Executive's signature.
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 written notice to the other party in the manner described above.
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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 listed parties with respect to the subject matter
described in this Agreement and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties 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 either party 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 or any
arbitrator selected in accordance with the terms hereof to be illegal, invalid
or unenforceable in any respect, such provision shall have no force and effect,
but such holding shall not affect the legality, validity or enforceability of
any other provision of this Agreement provided that the provisions held illegal,
invalid or unenforceable does not reflect or manifest a fundamental benefit
bargained for by a party hereto.
19. Dispute Resolution and Arbitration. In the event that
any dispute arises between the Company and Executive regarding or relating to
this Agreement and/or any aspect of Executive's employment relationship with the
Company, AND IN LIEU OF LITIGATION AND A TRIAL BY JURY, the parties consent to
resolve such dispute through mandatory arbitration under the Commercial Rules of
the American Arbitration Association ("AAA"), before a single arbitrator in
McLean or Alexandria, Virginia. The parties hereby consent to the entry of
judgment upon award rendered by the arbitrator in any court of competent
jurisdiction. Notwithstanding the foregoing, however, should adequate grounds
exist for seeking immediate injunctive or immediate equitable relief, any party
may seek and obtain such relief; provided that, upon obtaining such relief, such
injunctive or equitable action shall be stayed pending the resolution of the
arbitration proceedings called for herein. The parties hereby consent to the
exclusive jurisdiction in the state and Federal courts of or in the Commonwealth
of Virginia for purposes of seeking such injunctive or equitable relief as set
forth above. Any and all out-of-pocket costs and expenses incurred by the
parties in connection with such arbitration (including attorneys' fees) shall be
allocated by the arbitrator in substantial conformance with his or her decision
on the merits of the arbitration; provided, however, that in no event shall
Executive be required to pay attorneys' fees in an amount that exceeds the
amount incurred by Executive for Executive's attorneys' fees.
20. Choice of Law. Executive and the Company intend and
hereby acknowledge that jurisdiction over disputes with regard to this
Agreement, and over all aspects of the relationship between the parties hereto,
shall be governed by the laws of the Commonwealth of Virginia without giving
effect to its rules governing conflicts of laws.
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.
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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 have executed this Agreement
on the date and year first above written.
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Senior VP - Human Resources
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxxxxx
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