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EXHIBIT 10.5
DATED AS OF JULY 1, 1997
AMENDED AND RESTATED
SERVICE AGREEMENT
PLD TELEKOM INC. (1)
XXXXX XXXXXXX (2)
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DATED AS OF July 1, 1997
PARTIES
(1) PLD TELEKOM INC., a corporation incorporated under the laws of the
State of Delaware, whose registered office is at c/o CT Corporation
System, Inc., 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx ("the
Company"); and
(2) XXXXX XXXXXXX of 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("the
Executive").
RECITALS
The Company and the Executive were parties to a Service Agreement
dated as of October 1, 1995 (the "First Agreement") and the Executive and PLD
Management Services Limited, an English company and a wholly-owned subsidiary
of the Company ("PLDMS"), were parties to a second Service Agreement also dated
as of October 1, 1995 (the "Second Agreement").
As a result of the Company's continuance to Delaware and the
Executive's transfer to the United States, the Second Agreement is being
concluded by agreement of the parties thereto effective as of the close of
business on June 30, 1997 and the Company and the Executive are entering into
this Amended and Restated Service Agreement with a view to amending and
restating the terms of the First Agreement in their entirety, inter alia, to
incorporate the salary and other compensation and benefits previously being
provided under the Second Agreement, and to make various other changes to
reflect the fact that the Company is now a Delaware corporation.
INTERPRETATION
(3) In this Agreement, unless the context otherwise requires, the
following expressions have the meanings set out below:
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the Appointment the employment of the Executive
pursuant to this Agreement;
the Board the board of directors of the
Company for the time being
(including any committee of the
Board);
the Commencement Date October 1, 1995;
Compensation Committee a committee of the Board which
determines the annual sum (inclusive
of any bonuses and other
remuneration) payable to the
Executive and other officers and of
which a majority consists of
non-executive directors;
Confidential Information all information which may be
imparted in confidence or be of a
confidential nature relating to the
business or prospective business,
plans or internal affairs of the
Company or any Group Company and in
particular all Know-how, Marketing
Information, trade secrets,
unpublished information relating to
the Company's or any Group Company's
intellectual property and any other
confidential commercial, financial
or technical information relating to
the business of the Company or any
Group Company or to any customer or
supplier, officer or employee of the
Company or Group Company or to any
member or person interested in the
share capital of the Company or any
Group Company;
Documents documents, disks, memory, notebooks,
tapes or any other medium, whether
or not eye-readable, on which
information may from time to time be
recorded;
the Effective Date July 1, 1997
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Group Company any company which directly or
indirectly controls, is controlled
by, or is under common control with
the Company, and references to the
"Group Companies" shall be construed
accordingly, provided that for
greater certainty "Group Company"
shall include BECET International
and Teleport-TP;
Know-how information comprised in formulae,
specifications, designs, drawings,
component lists, software (or
pre-cursor documents), databases,
manuals, instructions and catalogues
held in whatever form relating to
the creation, production or supply
of any products or services by the
Company or any Group Company, or by
or to any of the suppliers,
customers, partners or joint
ventures of such company;
Marketing Information information relating to the
marketing or sales of any products
or services of the Company or any
Group Company, including lists of
customers' and suppliers' names,
addresses and contacts, sales
targets and statistics, market share
and pricing statistics, marketing
surveys, research and reports;
Permitted Interest an interest in any class of shares
or other securities of any company
which are traded on a recognized
investment exchange which amount to
not more than five percent of such
class of issued shares or securities
and an interest in any units of any
authorized unit trust;
Termination Amount an amount equal to the amount
arrived at by multiplying by 2.0 (or
such other amount as may be agreed
by the Board and the Executive) the
aggregate total of the amount
payable to the Executive under
Clause 4.1 hereof at the rate in
force at the date that the
calculation falls to be made and
deducting
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therefrom any taxation or other
withholdings required by law; and
Termination Date the date of termination or
expiration of the Appointment
howsoever occurring.
(4) The expressions "subsidiary" and "affiliate" have the meanings given
to them by the Delaware General Corporation Law or, in the absence
thereof, under Delaware law.
(5) References to Clauses and Parties are respectively to Clauses of and
the Parties to this Agreement.
(6) References to any enactment are to be construed as referring also to
any enactment or re-enactment thereof (whether before or after the
date hereof), and to any previous enactment which such enactment has
replaced (with or without amendment provided that the amendment does
not change the law as at the date hereof) and to any regulation or
order made thereunder.
OPERATIVE PROVISIONS
1. JOB TITLE
The Company shall employ the Executive and the Executive shall serve
the Company as Chief Financial Officer.
2. PERIOD OF ENGAGEMENT
2.1 The Appointment commenced on the Commencement Date and the
amendments made hereby shall be effective as of the Effective
Date. Unless terminated earlier under Clause 9, the
Appointment will continue until terminated by either Party
giving to the other not less than six (6) months' notice in
writing.
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2.2 The Company (and any relevant Group Company) shall not be
obliged to provide work to the Executive at any time after
notice of termination of the Appointment shall have been given
by either Party and the Company may, in its discretion, take
any one or more of the following steps in respect of all or
part of an unexpired period of notice:
(a) require the Executive to comply with such conditions
as it may specify in relation to attending at, or
remaining away from, the place(s) of business of the
Company and the Group Companies; or
(b) withdraw any powers vested in, or duties assigned to,
the Executive.
2.3 Should the Company give notice of termination of the
Appointment other than pursuant to Clause 9.1 (and whether or
not in accordance with Clause 2.1), the Company shall
forthwith upon giving such notice pay to the Executive the
Termination Amount. The Executive shall have no obligation to
mitigate in respect of such payment.
2.4 The Company reserves the right at its sole discretion, should
the Executive give notice of termination of the Appointment in
accordance with Clause 2.1, to terminate the Appointment with
immediate effect upon payment to the Executive of a lump sum
by way of six months' gross salary (defined as the amount
payable under Sections 4.1 and 4.2) in lieu of notice, which
sum shall be deemed to be accepted for all purposes by the
Executive as satisfaction in full of all claims in relation to
the Appointment or otherwise.
3. DUTIES
3.1 During the term of the Appointment, the Executive shall have
the following duties and obligations:
(a) to serve the Company as Chief Financial Officer; and
to carry out such other duties and responsibilities
as may reasonably and lawfully be
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delegated to him by the Chief Executive Officer or
the Board from time to time during the Appointment;
(b) at all times to use all reasonable endeavors to
promote the interests and maintain the goodwill of
the Company and any other Group Company and not
knowingly to do anything which is materially
prejudicial or detrimental to the Company or any
Group Company;
(c) to faithfully and diligently perform his duties and
carry out such powers and functions as may from time
to time be vested in him by or under the authority of
the Chief Executive Officer or the Board;
(d) to devote such time and attention as is necessary and
the full benefit of his knowledge, expertise and
skills in the proper performance of his duties
(unless on holiday as permitted by this Agreement or
prevented by ill health or accident);
(e) to give (in writing if so requested) to the Chief
Executive Officer, or the Board, or to such person(s)
as the Chief Executive Officer or the Board may
direct, such information and explanations regarding
the affairs of the Company or any other Group Company
or matters relating to the Appointment as the Board
may require; and
(f) to comply with any applicable code relating to
dealings in securities of the Company and with all
lawful directions from time to time given to the
Executive by or under the authority of the Chief
Executive Officer or the Board and, save as
inconsistent with the express terms of this
Agreement, all applicable rules and regulations from
time to time laid down by the Company concerning its
employees.
3.2 Subject to the provisions of Clause 3.1, the Executive shall
have such powers and do such acts in the ordinary course of
business carried on by the Company as the
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Chief Executive Officer or the Board may from time to time
delegate to the Executive.
3.3 The Executive acknowledges that the executive offices of the
Company are in New York City, New York, U.S.A. and that the
Executive shall attend and work at any of the Company's
locations (whether within or outside the United States, the
Commonwealth of Independent States or the United Kingdom) in
the manner and on the occasions reasonably required from time
to time by the Board.
3.4 The Chief Executive Officer or the Board may require the
Executive to perform services for any Group Company wherever
situated and without further fees or remuneration and any
duties that he may have under this Agreement will be deemed to
extend to such Group Company.
3.5 The hours of work of the Executive are not fixed but are the
usual working hours of the Company and such additional hours
as may be necessary to enable him properly to discharge his
duties.
3.6 The Executive shall:
(a) at the request and expense of the Company, submit
annually to a medical examination by a medical
practitioner nominated by the Company as part of a
health screening program and for insurance purposes;
and
(b) authorize such medical practitioner to disclose to or
discuss with the Company's medical advisor any
matters arising from such examination; and the
Company's medical advisor may notify the Board of any
serious matter if, in his opinion, it might
materially and adversely affect the health of the
Executive or the proper discharge of his duties,
provided that the Company shall not disclose to any
third party any matters arising from such examination
without the previous consent in writing of the
Executive.
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4. PAY AND EXPENSES
4.1 The Company shall pay to the Executive for the proper
performance of his duties under this Agreement for the balance
of 1997 and thereafter a salary at an annual rate of $325,000
(or such higher rate as the Company may from time to time
notify in writing to the Executive).
4.2 Until the Termination Date, the Company shall pay to the
Executive (or as the Executive may otherwise direct) 20% of
the amount due under Clause 4.1 annually, in lieu of all
pension, social and other benefits whatsoever. Such amount
shall be paid at the direction of the Executive in monthly
installments.
4.3 The salary payable to the Executive will:
(a) accrue from day to day and be payable by equal
monthly installments in arrears by not later than the
last working day of each month,
(b) notwithstanding anything to the contrary contained in
the Articles of Incorporation of the Company or
equivalent charter document of any other Group
Company, be inclusive of any other fees or
remuneration of any description which the Executive
might be entitled to receive from the Company or any
Group Company or any other company or association in
which the Executive holds office as a nominee or
representative of the Company or any Group Company
(and the Executive shall, at the discretion of the
Board, either waive his right to any such
remuneration or account to the Company for the same
forthwith upon receipt);
(c) be paid by credit transfer to the account nominated
by the Executive from time to time; and
(d) be capable of set-off by the Company from time to
time against any liability of the Executive to the
Company.
All payments to the Executive shall be subject to applicable
source deduction and withholding taxes.
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4.4 From time to time (but not less frequently than April 30 of
each year of this Agreement) all compensation to the Executive
(including without limitation salary, bonuses and equity
compensation arrangements) shall be reviewed by the
Compensation Committee. Increases or awards are not automatic
but will be based on such factors as the Compensation
Committee may consider relevant, provided it is acknowledged
that increases or awards are solely in the discretion of such
Committee and are not required under this Agreement.
Increases or awards shall to the extent applicable be
retroactive to the preceding January 1.
4.5 The Executive hereby authorizes the Company to deduct from any
remuneration accrued and due to him under the terms of this
Agreement (whether or not actually paid during the
Appointment) or from any pay in lieu of notice:
(a) any overpayment (whether of salary or expenses or
otherwise) or payment made to the Executive by
mistake or through any misrepresentation; and
(b) any debt owed by the Executive to the Company or any
Group Company.
Provided that in the case of a debt owed to any Group Company
the Company shall obtain for the benefit of the Executive a
release of such debt from such Group Company.
4.6 The Company shall repay to the Executive or (at the option of
the Executive) pay all reasonable travelling, hotel,
accommodation and other expenses properly incurred by the
Executive in or about the performance of the Executive's
duties, subject to the Executive having delivered to the
Company such form(s) and vouchers or other evidence of actual
payment of such expenses as the Company may from time to time
require.
5. HOLIDAY
5.1 In addition to the usual public and bank holidays, the
Executive shall be entitled to 25 days' paid holiday in each
holiday year (and pro rata for part of each holiday year
worked) to be taken at such time or times as shall be agreed
by the Board.
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5.2 The holiday year runs from 1 January each year to the
following 31 December. No holiday entitlement may be carried
forward from one holiday year to the next and no money will be
paid in lieu of any such untaken holiday entitlement.
5.3 Upon termination of the Appointment, other than pursuant to
Clause 9.1, the Executive's entitlement to holiday will be
calculated on the basis of two days for each calendar month of
service completed during the holiday year in which termination
occurs and the Company shall make a payment in lieu of untaken
holiday entitlement.
6. CONFIDENTIALITY
6.1 Neither during the continuance of the Appointment, other than
in the proper course of the Executive's duties and for the
benefit of the Company, nor after the Termination Date for any
reason whatsoever, shall the Executive:
(a) use, disclose or communicate to any person any
Confidential Information which he shall have come to
know or have received or obtained at any time (before
or after the date of this Agreement) by reason of or
in connection with this Appointment; or
(b) copy or reproduce in any form or by or on any media
or device or allow others access to or to copy or
reproduce Documents containing Confidential
Information.
6.2 The Executive acknowledges that all Documents containing
Confidential Information at any time in his control or
possession are and shall at all times remain the absolute
property of the Company and the Executive undertakes, both
during the Appointment and after the Termination Date:
(a) to exercise due care and diligence to avoid any
unauthorized publication, disclosure or use of
Confidential Information and any Documents containing
or referring to it;
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(b) at the direction of the Board, to deliver up any
Confidential Information (including all copies of all
Documents whether or not lawfully made or obtained)
or to delete Confidential Information from any
re-usable medium; and
(c) to do such things and sign such documents at the
expense of the Company as shall be reasonably
necessary to give effect to this Clause and/or to
provide evidence that it has been complied with.
6.3 The restrictions in Clause 6.1:
(a) will not restrict the Executive from disclosing (but
only to the proper recipient) any Confidential
Information which the Executive is required to
disclose by law or any order of the court or any
relevant regulatory body (including any stock
exchange upon which the shares or other securities of
the Company are or are proposed to be traded),
provided that the Executive shall, unless obliged by
law, have given prior written notice to the Company
of the requirement and of the information to be
disclosed and allowed the Company an opportunity to
comment on the requirement before making the
disclosure, and
(b) will not apply to Confidential Information which is
or which comes into the public domain otherwise than
as a result of an unauthorized disclosure by the
Executive or any other person who owes the Company an
obligation of confidentiality in relation to the
information disclosed.
6.4 The Executive acknowledges that the restrictions set out in
this Clause 6 are without prejudice to any other duties of
confidentiality owed to the Company whether express or implied
and are to survive the termination of the Appointment
(howsoever arising).
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7. FURTHER RESTRICTIONS
7.1 Unless agreed by the Board in advance, the Executive shall not
(a) during the Appointment carry on or be concerned, engaged
or interested directly or indirectly (whether as principal,
shareholder, partner, employee, officer, agent or otherwise)
in any trade or business other than that of the Company and
shall not engage in any other activity which the Company
reasonably considers may impair his ability to perform his
duties under this Agreement; and (b) for a period of equal to
the greater of (i) twelve months following the Termination
Date and (ii) the period the Executive receives remuneration
hereunder following the Termination Date, carry on or be
concerned, engaged or interested directly or indirectly
(whether as principal, shareholder, partner, employee,
officer, agent or otherwise) in any trade or business which is
in competition with the business of the Company or any Group
Company carried on at the Termination Date in any country in
which the Company (or any entity in which the Company has a
greater than 25 % economic interest) operates; provided that
the foregoing shall not apply to a Permitted Interest.
7.2 The Executive shall not during the Appointment and for a
period of six months thereafter either on his own behalf or on
behalf of any person, firm or company:
(a) solicit or endeavor to entice away from the Company
an actual employee, or discourage from being employed
by the Company any person who, to the knowledge of
the Executive, is an employee or a prospective
employee of the Company; or
(b) employ or procure another person to employ any such
person.
7.3 The restrictions set out in this Clause 7 are without
prejudice to any other fiduciary duties owed to the Company
whether express or implied.
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8. ABSENCE, ILLNESS AND INCAPACITY
8.1 If at any time the Executive is prevented by reason of
ill-health, accident or other incapacity from properly
performing his duties he shall promptly furnish to the
Company, if required, evidence of such incapacity in a form
reasonably satisfactory to the Board.
8.2 The Company shall pay the Executive the amounts payable under
Clauses 4.1 and 4.2 for the first 180 days in aggregate in any
calendar year of absence due to illness or other incapacity of
the Executive, but shall not be required to pay the Executive
any salary or other remuneration for any further periods of
such absence in any calendar year, although it may at its
discretion do so.
8.3 The Company shall provide long-term disability coverage which
shall provide for disability payments in an amount not less
than 40% of basic salary commencing after the Executive has
been incapacitated from properly performing his duties for a
period of 180 days.
9. TERMINATION
9.1 The Company may at any time terminate the Appointment with
immediate effect (or any such longer period of notice as the
Company shall see fit) by giving the Executive written notice
in any of the following events:
(a) If the Executive at the time the notice is given is
prevented by reason of ill health or accident or
other incapacity from properly performing his duties
and has been so prevented (whether by the same or
another reason) for at least a continuous period of
180 days or for an aggregate period of at least 180
days (whether or not, in either case, working days)
in the preceding twelve months:
(b) If the Executive shall have:
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(i) been guilty of gross default or gross
misconduct in respect of his duties hereunder
or otherwise as a director or officer of the
Company or any Group Company;
(ii) committed any material breach or
non-observance or, after having been given
warning in writing, any repeated or continued
material breach or material non-observance of
any of his duties or any of his express or
implied obligations arising from the
Appointment or otherwise as a director or
officer of the Company or Group Company
including refusing to comply with any proper,
reasonable and lawful instructions given to
him by the Board;
(iii) been guilty of conduct or permitted or
suffered events tending in the reasonable
opinion of the Board to bring themselves, the
Company or any Group Company into disrepute;
(iv) become prevented by any applicable law or
regulation from continuing as a director or
officer of the Company or performing any of
his duties;
(v) committed any act of fraud or dishonesty
(whether or not connected with the
Appointment) or committed any act which, in
the reasonable opinion of the Board,
materially and adversely affects his ability
properly to carry out his duties and which is
likely to bring the Company into disrepute;
(vi) become bankrupt or claimed the benefit of any
Act for the time being in force for the
relief of insolvent debtors or proposed or
made any arrangement or composition with
their creditors;
(vii) been convicted of a felony or other crime
involving moral turpitude; or
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(viii) become of unsound mind, as certified by a
recognized doctor of psychiatry.
9.2 Upon termination of the Appointment however arising:
(a) The Executive shall, without prejudice for any claim
that may arise out of the termination of this
Appointment, forthwith at the request of the Board
resign as a director of the Company and from all
offices held by him in any Group Company and from all
other appointments or offices which he holds as
nominee or representative of the Company or any Group
Company and, if he fails so to do, the Company is
irrevocably authorized by the Executive to appoint
some person in his name and on his behalf to execute
such documents and to do such other things as are
reasonably necessary to give effect to such
resignations; and
(b) The Executive (or, if he shall be dead, of unsound
mind or bankrupt), his personal representatives or
such other persons as shall be appointed to
administer his estate and affairs shall deliver up to
the Company in accordance with the directions of the
Board all keys, security passes, credit cards,
Documents and other property belonging to or relating
to the businesses or affairs of the Company or any
Group Company, including all copies of all Documents
containing Confidential Information which may be in
his possession or under his control (or that of his
personal representatives or such other persons), and
shall not retain copies, extracts or notes of any of
the same.
9.3 The Executive shall have no claim against the Company in
respect of the termination of the Appointment by reason of the
merger, consolidation, continuation, dissolution or
liquidation or the sale of all or substantially all of the
assets of the Company provided that the Executive shall have
first been offered in writing a new appointment with the
successor or surviving company on terms no less favorable to
him than under this Agreement.
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10. CHANGE OF CONTROL
10.1 If at any time there shall occur a "Change of Control" as that
term is defined in the Company's 1997 Equity Compensation
Plan, the Executive may at any time terminate this Agreement
by giving to the Company not less than three months notice in
writing to that effect.
10.2 In the event of such termination, the Company shall pay the
Executive upon the expiration of such notice, the Termination
Amount but without any obligation to mitigate.
11. NOTICES
Notices by either party:
(a) must be in writing addressed:
(i) to the Company at its registered office for
the time being; and
(ii) to the Executive at the address set out in
this Agreement or such other address as may
be notified to the Company from time to time.
(b) will be effectively served:
(i) on the day of receipt, where any
hand-delivered letter or facsimile
transmission is received on a business day
before or during normal working hours;
(ii) on the following business day, where any
hand-delivered letter or facsimile
transmission is received either on a business
day after normal working hours or on any
other day; or
(iii) on the fifth business day following the day
of posting to an overseas address of any
prepaid airmail letter.
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12. INDEMNITY
12.1 The Company agrees, for the avoidance of doubt, that in
addition to the protection offered by the By-laws of the
Company, insofar as it is lawfully able, to indemnify the
Executive for all proper and reasonable costs and expenses of
lawyers (including disbursements and applicable taxes)
incurred by the Executive in connection with or in relation to
any claim, action or proceedings brought by any person arising
out of any allegation against the Executive in respect of any
act or omission by him in the course of carrying out his
duties under this Agreement and in which the Executive is a
defendant.
12.2 This indemnity will continue to apply for the period of the
Appointment and for a further period of six years after the
Executive's employment with the Company has come to an end
provided that the Executive:
(a) instructs lawyers approved in writing by the Company;
(b) acts in accordance with their advice;
(c) instructs the lawyers to provide copies of
correspondence and other documentation to the Company
and authorizes them to provide any information to the
Company on request;
(d) has not been guilty of gross misconduct or any breach
of contract, or has not been the subject of any of
the other conditions or circumstances set out in
Clause 9.1(b), pursuant to which the Company is
entitled summarily to terminate this Agreement; and
(e) has not (after the expiry of the Appointment) acted
in breach of any of his continuing obligations under
this Agreement or any other agreement entered into by
him with the Company.
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13. GENERAL
13.1 This Agreement, which contains all the terms of the
Appointment, is in substitution for all contracts between the
Company and any Group Company and the Executive (whether
written, oral or governed by a course of dealings) dated prior
to the date hereof which shall be deemed to have terminated
with effect from the Effective Date.
13.2 The waiver, express or implied, by either Party of any right
under this Agreement or any failure to perform or breach by
the other shall not constitute or be deemed a waiver of any
other right under this Agreement or of the same right on
another occasion.
13.3 No amendment, change or addition to the terms of this
Agreement shall be effective or binding on either Party unless
reduced to writing and executed by both Parties.
13.4 The Executive represents and warrants that, other than as
notified in writing to the Board, he is not a party to any
agreement, contract (whether of employment or otherwise) or
understanding which would in any way restrict or prohibit the
Executive from undertaking or performing any of the duties of
the Appointment in accordance with this Agreement.
13.5 The Executive undertakes not to disclose or communicate any
terms of the Appointment to any other employee of any Group
Company or to any third party (other than for the purpose of
obtaining professional advice or other than as required by
applicable law, including the securities laws and regulations
of the United States).
13.6 Any provision of this Agreement which contemplates or is
capable of operation after the termination of the Appointment
shall apply notwithstanding termination of the Appointment
howsoever arising.
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13.7 This Agreement is governed by and is to be construed in
accordance with the laws of the State of New York and the
Parties hereby submit to the non-exclusive jurisdiction of the
Courts of the State of New York with respect to all matters
relating to this Agreement.
13.8 The Executive hereby appoints CT Corporation System, 0000
Xxxxxxxx, Xxx Xxxx, XX 00000 for service of process in
connection with legal proceedings in New York and arising
under or in connection with this Agreement.
IN WITNESS WHEREOF the Parties have executed this Amended and Restated
Agreement.
Attest: PLD TELEKOM INC.
s/s E. XXXXX XXXXXXXX By: s/s XXXXX XXXXXXXXXXX
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s/s E. XXXXXX XXXXXXXX s/s XXXXX XXXXXXX
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Witness Xxxxx Xxxxxxx
