Exhibit 10.21
EMPLOYMENT AGREEMENT
PARTIES: XX.XXX CORP. (the "Company")
a Delaware corporation
XXXXXXX XXXXX ("Employee")
DATED EFFECTIVE: November 1, 1999
RECITAL
The Company desires to employ and retain the unique experience,
abilities and services of Employee.
AGREEMENT
The parties agree as follows:
1. EMPLOYMENT
1.1 TERM. Subject to Section 6, the Company agrees to employ Employee
for a term commencing on the effective date of this Agreement and terminating
December 31, 2000.
1.2 DUTIES. Employee accepts employment with the Company on the terms
and conditions set forth in this Agreement. Employee agrees to devote
substantially all of Employee's working time during the term of this Agreement
to the performance of Employee's duties under this Agreement. Employee shall be
responsible for exercising management direction and control of the activities
associated with the construction of the AT&T System (as defined in the Fiber
Optic System Agreement No. 4569177 between AT&T Corp. and XX.Xxx Corp.), and
performing such other duties consistent with prior duties as may be determined
by the Board of Directors of the Company. In performing duties, Employee shall
be subject to the direction and control of the Board of Directors of the
Company. Employee acknowledges that all policy making functions will be
determined by the Board of Directors of the Company and executive officers of
the Company and that Employee's authority will be limited to the implementation
of the policies. Employee shall perform Employee's duties faithfully,
intelligently, diligently, to the best of Employee's ability and in the best
interests of the Company. The Company acknowledges that, to the extent not
inconsistent with Section 5, Employee may serve on the boards of directors or
other governing body of other companies, including charitable entities; provided
that if a company is a competitor of the Company, Employee will not serve on the
board of directors of that competitor without obtaining the prior written
consent of the Company. In addition, the Company acknowledges (a) that Employee
shall have the right (i) to pursue Employee's interest in The Xxxxxxx LLC and
its affiliates, (ii) to continue Employee's "of counsel" relationship with
Olshan, Grundman, Frome, Xxxxxxxxxx and Xxxxxxx LLP, (iii) to act as a
consultant to certain companies whose businesses are not
competitive with the business of the Company, and (iv) monitor and pursue
Employee's private investments, and (b) that provided Employee does not spend
more than 20% of Employee's working time during the term of this Agreement with
respect to such ventures, the pursuit of such ventures by Employee shall not be
a breach of this Agreement. Finally, the Company acknowledges that Employee may
be required to devote time and attention to certain matters related to GST
Telecommunications, Inc. and its affiliates, limited solely to litigation
matters, and agrees that the pursuit of such matters shall not be a breach of
this Agreement.
2. COMPENSATION
2.1 BASE COMPENSATION. In consideration of all services to be performed
by Employee for the Company, the Company shall pay to Employee base compensation
of $29,166.67 monthly, payable in equal semi-monthly installments.
2.2 BONUS COMPENSATION. With respect to the period ending December 31,
2000, Employee shall be eligible to receive a performance-based bonus which
shall be payable in an amount, if any, determined by the Board of Directors of
the Company in its sole discretion.
2.3 OTHER BENEFITS. The Company shall pay Employee a car allowance of
$600 per month, payable on the first day of each calendar month and shall pay
for the benefit of Employee and Employee's spouse, during the term of this
Agreement, medical and dental insurance and life insurance on Employee in the
amount of $1,000,000. Further, in the event the Employee's employment with the
Company is terminated without Cause or at the expiration of the term (including
any extensions of this Agreement), the Company shall pay for the benefit of
Employee and Employee's spouse full medical and dental insurance coverage and
life insurance coverage on the Employee in the amount of $1,000,000, during the
period commencing on the date of termination without Cause or the expiration of
this Agreement and ending on the later of (a) the last day of the Severance
Period (as defined in Section 6.3.3), (b) the last day of the Consulting Term
(as defined in Section 7.1) or (c) the date Employee violates any of the
covenants set forth in Section 5.
2.4 VACATION. Employee shall be entitled to one or more vacations
totaling 30 working days annually accruing ratably during the term of this
Agreement.
2.5 CHANGE OF CONTROL. Notwithstanding anything to the contrary in
Section 6, if on or within the first 60 days following the date of a Change of
Control during the term of this Agreement, Employee voluntarily terminates his
employment with the Company, the Company shall continue to pay Employee, in
accordance with the Company's customary payroll practices, (a) base compensation
described in Section 2.1 through the last day of the term of this Agreement as
set forth in Section 1.1 (b) any accrued but unpaid bonus compensation payable
pursuant to Section 2.2, and (c) the consulting fee described in Section 7.3
through the last day of the Consulting Term as set forth in Section 7.1. For
purposes of this Agreement, a Change of Control means (i) the direct or indirect
sale, exchange or other transfer of all or substantially all (60% or more) of
the assets of the Company or of XX.Xxx Holdings, Limited, a Delaware corporation
("Holdings"), to any person or entity or group of persons or entities acting in
concert which does not include any stockholder or member prior to any such
transfer (a "Group of Persons"), (ii) the merger, consolidation or other
business combination of the Company or
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Holdings with the effect that the members or shareholders of the Company, as the
case may be, immediately following the merger, consolidation or other business
combination, hold 50% or less of the combined voting power of the
then-outstanding ownership interests or securities of the surviving entity of
such merger, consolidation or other business combination, (iii) the replacement
of three-fourths or more of the Board of Directors of the Company or the Board
of Directors of Holdings in any given 12-month period as compared to the
directors at the beginning of such 12-month period, and such replacement(s)
shall not have been approved by the Board of Directors of the Company or the
Board of Directors of Holdings, as applicable, as constituted at the beginning
of such 12-month period, or (iv) a person or Group of Persons other than the
Permitted Holders or a Permitted Group shall have become the beneficial owner of
ownership interests or securities of the Company or Holdings representing 60% or
more of the combined voting power of the Company or Holdings. For purposes of
this Section 2.5, the terms "Permitted Holders" and "Permitted Group" shall have
the meanings set forth in the Form of Description of Notes of Holdings attached
as Exhibit XI to that certain Bridge Loan Agreement dated as of October 29,
1999.
3. EXPENSES
Employee shall be entitled to reimbursement from the Company for
reasonable expenses incurred by Employee in the performance of Employee's duties
under this Agreement in accordance with the Company's applicable expense and
travel policies upon presentation of vouchers or other required documentation
indicating in reasonable detail the amount and business purpose of each such
expense.
4. FACILITIES AND LOCATION
Employee shall be provided a private office, secretarial services and
such other facilities, supplies and services as shall be required for the
performance of Employee's duties under this Agreement which office, secretarial
services and other facilities, supplies and services shall not cost in the
aggregate more than $10,000 per month. Employee shall perform Employee's duties
in the New York City - Northern New Jersey metropolitan area, at a location
agreed upon by the Company and Employee.
5. CONFIDENTIALITY; COVENANT NOT TO COMPETE
5.1 AFFILIATES. For purposes of this Section 5, the term "Company"
shall include the Company and any and all affiliates of the Company.
5.2 CONFIDENTIALITY.
5.2.1 CONFIDENTIALITY. Employee acknowledges and agrees that
all trade secrets, information, lists of customers and vendors, product planning
information, marketing research, marketing plans and strategies, pricing
strategies, financial information, data of the Company or any other information
proprietary to the Company ("Confidential Information") are valuable assets of
the Company.
5.2.2 OWNERSHIP. Employee acknowledges and agrees that all
Confidential Information is and shall continue to be the exclusive property of
the Company, whether or not
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conceived, discovered or developed, in whole or in part, by Employee and whether
or not disclosed or entrusted to Employee in connection with Employee's
employment by the Company.
5.2.3 ACKNOWLEDGMENT OF RECEIPT OF CONFIDENTIAL INFORMATION.
Employee acknowledges that in the course of performing employment services for
the Company, Employee will have access to Confidential Information, the
ownership and confidential status of which are highly important to the Company,
and Employee agrees, in addition to the specified covenants contained in the
Agreement, to comply with all policies and procedures of the Company for the
protection of Confidential Information.
5.2.4 COVENANT OF NONDISCLOSURE. Except for disclosure of
Confidential Information to other employees or consultants of the Company on a
"need to know" basis in the course of performing employment services for the
Company, Employee agrees not to disclose Confidential Information, directly or
indirectly, under any circumstances or by any means, to any person or enterprise
without the prior written consent of the Company, which consent may be granted
or withheld by the company in its sole discretion.
5.2.5 COVENANT OF NONUSE. Employee agrees not to copy,
transmit, reproduce, summarize, quote or make any commercial or other use
whatsoever of Confidential Information, except as may be necessary to perform
the duties of employment for the Company.
5.2.6 SAFEGUARD OF CONFIDENTIAL INFORMATION. Employee agrees
to exercise the highest degree of care in safeguarding Confidential Information
against loss, theft or other inadvertent disclosure and agrees generally to take
all steps necessary to ensure the maintenance of confidentiality.
5.3 RETURN OF DOCUMENTS. Employee agrees that all originals and copies
of records, data, reports, documents, lists, plans, correspondence, memoranda,
notes and other materials related to or containing any confidential information,
in whatever form they exist, whether written, film, tape, computer disk or other
form of media, shall be the sole and exclusive property of the Company and shall
be returned promptly to the Company on the termination of this Agreement.
5.4 COVENANT NOT TO COMPETE.
5.4.1 COVENANT. Employee covenants and agrees that for the
Restriction Period (defined in Section 5.4.2), Employee shall not:
(a) Directly or indirectly in any manner or capacity (e.g., as
an advisor, principal, agent, partner, officer, director, stockholder,
employee, member of any association or otherwise) without in each
instance obtaining prior written consent of the Company, which consent
may be granted or withheld by the Company in its sole discretion,
engage, in, work for, consult provide advice or assistance or otherwise
participate within or with respect to North America, in the business of
providing dark fiber, conduit and bandwidth on long haul fiber optic
network telecommunicating systems, or in any other business which may
be in competition with the business conducted by the Company on the
date of this Agreement or commenced at any time
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during the Restriction Period or the subject of any agreement, plan or
proposal approved by the Board of the Directors of Holdings or the
Board of Directors of any affiliate of Holdings during such period;
provided, however, that Employee may (i) own up to three percent (3%)
of the outstanding shares or other equity securities of any enterprise
that is a reporting company under the Securities Exchange Act of 1934,
as amended, and (ii) own any shares of common stock of GST
Telecommunications, Inc. held by Employee as of the effective date of
this Agreement. Employee further agrees that during the Restriction
Period he will not assist or encourage any other person in carrying out
any activity that would be prohibited by this Section 5.4 if such
activity were carried out by Employee.
(b) For the benefit of Employee or any other person or
enterprise (i) solicit any business whatsoever from any vendor or
customer of the business conducted by the Company, (ii) induce or cause
any vendor to cease providing or selling any service or product to the
Company or to terminate or change such vendor's business relationship
with the Company in any manner or (iii) induce or cause any customer to
cease purchasing any product or service from the Company or to
terminate or change such customer's relationship with the Company in
any manner.
(c) For the benefit of Employee or any other person or
enterprise (i) induce or solicit any person who is then employed by the
Company, or has been employed by the Company at any time during the
one-year period preceding such inducement or solicitation, to leave
that person's employment or other position with the Company or to
accept any other employment or position or (ii) otherwise assist any
person or enterprise in hiring or otherwise engaging such person.
(d) Violate any Conflict of Interest Policy of the Company.
5.4.2 RESTRICTION PERIOD. The covenant set forth in Section
5.4.1 shall be binding on Employee for a period (the "Restriction Period")
commencing on the date of this Agreement and ending on the later of (a) the
first anniversary of the date Employee's employment with the Company is
terminated or (b) the last day of the Consulting Term (as defined in Section
7.1); provided, however, that the latest the Restriction Period shall terminate
in any event is December 31, 2005.
5.5 REASONABLENESS OF RESTRICTIONS. Employee acknowledges and confirms
that the agreements, acknowledgements and covenants set forth in this Section 5
(a) do not impose unreasonable restrictions or work a hardship upon Employee,
(b) are essential to the willingness of the Company to employ Employee, (c) are
necessary and fundamental to the protection of the business conducted by the
Company and (d) are reasonable as to scope, duration and territory. Employee
waives any and all defenses to the enforcement of the covenants set forth in
this Section 5. Employee specifically acknowledges the payments under this
agreement and shares of equity securities of the Company that he has or will
receive are being provided by the Company in consideration of the covenants set
forth in this Section 5 and that such payments and equity securities constitute
good, valuable and adequate consideration for such covenants. If it is
determined by any court of competent jurisdiction that any restriction in this
Section 5 is excessive in duration or scope or is unreasonable or unenforceable
under any applicable law, it is
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the intention of the parties that such restriction may be modified or amended by
the court to render it enforceable to the maximum extent permitted by applicable
law.
5.6 NO RELEASE. Employee agrees that the termination of this Agreement
shall not release Employee from any obligations under this Section 5.
6. TERMINATION OF EMPLOYMENT
6.1 CAUSES OR GROUND FOR TERMINATION OF EMPLOYMENT. The Company shall
have the right to terminate the employment of Employee at any time, without
notice and without payment of compensation in lieu of notice, under either of
the following conditions:
6.1.1 For cause ("Cause"), including, but not limited to, (i)
any form of dishonesty, criminal conduct or conduct involving moral turpitude
connected with the employment of Employee or which otherwise reflects adversely
upon the Company's reputation or operations, (ii) the refusal of Employee to
comply with the Company's written instructions, policies or rules as approved or
mandated by the Board of Directors of the Company, (iii) continuing or repeated
problems with Employee's performance or conduct or Employee's inattention to
duties after Employee has been provided written notice and a reasonable
opportunity to cure, (iv) any material breach of Employee's obligations under
this Agreement after Employee has been provided written notice and a reasonable
opportunity to cure or (v) any violation of any Conflict of Interest Policy of
the Company; provided, however, that "Cause" shall not include any conduct
related to Employee's litigation with GST Telecommunications, Inc. and its
affiliates unless there is a final judicial determination that such conduct
constituted fraud or intentional malfeasance; or
6.1.2 Employee has suffered a disability as a result of
illness, accident or other cause and is unable to perform a substantial portion
of Employee's usual duties of employment for a total (consecutive or cumulative)
of 90 days in any 12-month period after the date the disability commenced.
6.2 DEATH. This Agreement and Employee's employment with the Company
shall terminate automatically upon Employee's death.
6.3 EFFECT OF TERMINATION.
6.3.1 IN GENERAL. Upon the termination of employment, Employee
(or Employee's estate in the event of Employee's death) shall receive Employee's
base compensation prorated through the effective date of termination of
employment and any other payments, including, but not limited to, earned
vacation pay, to which Employee is entitled under the Company's policies. Any
termination of employment shall automatically terminate Employee's right to any
additional compensation or to other benefits paid by the Company except as
provided in Section 6.3.2 and 6.3.3.
6.3.2 TERMINATION UPON DISABILITY. In the event Employee's
employment is terminated as a result of a disability as provided in Section
6.1.2, the Company shall pay Employee, in accordance with the Company's
customary payroll practices, his base compensation during the period beginning
on the date of termination and ending on the earlier of
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(a) the first anniversary of the date of termination or (b) the last day of the
term of this Agreement as set forth in Section 1.1.
6.3.3 TERMINATION BY COMPANY WITHOUT CAUSE. In the event the
employment of Employee is terminated by the Company for any reason other than
for Cause, in addition to the compensation payable under Section 6.3.1, the
Company shall pay Employee, in accordance with the Company's customary payroll
practices, his base compensation during the period (the "Severance Period")
beginning on the date of termination and ending on the earliest of (a) the last
day of the term of this Agreement as set forth in Section 1.1 or (b) the date
Employee violates any of the covenants set forth in Section 5.
7. CONSULTING SERVICES
7.1 RETENTION AS CONSULTANT. The Company shall retain Employee as a
consultant ("Consultant") for a term of five years commencing on the later of
(a) the date of Employee's termination of employment with the Company or (b) the
last day of any period following the date of such termination of employment
during which any amounts are payable to Employee pursuant to Section 6.3;
provided, however, that in the event of a Change in Control Employee at his
election may terminate his consulting relationship with the Company at any time
following the second anniversary of such Change in Control (the "Consulting
Term"). Consultant shall be an independent contractor and shall not be
considered an employee or agent of the Company. The Company shall not have and
shall not exercise any control over the manner and means used by Consultant to
perform services.
7.2 CONSULTING SERVICES. During the Consulting Term, Consultant shall
provide services to the Company on the following terms:
7.2.1 HOURS AND SERVICES. The services provided shall be not
more than 20 hours per month. If the Company does not request 20 hours of
services in any month, Consultant shall nevertheless be paid for 20 hours during
that month.
7.2.2 NOTICE. The Company shall advise Consultant, at least
one month in advance, of the number of hours of Consultant's time that will be
required during the calendar month in question. Consultant's services shall be
provided on dates and at times reasonably convenient to both parties.
7.3 CONSULTING FEES; EXPENSES. Consultant shall be paid $10,000 per
month for services provided under this Agreement. During the Consulting Term,
Consultant shall be paid $2,500 per month as an allowance for office,
secretarial services and other facilities, supplies and services. Additionally,
Consultant shall be reimbursed for reasonable travel and business expenses
incurred in connection with the Company's business approved in advance by the
Company.
7.4 TERMINATION. The Consulting Term shall terminate automatically on
the death of Consultant.
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7.5 OTHER PROVISIONS. During the Consulting Term, Sections 1, 2, 3, 4
and 6 of this Agreement shall not be applicable except with respect to the
provision of medical, dental and life insurance as provided in Section 2.3.
8. MISCELLANEOUS PROVISIONS
8.1 BINDING NATURE. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective legal representatives, successors
and assigns.
8.2 MODIFICATION. This Agreement may not be changed or modified except
by the written agreement of the parties. No change, termination, or attempted
waiver of any of the provisions of this Agreement shall be binding unless in
writing. This Agreement may not be modified or terminated orally.
8.3 WAIVER. The waiver by either the Company or Employee of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by either party and shall in no way affect the enforcement
of the other provisions of this Agreement.
8.4 APPLICABLE LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, except to the
extent governed by federal law.
8.5 ATTORNEYS' FEES. If any suit or action is filed by any party to
enforce this Agreement or otherwise with respect to the subject matter of this
Agreement, each party shall be responsible to pay the attorney fees and costs
incurred by such party in preparation or in prosecution or defense of such suit
or action and the court or adjudicator is not authorized to allocate attorney
fees and costs between the parties or to one party.
8.6 INJUNCTIVE AND OTHER RELIEF. If any party breaches or threatens
breach of any provision of this Agreement, the other party shall be entitled to
damages. The parties agree that damages for any breach or threatened breach by a
party may, by its nature, be inadequate, and that the other party shall be
entitled, in addition to damages, to a restraining order, temporary and
permanent injunctive relief, specific performance and other appropriate
equitable relief, without showing or proving that any actual damage has been
sustained.
8.7 NOTICES. Any notice or other communication required or permitted to
be given under this Agreement shall be in writing and shall be delivered
personally or mailed by certified mail, return receipt requested, postage
prepaid, addressed to the parties as follows:
If to Employee: Xxxxxxx Xxxxx
00 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
If to the Company: XX.Xxx Corp.
0000 X Xxxxxx
Xxxxxxxxx, XX 00000
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Any notice or other communication shall be deemed to be given at the expiration
of the third day after the date of deposit in the United States Mail. The
addresses to which notices or other communications shall be mailed may be
changed from time to time by giving written notice to the other party as
provided in this Section 8.7.
COMPANY: EMPLOYEE:
XX.XXX CORP. XXXXXXX XXXXX
By: /s/ XXXX XXXXX /s/ XXXXXXX XXXXX
---------------------------- ---------------------------
Title: Chief Executive Officer
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