Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
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This Executive Employment Agreement is made as of this eighth day of
January, 2000, by and between Focal Communications Corporation and its
Subsidiaries, a Delaware corporation (the "Company") and Xxxxxxx X. Xxxx whose
address is 0 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "Executive").
WHEREAS, the Company and the Executive wish to enter into an agreement for
employment which shall provide certain terms of employment. The parties
acknowledge that all terms of employment may not be contained in this Agreement,
but that as to other conflicting terms of employment, which may be initiated
from time to time by the Company, the terms contained herein, or as amended from
time to time by the parties hereto, shall control.
NOW THEREFORE, in accordance with the premise above, the parties agree as
follows:
1. Terms of Executive's Employment.
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(a) Employment. The Company hereby employs Executive, and Executive
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hereby accepts employment and agrees to perform his duties and
responsibilities hereunder, in accordance with the terms and
conditions hereinafter set forth. The Company shall have the
right to terminate the Executive's employment for any reason, at
any time, with or without Cause (defined below). Executive shall
have the right to terminate his employment for any reason,
including Good Reason (as hereinafter defined), at any time, upon
giving the Company written notice two weeks prior to such
termination.
(b) Duties and Responsibilities.
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(i) Initially, the Executive shall serve as Executive Vice
President of the Company and the President of [subsidiary],
and so long as Executive is employed by the Company or any
of its Subsidiaries, the Executive shall serve in such
position as may be determined by the Board of Directors
("Board") and shall perform all duties and accept all
responsibilities incident to such position or as may be
assigned to him by the Board, and shall at all times comply
with the policies and procedures adopted by the Company for
its employees.
(ii) The Executive represents and covenants to the Company that
he is not subject or a party to any employment agreement,
non-competition agreement, nondisclosure agreement or any
similar agreement, covenant or restriction that would
prohibit the Executive from executing this Agreement and
performing his duties and responsibilities assigned by the
Company.
(c) Extent of Service. So long as Executive is employed by the
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Company or any of its Subsidiaries, the Executive agrees to use
his best efforts to carry out his duties and responsibilities
under paragraph 1 (b) hereof and to devote his full professional
time and attention thereto.
(d) Base Compensation. For all the services rendered by the Executive
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hereunder, the Company shall, commencing on the agreed upon start
date of January 10, 2000, and continuing so long as Executive is
employed by the Company or any of its Subsidiaries, pay the
Executive an annual salary at the rate of $225,000 per year, plus
any additional amounts, if any, as may be approved by a majority
of the Board, less withholding required by law or agreed to by
the Executive, and payable in installments at such times as is
customary with the Company but in any event no less frequently
than monthly. The Company agrees that the Executive's salary will
be reviewed annually by the Board to determine if any adjustment
is appropriate. For purposes of paragraph 1 (f) and Section 3
herein, Executive's annual salary shall not be less than
$225,000. So long as Executive is employed by the Company or any
of its Subsidiaries, the Executive shall also be entitled to
participate in such vacation pay and any other fringe benefit
plans as may from time to time be adopted by a majority of the
Board and as are made available generally to other senior
executives of the Company.
(e) Incentive Compensation. In addition to the compensation set
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forth in paragraph 1 (d) above, so long as the Executive is
employed by the Company or its Subsidiaries the Executive shall
be entitled to participate in a discretionary annual bonus plan
providing for the payment to Executive of an annual bonus, in an
amount to be determined by a majority of the Board or another
officer of the Company as the Board determines. Executive shall
be entitled to provide his input on the terms of his annual bonus
plan before it is submitted to the Company's Board, but Executive
acknowledges that such plan is discretionary in nature and is
determined in the exclusive discretion of the Board or other
officer so designated by the Board. The Company may adopt from
time to time a bonus program, in which the Executive shall
participate, the terms of which require the Company to achieve
certain performance goals which are set in advance each year in
the sole discretion of the Board.
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(f) Severance Pay. If at any time after the date hereof Executive
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ceases to be employed by the Company and its Subsidiaries
("Termination") for death or disability or by the Company for any
reason other than Cause, or by Executive for Good Reason (a
"Covered Termination"), Executive (or, in the case of death,
Executive's estate) shall, until the end of the Severance Pay
Period (as defined below), be entitled to receive a salary at the
same rate of pay as, and on the same schedule and terms as was
customary for, the salary Executive received under paragraph 1
(d) above immediately prior to the Termination, as well as
(except in the case of Executive's death) comparable medical
benefits to those provided by the Company to Executive
immediately prior to the Termination (such salary and benefits
collectively, the "Severance Pay"); provided that if at any time
during the Severance Pay Period Executive obtains other
employment, Executive's Severance Pay shall during the period of
such employment be reduced (but not below zero) by the amount of
salary and benefits Executive receives as compensation for such
employment; (ii) all restricted stock theretofore granted to
Executive shall vest immediately; and (iii) all stock options
theretofore granted to Executive and scheduled to vest within 12
months of the Covered Termination shall vest immediately. The
payment of such Severance Pay shall in no way be construed as a
continuation of Executive's employment after the Termination. The
"Severance Pay Period" shall be equal to (i) if Executive is
terminated by the Company for any reason other than Cause, the
longer of (A) the period between the Covered Termination and the
12-month anniversary of the start date of employment of
Executive, and (B) the 6-month period commencing on the date of
the Covered Termination, or (ii) if Executive's employment is
terminated due to Good Reason, death or disability, the 6-month
period commencing on the date of the Covered Termination. If
Executive resigns other than for Good Reason or is terminated by
the Company for Cause, the Company shall not be obligated to pay
any Severance Pay or provide vesting of any restricted stock or
stock options as provided in this paragraph.
(g) Nondisclosure and Nonuse of Confidential Information.
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(i) Nondisclosure Obligation. Executive shall not disclose or
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use at any time, either during his employment with the
Company or thereafter, any Confidential Information (as
defined below) of which Executive is or becomes aware,
whether or not such information is developed by him except
to the extent that such disclosure or use is directly
related to and required by Executive's performance of duties
assigned to Executive by the Company. Executive shall take
all appropriate steps to safeguard Confidential Information
and to protect it against disclosure, misuse, espionage,
loss and theft.
(ii) Confidential Information. As used in this Agreement, the
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term "Confidential Information" means information that is
not generally known to the public and that is used,
developed or obtained by the Company in connection with its
business, including but not limited to (i) products or
services, (ii) fees, costs and pricing structures, (iii)
designs,
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(iv) analysis, (v) drawings, photographs and reports, (vi)
computer software, including operating systems, applications
and program listings, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new developments,
methods and processes, whether patentable or unpatentable
and whether or not reduced to practice, (xi) customers and
clients and customer or client lists, (xii) copyrightable
works, (xiv) all technology and trade secrets, (xv) business
plans and financial models, and (xvi) all similar and
related information in whatever form. Confidential
Information shall not include any information that has been
published in a form generally available to the public prior
to the date Executive proposes to disclose or use such
information. Information shall not be deemed to have been
published merely because individual portions of the
information have been separately published, but only if all
material features constituting such information have been
published in combination.
(h) Cause. Cause means a finding by 2/3rds of the Board members then
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serving, after Executive has been given the opportunity for a
formal hearing, of (A) Executive's theft or embezzlement, or
attempted theft or embezzlement, of money or property of the
Company, Executive's perpetration or attempted perpetration of
fraud, or Executive's participation in a fraud or attempted
fraud, on the Company, or Executive's unauthorized appropriation
of, or attempt to misappropriate, any tangible or intangible
assets or property of the Company, (B) any act or acts of
disloyalty, misconduct or moral turpitude by Executive injurious
to the interest, property, operations, business or reputation of
the Company or Executives' conviction of a crime the commission
of which results in injury to the Company, or (C) Executive's
refusal or failure (other than by reason of disability) to carry
out reasonable instructions by his superiors or the Board and in
the case of subsection (C), the failure of Executive to cure the
same within 10 business days, after receipt of written notice
thereof from the Company.
(i) Good Reason. "Good Reason" means (A) a significant adverse change
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by the Company in the nature or scope of the duties attached to
Employee's positions as Executive Vice President and President,
respectively, (B) the willful failure or refusal of Company to
perform its material obligation under Section 1(d) or (e) of this
Agreement, or (C) the reduction by the Company of its
expenditures for the operation of the Company's Data Services
business in an amount that is materially less than the
expenditures set forth in the Company's fiscal year 2000 budget
unless such reduction is part of a reduction applicable generally
to the Company's other operating units, or (D) the Company
requires the Executive to have his principal location of work
changed to a location which is in excess of 50 miles from
Washington, D.C. without Executive's prior written consent, and,
in the case of subsections (A), (B) or (C), the failure of the
Company to cure the same within 10 business days after receipt of
written notice thereof from Executive.
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2. The Company's Ownership of Intellectual Property.
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(a) Acknowledgment of Company Ownership. In the event that Executive
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as part of his activities on behalf of the Company generates,
authors or contributes to any invention, design, new development,
device, product, method or process (whether or not patentable or
reduced to practice or constituting Confidential Information),
any copyrightable work (whether or not constituting Confidential
Information) or any other form of Confidential Information
relating directly or indirectly to the Company's business as now
or hereinafter conducted (collectively, "Intellectual Property"),
Executive acknowledges that such Intellectual Property is the
exclusive property of the Company and hereby assigns all right,
title and interest in and to such Intellectual Property to the
Company. Any Intellectual Property that is copyrightable work
prepared in whole or in part by Executive will be deemed "a work
made for hire" under Section 201(b) of the 1976 Copyright Act,
and the Company shall own all of the rights comprised by the
copyright therein. Executive shall promptly and fully disclose to
the Company all Intellectual Property he generates, authors or
contributes to the Company and shall cooperate with the Company
to protect the Company's interests in and rights to such
Intellectual property (including, without limitation, providing
reasonable assistance in securing patent protection and copyright
registrations and executing all documents as reasonably requested
by the Company, whether such requests occur prior to or after
Termination of Executive's employment with the Company).
(b) Executive Invention. Executive understands that paragraph 2 of
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this Agreement regarding the Company's ownership of Intellectual
Property does not apply to any invention for which no equipment,
supplies, facilities or trade secret information of the Company
were used and which was developed entirely on Executive's own
time, unless (i) the invention relates to the business of the
Company or to the Company's actual or demonstrably anticipated
research or development or (ii) the invention results from any
work performed by Executive for the Company.
(c) Delivery of Materials upon Termination of Employment. As
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requested by the Company from time to time and upon the
Termination of Executive's employment with the Company for any
reason, Executive shall promptly deliver to the Company all
copies and embodiments, in whatever form, of all Confidential
Information and Intellectual Property in Executive's possession
or within his control (including, but not limited to, written
records, notes, photographs, manuals, notebooks, documentation,
program listings, flow charts, magnetic media, disks, diskettes,
tapes and all other materials containing any Confidential
Information or Intellectual Property) irrespective of the
location or form of such material and, if requested by the
Company shall provide the Company with written confirmation that
all such materials have been delivered to the Company.
3. Noncompetition and Nonsolicitation.
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(a) Noncompetition. Executive acknowledges and agrees with the
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Company that Executive's services to the Company are unique in
nature and that the Company would be irreparably damaged if
Executive were to provide similar services to any person or
entity competing with the Company or engaged in a similar
business. For and in consideration of the terms contained herein
Executive covenants and agrees with the Company that during the
Noncompetition Period (as defined below), Executive shall not,
directly or indirectly, either for himself or for any other
individual, corporation, partnership, joint venture or other
entity, participate in any business division, group or franchise
(or if there are no divisions, any business) where such division,
group or franchise (or business, if applicable) engages or
proposes to engage in any business conducted by the Company or
proposed to be conducted pursuant to a Board resolution or
Subsequent Business Plan (including, but not limited to, the sale
or distribution of local switched dial tone telecommunication
services) in any metropolitan statistical area ("MSA") in which
the Company conducts such business or proposes to conduct such
business pursuant to a Board resolution or Subsequent Business
Plan. For purposes of this Agreement, the term "participate in"
shall include, without limitation, having any direct or indirect
interest in any corporation, partnership, joint venture or other
entity, whether as a sole proprietor, owner, stockholder,
partner, joint venturer, creditor or otherwise, or rendering any
direct or indirect service or assistance to any individual,
corporation, partnership, joint venture and other business entity
(whether as a director, officer, manager, supervisor, employee,
agent, consultant or otherwise), other than ownership of up to 2%
of the outstanding stock of any class which is publicly traded.
(b) Nonsolicitation. During the Noncompetition Period, Executive
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shall not (i) induce or attempt to induce any employee of the
Company to leave the employ of the Company, or in any way
interfere with the relationship between the Company and any
employee thereof, (ii) hire directly or through another entity
any person who was an employee of the Company at any time during
the Noncompetition Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of
the Company to cease doing business with the Company, or in any
way interfere with the relationship between any such customer,
supplier, licensee or relation and the Company (including,
without limitation, making any negative statements or
communications concerning the Company).
(c) Noncompetition Period. The "Noncompetition Period" shall commence
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on the date hereof and continue (i) if Executive is terminated by
the Company with or without Cause, until such date as shall be
specified by the Company in writing within 14 calendar days after
Termination, provided that such date shall not be later than the
first anniversary of the Termination, or (ii) otherwise, until
such date as shall be specified by the Company in writing within
the 30 calendar days after Termination, provided that such date
shall not be later than the 18-month anniversary of the
Termination. After the end
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of the Severance Pay Period (or if there is no Severance Pay, the
date upon which the Company elects the duration of the
Noncompetition Period), the Company shall until the end of the
Noncompetition Period pay Executive his Noncompete Compensation
(unless Executive breaches his obligations under this paragraph
3, it being understood that in such case Executive shall continue
to be bound by such obligations as if the Company were continuing
to pay Noncompete Compensation). If there is no Severance Pay,
the Company shall during the period from Termination until such
time as the Company elects the duration of the Noncompetition
Period (the "Interim Period"), pay Executive his Interim
Compensation (unless Executive breaches his obligations under
this paragraph 3, it being understood that in such case Executive
shall continue to be bound by such obligations as if the Company
were continuing to pay Interim Compensation). "Noncompete
Compensation" shall consist of 50% of the salary that Executive
received under paragraph 1 (d) above as compensation from the
Company and its Subsidiaries immediately prior to termination
(Executive's "Previous Salary") together with the continuation of
the medical benefits that the Company provided to Executive
immediately prior to Termination (Executive's "Previous
Benefits"); provided that if at any time during the
Noncompetition Period Executive obtains other employment (i) with
comparable medical benefits to Executive's Previous Benefits,
Executive's Noncompete Compensation shall during the period of
such employment not include the continued provision of medical
benefits, and (ii) with a salary exceeding 50% of Executive's
Previous Salary, Executive's Noncompete Compensation shall during
the period of such employment be reduced (but not below zero) by
the amount of such excess. "Interim Compensation" shall consist
of 100% of Executive's Previous Salary and Previous Benefits,
provided that if at any time during the Interim Period Executive
obtains other employment, Executive's Interim Compensation shall
during the period of such employment be reduced (but not less
than zero) by the amount of salary and benefits received as
compensation for such other employment.
4. Notices. Any notice provided for in this Agreement must be in writing
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and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable
overnight courier service (charges prepaid) to the recipient at the
address below indicated:
To the Company: Focal Communications Corporation
000 X. XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: Vice President, Human Resources
with a copy to: Focal Communications Corporation
000 X. XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: General Counsel
To Executive:
or to such other address or to the attention of such other person as the
recipient party shall
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have specified by prior written notice to the sending party. Any notice
under this Agreement shall be deemed to have been given when personally
delivered, one business day after being sent by reputable overnight courier
service, or three business days after being deposited in the U.S. mail.
5. General Provisions.
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(a) Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other
provision or any other jurisdiction as if such invalid, illegal
or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
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referred to herein and other documents of even date herewith
embody the complete agreement and understanding among the parties
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which
may have related to the subject matter hereof, in any way.
(c) Counterparts. This Agreement may be executed in separate
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counterparts, none of which need contain the signature of more
than one party hereto but each of which shall be deemed to be an
original and all of which taken together shall constitute one and
the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
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Agreement shall bind the parties hereto and their respective
successors and assigns and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors
and assigns.
(e) Choice of Law. All questions concerning the construction,
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validity, enforcement and interpretation of this Agreement and
the exhibits hereto shall be governed by the laws of the State of
Illinois.
(f) Remedies. Each of the parties to this Agreement shall be entitled
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to enforce its rights under this Agreement specifically, to
recover damages and cost (including reasonable attorney's fees)
caused by any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages would not be an
adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to
any court of law or equity of competent jurisdiction (without
posting any bond or deposit) for specific performance and/or
other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
(g) Amendment and Waiver. The provisions of this Agreement may be
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amended
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and waived only with the prior written consent of the Company and
Executive.
(h) Business Days. If any time period for giving notice or taking
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action hereunder expires on a day which is a Saturday, Sunday or
legal holiday in the State of Illinois, the time period will be
automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
FOCAL COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Its: President and Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxxx X. Xxxx
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