Exhibit 10.36
EMPLOYMENT AGREEMENT
DATED AS OF DECEMBER 3, 1999
BETWEEN GLOBAL CROSSING LTD.
AND
XXXX X. XXXXXXXX
XXXX X. XXXXXXXX ("Executive") and Global Crossing Ltd. ("Company") hereby
agree as follows:
1 . Term. The term of Executive's employment by Company under this
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Agreement (the "Term") shall commence on and as of December 3, 1999 for a three-
year term ending December 3, 2002, and continue thereafter for successive one-
year terms (the initial three-year term and each one-year term thereafter,
collectively the "Term"), unless either Company or Executive gives notice to the
other at least six (6) months in advance of the expiration of the current term
that it wishes to terminate this Agreement, in which event this Agreement shall
terminate as of the end of such term, unless earlier terminated as hereafter
provided.
2. Title and Duties. During the Term, Executive shall be employed by
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Company as Chief Administrative Officer ("CAO") world-wide reporting to the
Chief Executive Officer (the "CEO") of the Company. Executive shall devote his
full-time attention and energies to the business of the Company; provided,
however, that the foregoing shall not preclude Executive from engaging in
charitable and community affairs, or participating as a director of a non
competing business company, or managing his personal passive investments so long
as such activities do not materially interfere with his obligations as CAO.
Executive shall perform such duties, which shall not be inconsistent with his
position as CAO of the Company, as are assigned to him from time to time by the
CEO of the Company, and any other duties undertaken or accepted by Executive
consistent with his position as CAO of the Company. The Executive shall have
such officers of the Company report to him as Executive and the CEO shall agree
from time to time.
3. Salary; Additional Benefit. (a) Executive shall receive a salary of
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$500,000 per annum during the first three (3) years of the Term, payable as set
forth below. Executive's salary shall be reviewed at least annually and may be
increased but not decreased during the Term. Salary payments shall be made in
equal installments in accordance with Company's then prevailing payroll policy.
(b) If Executive is still employed with the Company at the end of the
initial three year Term (or, if earlier, upon termination of Executive's
employment with the Company under Section 10 (a) (i) or Section 10 (a) (ii) or
any other Non-Fault Termination), Executive shall be entitled to an $8 million
cash payment from the Company or in the discretion of the Company, common stock
which shall be immediately available for sale or transfer. If stock is
utilized, the value for these purposes shall be determined based upon the
closing price of the common stock
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on the NASDAQ market on the date on which the payment becomes due.
4. Annual Bonus. (a) For each year of the Term, Executive will be
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eligible for an annual bonus which will be determined by the Board of Directors,
but which shall not be less than $500,000 for the first full year of the Term.
The bonus will be determined thereafter by the Board of Directors and
Executive's target bonus shall be one hundred percent (100 %) of his salary. In
determining the annual salary and bonus, the Board of Directors shall consider,
among other things, Executive's performance in his capacity as CAO of the
Company. It is the intent of this Agreement that Executive's total cash
compensation (salary and bonus) shall be appropriate for a CAO and that annual
increases in salary and bonus shall be made, in each event, assuming
satisfactory performance.
(b) Within 10 days from the date of commencement of Executive's
employment with the Company, the Company shall pay to Executive a $2 Million
signing bonus, payable in cash. In the event Executive voluntarily resigns or
his employment is terminated pursuant to Section 10 (a) (iii) or 10 (a) (iv) in
the first year of Executive's employment, Executive shall promptly return to the
Company a portion of such signing bonus equal to the sum of (i) one twelfth
(1/12) of $1,000,000 for each full month of employment Executive does not
complete during such twelve month period plus (ii) $1,000,000. In the event
Executive's employment terminates prior to the completion by Executive of five
years of employment with the Company (or earlier in the sole discretion of the
Board of Directors of the Company), Executive shall promptly return to the
Company a portion of such signing bonus equal to $1,000,000; provided that this
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obligation shall not apply if Executive's termination of employment constitutes
a Non-Fault Termination or results from a Change in Control (as defined in the
Plan referred to below).
5. Stock Options. Executive shall be granted stock options (the "One
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Million Options") to purchase an aggregate of One Million (1,000,000) shares of
common stock of the Company. The One Million Options shall be granted in
accordance with, and subject to the following:
(a) The exercise price of the One Million Options shall be equal to $8.00
plus the closing price of the common stock of the Company on the
effective date of the grant of the One Million Options by the Board of
Directors of the Company (which is the date hereof). The One Million
Options may be exercised at any time after vesting but prior to
expiration.
(b) The One Million Options shall be subject to the terms and conditions
of the 1998 Global Crossing Ltd. Stock Incentive Plan, a copy of which
is attached hereto and incorporated herein by reference as Exhibit A
(as amended, the "Plan") and a Non-Qualified Stock Option Agreement,
the form of which is attached and incorporated herein by reference as
Exhibit B.
(c) The One Million Options shall vest according to the following schedule:
Tranche No. of Shares Vesting
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1 333,334 Immediately
2 222,223 December 3, 2000
3 222,223 December 3, 2001
4 222,220 December 3, 2002
The vesting schedule shall be accelerated in the event of a Non-Fault
Termination (as defined in Section 12).
(d) In the event there is a Change of Control at any time during the Term,
then the acceleration of the vesting schedule of the One Million
Options and the exercisibility of the One Million Options shall be
governed by the Plan upon such Change of Control.
(e) The One Million Options shall expire on the earlier of ten years from
the date of grant or the termination date set forth in the Stock
Option Agreement after termination of Executive's employment with the
Company.
(f) In the event the outstanding shares of common stock of the Company are
changed into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation by reason of
merger, consolidation, other reorganization, reclassification,
combination of shares, stock split-up or stock dividend, the One
Million Options granted hereunder, the number of subject shares and
the exercise price (and other terms herein relating thereto) shall be
adjusted appropriately.
6. Additional Stock Options. Executive shall be considered for additional
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stock option grants at least annually and any such additional grants shall be
determined by the Board of Directors. In determining whether to award any
additional stock option grants, the Board of Directors shall consider, among
other things, Executive's performance in his capacity as CAO of the Company.
7. Benefits. Executive shall be entitled to receive the following
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benefits:
(a) Health care coverage equivalent to that provided to the Company's
other executive officers.
(b) First Class airfare and limousine service to/from residence and/or
office in connection with all company travel.
(c) Four (4) weeks paid vacation each year during the Term. The maximum
accrued vacation shall be 4 weeks.
(d) The Executive shall be treated in the same manner as, and shall be
entitled to such benefits and other perquisites and terms and
conditions of employment as are
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generally provided to senior officers of the Company including an
appropriate moving allowance, if applicable. The Company shall
purchase a 2000 model of a recreational vehicle selected by the
Executive.
8. Reimbursement for Expenses. Executive shall be expected to incur
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various business expenses customarily incurred by persons holding like position,
including but not limited to traveling, entertainment and similar expenses, all
of which are to be incurred by Executive in the belief that they will benefit
the Company. Subject to Company's policy regarding the reimbursement and non-
reimbursement of such expenses, Company shall reimburse Executive for such
expenses from time to time, at Executive's request, and Executive shall account
to Company for such expenses.
9. Protection of Company's Interests.
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(a) During the Term of Executive's employment by Company, Executive will
not compete in any manner, directly or indirectly, whether as a
principal, employee, consultant, agent, owner or otherwise, by Company
or any affiliate thereof except that the foregoing will not prevent
Executive from holding at any time less that 5% of the outstanding
capital stock of any company (other than as part of a control group)
whose stock is publicly traded.
(b) To the extent permitted by law, all rights worldwide with respect to
any and all intellectual or other property of any nature produced,
created or suggested by Executive during the Term of his employment or
resulting from his service shall be deemed to be a work for hire and
shall be the sole and exclusive property of Company. Executive agrees
to execute, acknowledge and deliver to Company, at Company's request,
such further documents as Company finds appropriate to evidence
Company's rights in such property. Any confidential and/or proprietary
information of Company or any affiliate thereof (including, without
limitation, any information relating to the identities, capabilities,
compensatory and contractual arrangements and/or general personnel
data of employees of Company and its affiliates) shall not be used by
Executive or disclosed or made available by Executive to any person
except as required in the course of his employment by the Company, and
upon expiration or earlier termination of the Term of this Agreement,
Executive shall return to Company all such information that exists in
written or other physical form (and all copies thereof under his
control). Executive agrees to sign the Company's standard form of
confidentiality agreement contemporaneously with the execution and
delivery of this Agreement.
10. Termination. In addition to any right to terminate Executive's
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employment with the Company under Section 1 above:
(a) Company shall have the right to terminate Executive's employment with
the Company under the following circumstances:
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(i) Upon death of Executive;
(ii) Upon notice from the Company to Executive in the event of an
illness or other disability which has totally and permanently
incapacitated him from performing his duties as Executive on a
substantially full-time basis as described in the Company's long term
disability plan;
(iii) For good cause immediately upon notice from Company.
Termination by Company of Executive's employment for "Good Cause" as
used in this Agreement shall mean actual fraud, or embezzlement, or
intentional misconduct which has caused demonstrable and serious
injury to the Company; or
(iv) Conviction of a felony or crime of moral turpitude which has
caused serious injury to the Company.
(b) If Executive's employment is terminated pursuant to Section 10(a)(iii)
or 10(a)(iv) above, Executive's rights and Company's obligations
hereunder, and all unvested stock options granted in accordance with
this Agreement which have not already vested shall forthwith terminate
in their entirety, except that, notwithstanding the foregoing, (i) the
expiration date of any Options which have already vested in accordance
with this Agreement shall be ninety (90) days after the date of
termination pursuant to Section 10(a).
(c) If Executive's employment is terminated pursuant to this Section 10,
no Termination Payment (as defined in Section 12) shall be payable (it
being understood that, notwithstanding anything to the contrary
contained herein, the Company shall have the right to terminate
Executive's employment for any other reason, subject to Executive's
rights under Section 12).
11. Termination By Executive. Prior to the expiration of the Term,
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Executive shall have the right to terminate his employment under this Agreement
upon 30 days notice to Company given within 60 days following the occurrence of
any of the following events, provided that Company shall have 20 days after the
date such notice has been given to Company in which to cure the conduct or cause
specified in such notice:
(a) Executive is not elected or retained in accordance with Section 2 as
CAO (reporting to Company's CEO);
(b) There is a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or responsibilities
which are inconsistent with the authority, powers, functions, duties
or responsibilities of a CAO;
(c) Company shall fail to issue stock pursuant to the One Million Options
provided
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for herein in accordance with the terms hereof or shall reduce his
salary, or the Company shall fail to make any grant of options or
compensation payment required hereunder;
(d) A Change of Control shall occur; and
(e) Any material breach of this Agreement by the Company including naming
the Executive's principal office outside of the New York/ New Jersey/
Connecticut tri-state area.
12. Termination Payment. If a Non-Fault Termination (as defined below) of
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Executive's employment with Company shall occur other than by means of the death
or disability of Executive, Executive shall be entitled to receive a lump sum
payment equal to the sum of one times the sum of Executive's then annual base
salary and bonus (provided, however, that in no event shall the annual bonus for
this purpose be less than $500,000) ("Termination Payment"). The Termination
Payment shall be made to Executive not later than 30 days after the date of such
Non-Fault Termination. "Non-Fault Termination" shall mean Executive's
employment with Company shall be terminated (i) by the Company without cause,
(ii) by reason of death or total and permanent disability pursuant to Section
10(a)(i) or (ii) hereof, or (iii) Executive shall validly terminate his
employment pursuant to Section 11 hereof. A voluntary termination of employment
by Executive (unless validly made pursuant to Section 11) shall not be a Non-
Fault Termination. Except for Executive's rights under Sections 3 (b) and 5
(c), which shall remain in full force and effect after any Non-Fault Termination
of this Agreement, and for the acceleration of the vesting of the One Million
Options, the Termination Payment described Section 12 shall be Executive's sole
and exclusive remedy under this Agreement in the event of a Non-Fault
Termination.
13. Assignment. Company may assign this Agreement or all or any part of
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its rights hereunder to any entity that succeeds to all or substantially all of
Company's assets or that holds, directly or indirectly, all or substantially all
of the capital stock of the Company or that is otherwise a successor in interest
to Company generally, and this Agreement shall inure to the benefit of, and be
binding upon, such assignee or successor in interest. This Agreement is
personal to Executive and Executive may not, without the express written
permission of Company, assign or pledge any rights or obligations hereunder to
any person, firm, corporation or other entity.
14. No Conflict With Prior Agreements. Executive represents and warrants
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to Company that, to the best of his personal knowledge and belief, neither the
execution and delivery of this Agreement, his commencement of employment
hereunder nor the performance of his duties hereunder conflicts with any
contractual commitment on his part to any third party or violates or interferes
with any rights of any third party.
15. Key Man Insurance. Company shall have the right to secure, in its own
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name or otherwise, and at its own expense, life, disability, accident or other
insurance covering Executive
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and Executive shall have no right, title or interest in or to such insurance.
Executive shall assist Company in procuring such insurance by submitting to
reasonable examinations and signing such applications and other instruments as
may be required by the insurance carriers to which application is made for any
such insurance.
16. Post-Termination Obligation. After the expiration or earlier
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termination of the Executive's employment hereunder for any reason whatsoever,
Executive shall not either alone or jointly, with or on behalf of others, either
directly or indirectly, expressly or impliedly, whether as principal, partner,
agent, shareholder, director, employee, consultant or otherwise, at any time
during a period of two years following such expiration or termination, solicit
in any manner whatsoever the employment or engagement of, either for his own
account or for any other person, firm, company or other entity, any person who
is employed by Company or any affiliated entity, whether or not such person
would commit any breach of his contract of employment by reason of his leaving
the service of Company or any affiliated entity.
17. Reimbursement of Legal Expenses. The Company agrees to reimburse
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Executive for his reasonable out-of-pocket legal expenses and costs incurred in
connection with the negotiation and preparation of this Agreement.
18. Entire Agreement, Amendment, Waiver, Etc.
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(a) This Agreement supersedes all prior and/or contemporaneous agreements
and/or statements, whether written or oral, concerning the terms of
Executive's employment, and no amendment or modification of this
Agreement shall be binding unless set forth in writing signed by
Company and Executive. No waiver by either party of any breach by the
other party of any provision or condition of this Agreement shall be
effective unless in writing and signed by the party effecting the
waiver, and no such waiver shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or
subsequent time.
(b) All payments required to be made to Executive hereunder, whether
during the term of his employment hereunder or otherwise, shall be
subject to all applicable federal, state and local tax withholding
laws.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of California. In the event of any controversy
or claim by either party hereunder, the prevailing party in any final
and legally binding adjudication (as to which all periods for the
filing of any appeal have expired) with respect to such controversy or
claim shall be entitled to reimbursement from the losing party for
reasonable attorney's fees and costs and for all other reasonable
expenses of such adjudication.
19. Notices. All notices that either party is required or may desire to
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give the other shall be in writing and shall be effective (i) upon personal
delivery or (ii) three business days after
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deposit of the same with the United States Postal Service for delivery by
certified mail, return receipt requested, addressed to the party to be given
notice as follows:
To Company: Global Crossing Ltd.
000 X. Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
To Executive: Xxxx X. Xxxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Either party may by written notice designate a different address for giving
notices. The date of mailing of any such notices shall be deemed to be the date
on which such notice is given.
20. Arbitration. Any dispute arising out of this Agreement shall be
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determined by arbitration in Los Angeles, California, under the rules of the
American Arbitration Association then in effect and judgement upon any award
pursuant to such arbitration may be enforced in any court having jurisdiction
thereof, provided each of the parties to this Agreement will appoint one person
as an arbitrator to hear and determine the dispute, and if they are unable to
agree, then the two arbitrators so chosen will select a third impartial
arbitrator whose decision will be final and conclusive upon the parties to this
Agreement. Subject to Section 18(c), the expenses of the arbitration
proceedings concluded pursuant to this paragraph will be borne by the parties in
such proportions as the arbitrators decide.
21. Certain Additional Payments by the Company. Anything in this
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Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment, award, benefit or distribution by the Company to or for the
benefit of the Executive would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code or any corresponding provisions of state or
local tax laws as a result of payment upon a change of control, or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes) imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the payments.
22. Headings. The headings set forth herein are included solely for the
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purpose of identification and shall not be used for the purpose of construing
the meaning of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
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GLOBAL CROSSING LTD.
/s/ Xxxx Xxxxxxxx /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx Xxxxxxxx Xxxx X. Xxxxxxxx
Title: Senior Vice President, Human
Resources
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