EXHIBIT 10.5.5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into by and
between Xxxx X. Xxxxxxxxxx ("Employee") and Pacific Gateway Exchange, Inc., a
Delaware corporation ("PGE"), effective as of October 1, 1996 (the "Effective
Date").
RECITALS
A. Employee is an employee of PGE.
B. Employee and PGE desire to enter into this Agreement in order to provide
compensation and benefits to Employee in recognition of past services
rendered and to confirm the ongoing terms and conditions of the parties'
prospective employment relationship.
AGREEMENT
PGE and Employee agree as follows:
1. POSITION AND DUTIES. PGE will employ Employee as its Executive Vice
President, International Marketing on the terms and conditions set
forth herein, and Employee accepts such employment. Except as
otherwise provided herein, Employee will devote substantially all of
his business time, energy, attention, skill and efforts to performance
of his duties at PGE and any other duties assigned by the Board of
Directors of PGE that are commensurate with Employee's position;
provided that Employee shall not, without his consent, be assigned
tasks that would be inconsistent with those of Vice President,
International Relations of PGE. Employee will have such authority and
power as are inherent to the undertakings applicable to his position
and necessary to carry out his responsibilities and the duties
required of him hereunder. Subject to the terms of this Agreement,
Employee shall not be required to perform services under this
Agreement during any period that he is Disabled. Employee shall be
deemed to be "Disabled" if he has a physical or mental disability
which renders him incapable, after reasonable accommodation, of
performing his duties under this Agreement. Employee's duties shall
include all duties consistent with and customary to the position of
Vice President, International Relations. Employee will report directly
to PGE's Board of Directors, and will faithfully fulfill such duties
as may be assigned to him by the Board during his employment with the
company. Employee will, during his employment with PGE, conduct
himself in a manner consistent with his position, and will not
knowingly perform any act contrary to the best interests of PGE.
2. NON-COMPETITION.
a. Except as set forth in paragraph 2.b. below, during the term of this
Agreement, Employee will not render services to any other person or
entity, for compensation or otherwise, without the prior written
consent of the Board of Directors of PGE, and Employee will not engage
in any activity which conflicts or interferes in any material way with
the performance of the duties and responsibilities of his position
with PGE. During his employment with PGE, Employee will not, either as
an employee, employer, consultant, independent contractor, agent,
principal, partner, stockholder or in any other individual or
representative capacity, engage or participate in any employment,
consulting, business or other activity that is in competition in any
manner with the business of PGE.
b. Notwithstanding paragraph 2.a. above, Employee may devote a reasonable
amount of personal time to non-competitive activities; including up to
100 hours per year in consulting; the supervision of his passive
investments of up to 1% of the outstanding securities of any public
company; and activities involving professional, charitable, civic,
educational, religious and similar activities and engagements, to the
extent that such activities do not conflict or interfere in any
material way with his duties and responsibilities to PGE.
3. TERM OF AGREEMENT. This Agreement is effective on the Effective Date, and
Employee's employment with PGE hereunder shall continue for a two-year
period from the Effective Date, subject to the provisions on termination
set forth below. Upon termination of Employee's employment with PGE for any
reason, neither Employee nor PGE will have any further obligation or
liability to the other, except for Employee's ongoing fiduciary,
confidentiality and nondisclosure obligations, except as may be provided in
any applicable stock option agreements, and except as expressly set forth
herein.
4. COMPENSATION. PGE will compensate Employee for his services as follows:
a. SALARY. Employee will be paid a gross monthly salary of $11,483
($137,800 on an annualized basis), subject to applicable withholdings
in accordance with PGE's normal payroll practices and as may be
required by law. Employee's salary may be reviewed by PGE on
approximately an annual basis, and may be subject to upward adjustment
in the reasonable and good faith discretion of the Board of Directors
based upon various factors, including without limitation Employee's
performance and other economic and business considerations. Employee
shall be eligible for discretionary bonuses on an annual or quarterly
basis, as determined by the Board of Directors, based on Employee's
performance and the performance of PGE.
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b. BUSINESS EXPENSES. PGE will reimburse Employee for reasonable expenses
incurred by Employee on behalf of PGE on company business in
accordance with its practices for reimbursing similar expenses
incurred by its senior executives, so long as Employee provides proper
documentation establishing the amount, date and business purpose of
those expenses.
c. BENEFITS. Employee will have the right, on the same basis as other
employees of PGE, to participate in and to receive benefits under any
PGE employee benefit plans or policies available generally to
similarly situated employees, including 401k (or similar retirement or
profit sharing plan), medical, disability, dental, accidental death
and dismemberment or other group insurance plans (if any), in which
Employee is eligible to participate and as may be in effect from time
to time, subject at all times to the applicable terms and conditions
of the particular plan or policy. During the term of this Agreement,
Employee will also be entitled to receive four weeks paid vacation and
other employee benefits, such as paid holidays and authorized paid
sick leave, as may be established or granted by PGE from time to time.
PGE may change, amend or modify its benefit plans or policies from
time to time, in its sole discretion; provided that no such change,
amendment or modification may adversely affect benefits provided to
Employee except to the extent that the change, amendment or
modification applies in the same manner to all similarly situated
employees.
5. TRADE SECRETS, PROPRIETARY AND CONFIDENTIAL INFORMATION. During his
employment with PGE, Employee has had and will continue to have access to
confidential and proprietary PGE information. Employee acknowledges that he
has kept all such information in confidence to date, other than such
disclosures or use as may have been necessary in the ordinary course and
scope of his prior employment with PGE. As an express condition of
continued employment with PGE, Employee agrees to sign such confidentiality
and nondisclosure agreements as may be requested by PGE from time to time
which will be deemed effective as of the date of Employee's initial
employment with PGE. Except where necessary for the performance of his
duties hereunder, Employee will preserve as confidential and will not xxx
or disclose any confidential or proprietary PGE information at any time.
Following termination of employment with PGE, Employee shall return all
documents and other materials containing confidential or proprietary PGE
information.
6. BENEFITS UPON VOLUNTARY TERMINATION, DEATH, DISABILITY. If Employee
voluntarily resigns from his employment with PGE or otherwise voluntarily
terminates his employment with PGE, or if the employment relationship ends
as a result of Employee's death or permanent disability, Employee will be
entitled to no compensation or benefits from PGE other than those earned
and accrued under paragraph 4 through the date of termination. Employee's
stock options will be
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handled in accordance with the express provisions of any then-existing
stock option agreements. Employee shall be considered "permanently
disabled" during any period in which (i) he has a physical or mental
disability which renders him incapable, after reasonable accommodation, of
performing his duties under this Agreement; (ii) such disability is
reasonably expected to continue for at least 90 days; and (iii) he is
eligible for income replacement benefits under PGE's long-term disability
plan during such period of disability.
7. BENEFITS UPON OTHER TERMINATION. Employee acknowledges that his employment
may be terminated by PGE at any time, with or without cause. If PGE elects
to terminate its employment relationship with Employee at any time for the
reasons set forth below, Employee will be entitled to receive the following
benefits:
a. TERMINATION FOR CAUSE. If PGE terminates Employee's employment "for
cause," as defined below, Employee will be entitled to no compensation
or benefits from PGE other than those earned and accrued under
paragraph 4 through the date of termination. For purposes of this
Agreement, a termination "for cause" occurs if Employee is terminated
for any of the following reasons:
(i) The willful and continued failure to perform the reasonable
duties of Employee's employment. For this reason to constitute a
termination "for cause" for purposes of this Agreement, Employee
must receive at least two prior written warnings from PGE's
Board of Directors, describing the specific reasonable duties or
tasks, identifying the perceived failure to perform, and giving
Employee good faith opportunity to satisfactorily perform those
duties or tasks within a reasonable period of time. In addition,
for this reason to constitute a termination "for cause" for
purposes of this Agreement, the Board of Directors of PGE must
pass a resolution authorizing Employee's termination for these
reasons after providing the written notifications and
opportunity to improve described above;
(ii) The willful engaging by Employee in conduct which is
demonstrably and materially injurious to PGE, monetarily or
otherwise; or
(iii) The engaging by Employee in egregious misconduct involving
serious moral turpitude to the extent that, in the reasonable
judgment of the Board, Employee's credibility and reputation no
longer conform to the standard of PGE's executives.
For purposes of this Agreement, no act or failure to act, on
Employee's part shall be deemed "willful" unless done, or omitted to
be done, by Employee
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not in good faith and without reasonable belief that Employee's action
or omission was in the best interest of PGE.
b. TERMINATION OTHER THAN "FOR CAUSE."
(i) If, during the term of this Agreement, Employee's employment is
terminated by mutual agreement or by PGE for any reason other
than "for cause" as described above, Employee will receive the
greater of: (1) a salary continuation separation payment to the
end of the term of this Agreement, or (2) a one-year salary
continuation payment, at the base salary level existing just
prior to termination of employment, less applicable withholdings
and payable on or around the company's normal paydays in
accordance with PGE's then-existing normal payroll practices.
Employee will accrue no employment benefits (such as vacation or
sick leave) during the separation period, except as otherwise
provided herein. These separation payments are expressly
conditioned on Employee not competing with PGE during the
separation period. At any time during the separation period the
Employee may elect to terminate this Agreement, at which time
the Company's obligations to make separation payments, and the
Employee's obligations not to compete as set forth in paragraph
2, shall terminate.
(ii) In addition, upon submission of proper documentation, PGE will
reimburse Employee for premiums for health insurance
continuation that Employee timely and properly elects under
COBRA, for a period of eighteen (18) months following a
termination other than "for cause," as described herein, or
until comparable health insurance benefits are available to
Employee through another employer, whichever date is sooner.
Employee will notify PGE in writing within ten (10) days after
his acceptance of a position with any other company, whether as
an employee, independent contractor, consultant or otherwise,
and will likewise notify PGE in writing within ten (10) days of
the time when comparable health insurance benefits are available
to Employee from another employer. These health insurance
continuation benefits are expressly conditioned on Employee not
competing with PGE during the separation period.
(iii) In addition, upon any termination by mutual agreement or any
involuntary termination other than "for cause," PGE will
accelerate any and all of Employee's outstanding stock options,
so that they are fully vested and exercisable.
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c. TERMINATION FOLLOWING A "CHANGE IN CONTROL."
(i) If Employee's employment is terminated without cause following or
in connection with a Change in Control, Employee is entitled to
receive all of the separation benefits described in paragraph
7.b., above.
(ii) In addition, if following or in connection with a Change in
Control any of the following events happen, Employee may
voluntarily resign from his employment with PGE and will still be
entitled to receive all of the separation benefits described in
paragraph 7.b. above:
(1) Employee is assigned a position and/or duties that are
inconsistent in any substantial respect with the position,
authority or responsibilities associated with the position
and duties described in this Agreement;
(2) Employee's duties and/or responsibilities as an employee of
PGE are substantially reduced;
(3) Employee's office is relocated to a location not within five
(5) miles from the current office of PGE; and/or
(4) Employee's base salary or other benefits including bonuses
in effect on the date of the Change in Control substantially
reduced.
(iii) For purposes of this Agreement, a "Change in Control" means an
Ownership Change entered into after March 31, 1996, in which the
shareholders of PGE before such Ownership Change do not retain,
directly or indirectly, at least a majority of the beneficiary
interest in the voting stock of PGE after such transaction or in
which PGE is not the surviving corporation. For purposes of this
Agreement, an "Ownership Change" will be deemed to have occurred
if any of the following events occur with respect to the company:
(1) the direct or indirect sale or exchange by the shareholders
of PGE of all or substantially all of the stock of the
company;
(2) a merger or consolidation in which PGE is a party;
(3) the sale, exchange or transfer of all or substantially all
of the assets of the company; or
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(4) a liquidation or dissolution of the company.
d. CONSTRUCTIVE DISCHARGE. If PGE materially breaches its obligations to
Employee under this Agreement; and:
(i) if Employee provides written notice to PGE of the occurrence of
such breach, which specifically identifies the manner in which
Employee believes that the breach has occurred, and which is
delivered to PGE within a reasonable period (but in no event more
than 30 days ) after Employee has knowledge of the events giving
rise to the breach;
(ii) PGE fails to correct such breach within a reasonable period (but
in no event more than thirty (30) days) after receipt of the
notice described in paragraph (d)(i); and
(iii) Employee resigns after the end (but in no event more than 30 days
after the end) of the period described in paragraph (d)(ii);
then, for purposes of this Agreement, Employee's employment with PGE
shall be considered to have been terminated by Employer for reasons
other than Cause (that is, he will be deemed to be "Constructively
Discharged" by PGE). A material breach of this Agreement by Employer
shall include, without limitation:
(1) assigning duties to Employee that are inconsistent in any
substantial respect with the position, authority, or
responsibilities associated with the position of Vice
President, International Relations of PGE;
(2) assigning duties to Employee that substantially impair his
ability to function as Vice President, International
Relations of PGE;
(3) the failure by Employer to accord to Employee the title,
authority and responsibilities of Vice President,
International Relations of PGE;
(4) a reduction by PGE in Employee's total compensation
including base salary and bonuses based on performance as in
effect on the Effective Date or as the same may be increased
from time to time;
(5) relocation of Employee's office to a location not within
five miles from the current office of PGE located at 000
Xxxxxxx
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Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx, except for
required travel on PGE's business to an extent substantially
consistent with Employee's present business travel
obligations; and
(6) the failure of PGE, without Employee's consent, to pay to
Employee any portion of Employee's current compensation, or
to pay to Employee any portion of an installment of deferred
compensation under any deferred compensation program of PGE,
within ten (10) business days of the date such compensation
is due.
8. EXCLUSIVE REMEDY. Subject to paragraph 7 above, Employee will be
entitled to no further compensation for any actual or alleged damage
or injury arising out of the termination of his employment
relationship with PGE, including without limitation special,
compensatory, general, liquidated or punitive damages. The payments
and benefits described in this Agreement will be Employee's sole and
exclusive remedy in the event that the employment relationship ends
prior to expiration of the term hereof.
9. DISPUTE RESOLUTION. To the fullest extent permitted by law, any
dispute, claim or controversy relating to or arising out of this
employment relationship or this Agreement will be resolved by binding
arbitration before the American Arbitration Association, with the
hearing to be held in Santa Xxxxx or San Mateo County, California,
under the California Employment Dispute Resolution Rules then in
effect for that organization; provided, however, that this arbitration
provision will not be mandatory for any disputes or claims relating to
or arising out of the actual or alleged misuse or misappropriation by
Employee of PGE's trade secrets or other confidential or proprietary
information. In addition, nothing in this Agreement will prevent
either party from seeking injunctive relief (or any other provisional
remedy) from any court having competent jurisdiction over the parties
and the subject matter of their dispute. The parties specifically
acknowledge and agree that by entering into this arbitration
agreement, they are knowingly, intentionally and voluntarily waiving
their respective rights, if any, to jury trial. This arbitration
provision covers, without limitation, all claims pertaining to
wrongful termination, employment discrimination, harassment,
retaliation, defamation, and all other statutory, tort and/or
contractual claims which the parties may seek to bring against one
another under applicable local, state or federal law.
10. INTERPRETATION. This Agreement will be governed by and interpreted in
accordance with the laws of the State of California, as applied to
contracts entered into and to be performed entirely within California
by California residents. The language of this Agreement will be
construed as a whole according to its fair meaning, and not strictly
for or against any of the parties.
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11. ATTORNEYS' FEES. The prevailing party will be entitled to recover from
the losing party its attorneys' fees and costs incurred in any action
or arbitration brought to enforce any right arising out of this
Agreement.
12. SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of
and be binding upon PGE and its legal successors and assigns. In view
of the personal nature of the services Employee is to perform under
this Agreement, he will not have the right to assign or transfer any
of his rights, obligations or benefits under this Agreement, except as
may otherwise be provided herein.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire employment
agreement and the final understanding between PGE and Employee
regarding the terms and conditions of his employment with the company,
and supersedes and terminates all prior and simultaneous
understandings, communications, negotiations, representations, offers
and agreements by or between PGE and Employee, whether written or
oral, express or implied, with the exception of the confidentiality
agreement referred to above and any existing stock option agreements
in effect between the parties. This Agreement is intended to be a
complete and wholly integrated expression of the parties'
understanding and agreement, and may not be modified, altered, amended
or otherwise changed in any way except by a written document which
specifically identifies the intended alteration and clearly expresses
the intention to change this Agreement, signed by Employee and by the
Board of Directors of PGE.
14. VALIDITY. If any one or more of the provisions of this Agreement are
held invalid, illegal or otherwise enforceable in any respect, the
continued validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired, and the
remaining provisions will continue in full force and effect.
IN WITNESS WHEREOF, the parties have entered into this Agreement and caused
it to be duly executed on and as of the Effective Date.
Date:___________________________ PACIFIC GATEWAY EXCHANGE, INC.
__________________________________________
By:
Its:
Date:___________________________ _________________________________________
Xxxx X. Xxxxxxxxxx
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