EXHIBIT 10.21
EXECUTIVE EMPLOYMENT AGREEMENT
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This Executive Employment Agreement is made as of this 15th day of July,
1998, by and between Focal Communications Corporation of California, a Delaware
corporation (and with its affiliates, including its parent corporation, Focal
Communications Corporation, collectively referred to as the "Company") and
Xxxxxx X. Xxxxxxxxx, whose address is 00 Xxxxxx Xxxxxx, Xxxxxxxxx 000,
Xxxxxxxxx, 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, 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 Vice President and
General Manager, Focal Communications Corporation of California, and so
long as Executive is employed by the Company (including affiliates), the
Executive shall serve in such position as may be determined by the Board of
Directors of Focal Communications Corporation ("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 Company and Executive acknowledge that the Executive has
entered into a prior agreement with the Company regarding employment
issues, including non-competition matters and that this agreement shall
amend and supercede such prior agreement. 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 this
Agreement 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 $130,000
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 l(f) and Section 3 herein,
Executive's annual salary shall not be less than $130,000. 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.
(e) Incentive Compensation. In addition to the compensation set forth
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in paragraph l(d) above, so long as the Executive is employed by the Company 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. The annual bonus 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.
In addition to the discretionary bonus plan described above, Executive
will be entitled to participate in the current Stock Option Plan adopted by the
Board.
(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, 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 l(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. 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
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Period" shall be equal to the 12-month period commencing on the date of
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Termination. If Executive resigns or is terminated by the Company for Cause, the
Company shall not be obligated to pay any Severance Pay.
(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
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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, (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 2/3 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 Executive's conviction of a crime the commission of which results in
injury to the Company or (C) Executive's repeated refusal or failure (other than
by reason of disability) to carry out reasonable instructions by his superiors
or the Board.
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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
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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 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 all Intellectual Property
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
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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 business 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 the 14 days after Termination, provided that such date shall not
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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 days
after Termination, provided that such date shall not be later than the 12-month
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anniversary of the Termination. After the end 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
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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"
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shall consist of 50% of the salary that Executive received under
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paragraph l(d) above as compensation from the Company and its Subsidiaries
immediately prior to termination (Executive's "Previous Salary") together with
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the continuation of the medical benefits that the Company provided to Executive
immediately prior to Termination (Executive's "Previous Benefits"); provided
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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
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consist of 100% of Executive's Previous Salary and Previous Benefits, provided
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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, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
To Executive: Xxxxxx X Xxxxxxxxx
00 Xxxxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
or to such other address or to the attention of such other person as the
recipient party shall 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, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
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(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 California.
(f) Remedies. Each of the parties to this Agreement (including the
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Investors shall be entitled 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 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 shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
FOCAL COMMUNICATIONS CORPORATION
OF CALIFORNIA
By /s/ Xxxx X. Xxxxxxxx
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Its: E.V.P. - C.O.O.
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EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
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