1
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, is made and entered into as of the third
day of January, 1995, by and between SFMT, Inc., a Delaware corporation (the
"Corporation"), and Xxx Xxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive has substantial experience in the
telecommunications industry in both operations and finance; and
WHEREAS, the Corporation desires to employ the Executive, and the
Executive desires to be employed by the Corporation, in accordance with the
terms and provisions herein contained;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment.
(a) The Corporation hereby employs the Executive, and the Executive hereby
accepts such employment, on the terms, and subject to the conditions herein
contained.
(b) The Executive shall be the Senior Vice President - Hermes of the
Corporation, and by secondment agreement shall be assigned to work at
SFMT-Hermes ("SFMT-Hermes"), a subsidiary of the Corporation, or Hermes Europe
Railtel B.V. ("Hermes Europe"), a subsidiary of SFMT-Hermes, as the Managing
Director of Hermes Europe. In his capacity as Senior Vice President - Hermes,
the Executive shall report to and shall perform such duties and exercise such
power and authority as may from time to time be delegated to him by, the Chief
Executive Officer of the Corporation. As the Managing Director of Hermes Europe
he shall also report to the Board of Supervisory Directors of Hermes Europe.
(c) The Executive shall devote all of his business time and attention and
his best efforts to the performance of his duties pursuant to this Employment
Agreement.
(d) Initially, the Executive shall be required to reside in Brussels and
work from the Corporation's offices in Brussels. The Corporation reserves the
right to require that the Executive will move to and reside in and operate from
the offices of the Corporation's or Hermes Europe in another major city within
the region in which Hermes Europe operates.
2. Term. The initial term of the employment of the Executive under this
Employment Agreement shall be Two (2) years, commencing on January 3, 1995, and
continuing, unless sooner terminated pursuant to Section 9 to and including
January 2, 1997. Thereafter this Agreement shall he automatically renewed
annually, unless either party hereto shall
2
deliver written notice in accordance with Section 9 to the other party at least
Six (6) months prior to the date of termination of the initial term or any
extension or renewal thereof (the "Term") of its desire to terminate such
employment (a "Notice of Termination").
3. Compensation.
(a) During the initial Term, the Executive shall be paid a salary at the
rate of Two Hundred Thirty-Five Thousand Dollars ($235,000) per annum, payable
in accordance with the Corporation's customary payment practices for executive
officers.
(b) Thereafter, at the end of each year the Compensation Committee of the
Board of Directors of the Corporation shall review the salary of the Executive,
and shall make such increases to such salary as the Board of Directors shall, in
its sole and absolute discretion, deem appropriate.
(c) For the purposes of this Agreement, "Salary" shall mean any payment by
the Corporation to the Executive pursuant to this Section 3.
4. Bonus.
(a) After the Executive has been employed by the Corporation for a period
of eighteen (18) months, and as additional compensation to the Executive
hereunder, the Executive will he assessed for eligibility to receive a
discretionary bonus (the "Bonus") in respect of the initial employment period.
Subject to the provisions of Section 4(b), the initial target for such Bonus,
based on the achievement by Hermes Europe of the objectives shall be Fifty
percent (50%) of the Salary of the Executive earned during the initial
employment period. The first bonus shall be in respect of two years ("the
Initial Bonus"), payable in accordance with Section 4(c). One-half of the
maximum target for the Initial Bonus shall be guaranteed. The remainder of the
potential Initial Bonus shall be subject to the achievement of the performance
objectives set forth in the approved Hermes Europe Business Plan.
(b) The formula or other method for determining the Bonus for the
Executive in each subsequent fiscal year shall be determined by the Corporation
and shall be based upon the performance of Hermes Europe in such fiscal year as
compared with the Hermes Europe approved business plan for such fiscal years.
The amount of the Bonus paid to the Executive in respect of any fiscal year of
the Corporation shall be subject to the sole and absolute discretion of the
Board of Directors of the Corporation. The objectives for each fiscal year and
the amount of bonus for successful completion of objectives (as a percentage of
base salary or other formula declared for the period) shall be established
during the period between Twelve (12) and Fifteen (15) months prior to the
fiscal year for which such objectives apply (e.g., October 1 - December 31, 1994
for fiscal year 1996).
(c) All Bonuses in respect of any fiscal year of the Hermes Europe shall
be paid within Thirty (30) days after the issuance of the audited financial
statements of Hermes Europe for such fiscal year. The only exception will be the
guaranteed portion of the initial Bonus which shall be paid on or before January
2, 1997.
2
3
5. Equity Participation
(a) The Corporation shall use its best efforts to cause SFMT-Hermes to
adopt a Stock Option Plan (the "Option Plan") for its senior executives. Subject
to the provision of the Plan, SFMT-Hermes shall grant to the Executive options
to purchase shares of Capital Stock of SFMT-Hermes ("Capital Stock"). The number
of shares of Capital Stock which shall be subject to the option shall be an
amount equal to Three and One-Half percent (3.5%) of the outstanding shares of
SFMT-Hermes to be determined at the time of the completion of the capitalization
required to achieve the build-out of the first phase of network installation in
accordance with an approved business plan of Hermes Europe; provided, however,
that the issuance of such options is conditioned upon such capitalization being
committed to in writing on or prior to January 1, 1997 and completed within six
months thereafter; provided, further, that if Hermes Europe does not for any
reason adopt a stock option plan for its senior executives, the Corporation
shall provide options to purchase a number of shares of Common Stock of the
Corporation of comparable value as of the same date, which options shall be
issued pursuant to the Corporation's 1992 Stock Option Plan, as amended. Any
options which may be issued to the Executive shall vest as follows:
(i) options to purchase 33.33% (one-third) of the shares of Capital
Stock shall vest as at the close of business on January 2, 1997;
(ii) options to purchase 33.33% (one-third) of the shares of Capital
Stock shall vest as at the close of business of January 2,1998; and
(iii) options to purchase 33.33% (one-third) of the shares of
Capital Stock shall vest as at the close of business on January 2, 1999.
Notwithstanding the foregoing, in the event the Hermes Europe business plan is
revised to provide for the capitalization of Hermes Europe on a date subsequent
to January 1, 1997, then the foregoing options shall be issued on each of the
date of commitments for such capitalization (subject to its completion within
six months thereafter), and one-third of such options shall vest on the close of
business on each of the date of such commitment, and the first and second
anniversaries of the commitment of such financing (in each case subject to
completion of such financing within six months of the commitment for such
financing).
(b) The Corporation has a Restricted Stock Plan (the "Restricted Plan").
Subject to the provision of the Restricted Plan, the Corporation shall grant to
the Executive Twenty Thousand (20,000) shares of Restricted Stock of the
Corporation ("Restricted Stock") upon achievement of the first year Hermes
Europe Business Plan objectives. The shares shall vest as follows:
(i) Six Thousand Six Hundred Sixty-Six (6,666) shares of Restricted
Stock shall vest as at the close of business on January 2, 1997;
(ii) Six Thousand Six Hundred Sixty-Seven (6,667) shares of
Restricted Stock shall vest as at the close of business on January 2,
1998; and
3
4
(ii) Six Thousand Six Hundred Sixty-Seven (6,667) shares of
Restricted Stock shall vest as at the close of business on January 1,
1999.
6. Benefits.
(a) During the Term, the Executive shall be entitled to receive such
benefits and to participate in such employee group benefit plans as are
generally provided by the Corporation, or made available by the Corporation, to
its executive officers, including without limitation, but subject to the
conditions imposed by the carriers, any medical, health, disability and life
insurance policies.
(b) During the Term, the Corporation or Hermes Europe shall provide to the
Executive, at the Corporation's expense, use of a late model automobile
appropriate in the geographic location of Executive's residence, and acceptable
to the Corporation.
(c) During the Term, the Corporation or Hermes Europe shall provide
business class transportation to and from the United States for one trip per
annum for Executive and Executive's immediate family living with Executive in
Brussels.
(d) During the initial first Two (2) years of the Term, the Corporation or
Hermes Europe shall provide to the Executive a furnished residence in the city
of residence of the Executive.
(e) The Corporation or Hermes Europe shall pay to the Executive during the
Term an amount per annum as shall compensate the Executive for tax equalization
in connection with the requirement that the Executive reside outside the United
States for so long as the Executive is required to live outside the United
States. Such tax equalization shall apply to Salary, Bonus taxable components of
equity awards and any other payment deemed taxable in a foreign jurisdiction.
SFMT will also be responsible for paying for the preparation and filing of your
domestic and international income taxes.
(f) The Executive shall he paid an amount equal to Seven percent (7%) of
the Executive's Salary as a cost of living adjustment in connection with
requirement that the Executive reside in Brussels for so long as the Executive
is required to live in Brussels.
(g) The Corporation or Hermes Europe shall provide relocation and moving
support as provided in the Schedule to this Agreement in connection with the
Executive's relocation to Brussels.
7. Expense Reimbursement.
(a) During the Term, the Corporation shall reimburse the Executive for all
reasonable expenditures actually and necessarily paid or incurred by the
Executive in the course of and pursuant to the business of the Corporation. Such
reimbursement shall be subject to the submission to the Corporation by the
Executive of appropriate documentation and/or vouchers,
4
5
and shall he made in accordance with the customary procedures of the Corporation
for expense reimbursement, as may from time to time be established.
(b) Should the Corporation provide Executive with a credit card, Executive
acknowledges complete personal responsibility for all charges made on such
credit card. Any charges received by the Corporation for expenses not documented
on a approved expense report may be deducted by the Corporation from the
Executives payroll check. Upon termination of this Agreement, non approved
charges shall be deducted from the last payroll check issued to the Executive.
8. Vacation. In each fiscal year of the Corporation during the Term, the
Executive shall be entitled to Four (4) weeks vacation time, which shall not be
cumulative from year to year without the prior written consent of the
Corporation or unless the Executive shall be unable to take such vacation due to
Executive's duties under this Agreement; provided, however, that to the extent
the Executive cannot take vacation time during the Term due to his
responsibilities under this Agreement, upon termination, Executive shall he
entitled to be compensated for accrued but unused vacation time.
9. Termination.
(a) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation shall at all times have the right to terminate this Agreement
and the employment of the Executive hereunder for "Cause" by written notice to
the Executive in accordance with Section 15. For the purpose of this Agreement,
the term "Cause" shall mean any action of the Executive or any failure to act by
the Executive which constitutes:
(i) fraud, embezzlement or any felony in connection with the
Executive's duties as an executive officer of the Corporation or any
subsidiary or affiliate of the Corporation, or willful misconduct or the
commission of any other act which causes or may reasonably be expected to
cause substantial economic or reputational injury to the Corporation or
any such subsidiary or affiliate of the Corporation, including any
violation of the Foreign Corrupt Practices Act, as described in Section 15
of this Agreement;
(ii) continuing conflict of interest or continuing failure to follow
reasonable directions or instructions of the Board of Directors or Chief
Executive Officer of the Corporation. A conflict of interest or a failure
to follow directions of the Board of Directors or the Chief Executive
Officer of the Corporation shall be deemed to be continuing if the
Executive shall have received written notice thereof and shall have not
terminated the conflict of interest or failure to follow directions within
Thirty (30) days after receipt of such notice; or
(iii) an extended period of absence by the Executive from the
performance of the obligations of the Executive provided hereunder, which
absence shall be for a reason other than a disability, and which has not
been approved in writing advance by the Board of Directors or the Chief
Executive Officer of the Corporation.
5
6
(b) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation, by written notice to the Executive, shall at all times have the
right to terminate this Agreement and the employment of the Executive hereunder
if the Executive shall experience a "Total Disability." For the purpose of this
Agreement, the term "Total Disability" shall mean any mental or physical
illness, condition, disability or incapacity as shall:
(i) prevent the Executive from reasonably discharging his services
and employment duties hereunder;
(ii) be attested to in writing by a physician acceptable to the
Corporation; and
(iii) continue during any period of Three (3) consecutive months or
for periods aggregating three months in any twelve-month period.
A Total Disability shall be deemed to have occurred on the last day of
such applicable three-month period.
(c) This Agreement shall terminate automatically upon the date of the
death of the Executive.
10. Payments upon Termination.
(a) If the Corporation shall terminate the employment of the Executive
under this Agreement pursuant to Section 9 (a) hereof, or if the employment of
the Executive hereunder shall be terminated by the Executive other than in
accordance with Section 2 hereof, then, in any such event, the Corporation shall
have no obligation to pay to the Executive his Salary or any other compensation
or benefits provided under this Agreement for any period after the date of such
termination, or to pay any Bonus for the year in which such termination occurs;
provided, however, that the Corporation shall pay all Salary earned by the
Executive prior to the date of such termination and the reimbursement of all
expenses incurred by the Executive prior to the date of such termination in
accordance with Section 7 hereof. Upon a termination pursuant to Section 9 (a)
or by the Executive, all options and restricted shares granted to Executive
pursuant to Section 5 shall immediately be canceled and no further options shall
vest.
(b) If the employment of the Executive hereunder shall terminate pursuant
to Sections 9 (b) or (c) hereof, if the employment of the Executive shall be
terminated by the Corporation in accordance with Section 2 hereof, or if the
Executive shall be terminated by the Corporation other than in accordance with
the provisions of this Agreement, the Corporation shall pay to the Executive or
his Estate, as the case may be, the Salary and Bonus for the fiscal year in
which such termination occurs, prorated for the number of weeks during which the
Executive was employed by the Corporation during such fiscal year.
(c) In the event that the Corporation terminates the employment of the
Executive by delivering notice in accordance with Section 2, or for any reason
other than those set forth in
6
7
Section 9 above, the Executive shall receive as severance an amount equal to the
greater of (i) Six (6) months salary, and (ii) the amount of salary that would
have been payable to the Executive form the date of Notice of Termination until
the end of the Term, had the Corporation not delivered such Notice of
Termination. Such severance pay shall be paid in equal monthly installments,
commencing the month following such termination, and shall be payable in
accordance with the Corporation's customary practices for executive officers.
(d) In the event that the employment of the Executive is terminated due to
a Total Disability or the death of the Executive in accordance with Section 9
(6) or 9 (c) hereof, then the Executive or his designated beneficiary, as the
case may be, shall be entitled to receive such amounts as are provided for in
any disability policy or life insurance policy provided by the Corporation for
the benefit of the Executive.
11. Covenants of the Executive. In order to induce the Corporation to
enter into this Agreement and employ the Executive hereunder, the Executive
hereby covenants and agrees as follows:
(a) During the Term and for a period of Twelve (12) months thereafter, the
Executive shall not, without the prior written consent of the Corporation:
(i) directly or indirectly acquire or own in any manner any interest
in any person, firm, partnership, corporation, association or other entity
which competes with the Corporation or any of its affiliates or
subsidiaries; or
(ii) be employed by, or serve as an employee, agent, officer,
director of, any person, firm, partnership, corporation association which
competes with the Corporation or any of its affiliates or subsidiaries.
The foregoing provisions of this Section 11(a) shall not prevent the Executive
from acquiring and/or owning not more than nine per cent of the equity or debt
securities of any company which has securities listed for trading on a
recognized securities exchange or are regularly traded in the National
Association of Securities Dealers Automated Quotation System.
(b) The Executive shall not at any time, other than in the ordinary course
of business of the Corporation, when and if required, disclose, directly or
indirectly, to any person, firm, corporation, partnership, association or other
entity, any confidential information relating to the Corporation or any of its
affiliates or subsidiaries, or any information concerning the financial
condition, suppliers, customers, lessors, lessees, sources of leads for and
methods of obtaining new business or the methods generally of doing and
operating the respective businesses of the Corporation, its affiliates and
subsidiaries, except to the extent that such information is a matter of public
knowledge or is required to be disclosed by law or judicial or administrative
process.
(c) During the Term and for a period of Twelve (12) months thereafter, the
Executive shall not, without the prior written consent of the Corporation,
directly or indirectly through any other individual or entity:
(i) solicit, entice, persuade or induce any individual who currently
is, or at any time during the Term shall be, an employee of the
Corporation, or any of its affiliates, to
7
8
terminate or refrain from renewing or extending such person's employment
with the Corporation or such subsidiary or affiliate, or to become
employed by or enter into contractual relations with any other individual
or entity, and the Executive shall not approach any such employee for any
such purpose or authorize or knowingly cooperate with the taking of any
such actions by any other individual or entity; or
(ii) except in accordance with the Executive's duties hereunder on
behalf of the Corporation, solicit, entice, persuade, or induce any
individual or entity which currently is, or at any time during the Term
shall be, a customer, supplier, lessor or lessee of the Corporation, or
any of its subsidiaries of affiliates, to terminate or refrain from
renewing or extending its contractual or other relationship with the
Corporation or such subsidiary or affiliate, and the Executive shall not
approach any such customer, supplier, lessor or lessee for such purpose or
authorize or knowingly cooperate with the taking of any such actions by
any other individual or entity.
12. Specific Performance. The Executive acknowledges that a breach or
violation by the Executive of the covenants or agreements contained in Section
11 of this Agreement would cause irreparable harm and damage to the Corporation
if such provisions are not specifically enforced, the monetary amount of which
would be impossible to ascertain. Therefore, the Corporation shall be entitled
to enforce such provisions in a court of equity by a decree of specific
performance and to obtain an injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation of any or all of the covenants
and agreements contained in Section 11 of this Agreement by the Executive and/or
his employees, associates, partners or agents, or entities controlled by one or
more of them, either directly or indirectly. Such remedies shall be cumulative
and not exclusive and shall be in addition to whatever other rights or remedies
the Corporation shall have for damages for a breach by the Executive of the
covenants or agreements contained in Section 11 or elsewhere in this Agreement.
13. Foreign Corrupt Practices Act. The Executive agrees to comply in all
respects with the U.S. Foreign Corrupt Practices Act of 1977 (the "FCPA"), as
amended, which provides generally that: under no circumstances will foreign
officials, representatives, political parties or holders of public offices be
offered, promised or paid any money, remuneration, things of value, or provided
any other benefit, direct or indirect, in connection with obtaining or
maintaining contracts or orders hereunder. The Executive's failure to comply in
all respects with the provisions of the FCPA shall constitute a material breach
by him of his obligations hereunder and shall entitle SFMT to terminate this
Agreement immediately. A copy of the Corporation's FCPA policy is annexed hereto
as Exhibit C.
14. No Delegation. The Executive shall not delegate his employment
obligations under this Agreement to any other person.
15. Notices. Any notice required or permitted to be given under this
Agreement shall he in writing and sent by facsimile, with appropriate
confirmation of receipt, certified mail, return receipt requested, or overnight
courier to the following addresses:
If to the Corporation: SFMT, Inc.
000 Xxxxxxx Xxxxxx, 0xx floor
8
9
New York, New York 10022
Attention: General Counsel
Fax: 000-000-0000
If to the Executive: 0 Xxxxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Either party may change the address to which notices, requests, demands and
other communications to such party shall be delivered personally or mailed by
giving notice thereof to the other party hereto in the manner herein provided.
Notices shall be deemed given at the time of receipt.
16. Deductions and Withholding. The Executive acknowledges and agrees that
the Company shall be entitled to withhold from the Executive's compensation
hereunder, including Salary and Bonus and other payments made pursuant to the
Agreement, all applicable taxes that are due to the appropriate jurisdictions,
and pay this withholding to the appropriate tax authorities, consistent with the
tax equalization treatment described in Section 6(e) herein. Tax equalization,
applied in the context of monthly withholding, shall be reconciled at year end.
17. Binding Effect This Agreement shall be for the benefit of and binding
upon the parties hereto and their respective heirs, personal representatives,
legal representatives, successors and, where applicable, assigns.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified, amended, altered or rescinded in any manner,
except by written instrument signed by both of the parties hereto; provided,
however, that the waiver by any party of compliance by any other party with
respect to any provision hereof or of any breach by such other party need be
signed only by the party waiving such provision or breach; provided, further,
that the waiver by either party hereto of a breach or compliance with any
provision of this Agreement shall not operate nor be construed as a waiver of
any subsequent breach or compliance.
19. Severability. In case any one or more of the provisions of this
Agreement shall be held by any court of competent jurisdiction so be illegal,
invalid or unenforceable in any respect, such provision shall be of no force and
effect, but the illegality, invalidity or unenforceability of such provision
shall have no effect upon and shall not impair the enforceability of any other
provision of this Agreement, but this Agreement shall be construed as if such
illegal, invalid or unenforceable provision had never been contained herein.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within New York.
21. Arbitration. Any and all disputes, controversies and claims arising
out of or relating to this Agreement, shall be settled and determined by
arbitration conducted before a panel
9
10
of three arbitrators in New York in accordance with the rules of the American
Arbitration Association then in effect. The arbitrators' award shall be final
and binding upon the Corporation and the Executive, and judgment confirming such
arbitration may be entered thereon in any court having jurisdiction over such
proceedings.
22. Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any manner the meaning or
interpretation of this Agreement.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SFMT, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
/s/ Xxx Xxxxxx
---------------------------
Xxx Xxxxxx
10
