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Exhibit 10.4
Employment Agreement
THIS EMPLOYMENT AGREEMENT, is made and entered into as of the first day
of January, 1996, by and between GTS Group, Inc. a Delaware corporation (the
"Corporation"), and Xxxxx X. Xxxx (the "Employee").
WITNESSETH:
WHEREAS, the Employee has substantial experience in the planning and
development of telecommunications ventures;
WHEREAS, the Corporation desires to employ the Employee, and the Employee
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 Employee, and the Employee hereby
accepts such employment, on the terms, and subject to the conditions herein
contained.
(b) The Employee shall be seconded to work at the Corporation's affiliate,
GTS-Hermes, Inc. ("GTS-Hermes") and its subsidiary in Brussels, Belgium, Hermes
Europe Railtel B.V. ("Hermes"), as the Vice President and Director of Business
Planning and Development of Hermes. In his capacity as Vice President and
Director of Business Development, Planning and Regulatory Affairs for Hermes,
the Employee shall report to and perform such duties and exercise such power and
authority as may from time to time be delegated to the Employee by the Managing
Director of Hermes.
(c) The Employee shall devote all of the Employee's business time and
attention and dedicate with the Employee's best efforts toward the fulfillment
and execution, including performance criteria, of the Employee's defined duties
pursuant to this Employment Agreement.
2. Term.
(a) The initial term of the employment of the Employee under this
Employment Agreement shall be three years commencing on January 1, 1996, and
continuing, unless sooner terminated pursuant to Section 9, to and including
December 31, 1998.
(b) Thereafter this Agreement shall terminate, unless (i) at least one
hundred and twenty days prior to the date of termination of the initial term or
any extension or renewal thereof (the "Term") either party requests verbally or
in writing and in accordance with the notice requirements of Section 15 an
extension of the Agreement (the Term of such extension shall be confirmed in
writing by a formal agreement extension approval from the Managing Director of
Hermes (the "Renewal Approval") within forty-five days of receipt).
3. Compensation
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(a) During the initial 24 consecutive month period of service, the
Employee shall be paid a salary at the rate of one hundred thirty five thousand
dollars ($135,000) per annum, payable in accordance with the Corporation's
customary payroll practices for Employees.
(b) At the end of each fiscal year the Managing Director of Hermes shall
review the performance of the Employee, and in connection with such review shall
review the salary of the Employee, and shall make a recomendation with respect
to adjustment to the base salary to the Chief Executive Officer of the
Corporation who shall make such adjustment to the base salary, if any, in his
sole and absolute discretion, deem appropriate.
(c) For the purposes of this Agreement, "Salary" shall mean any payment by
the Corporation to the Employee pursuant to this Section 3.
4. Bonus Opportunities.
(a) As additional compensation opportunities for the Employee hereunder,
the Corporation or Hermes shall provide to the Employee a bonus program which
allows for possible incentive compensation (the "Bonus") in respect of each
fiscal year of the Corporation. Subject to the provisions of Section 4(b), the
basis for such bonus, shall be based on performance achievements by the
Corporation and the Employee. Incentive award opportunities shall be up to
fifteen percent (15%) of the Salary of the Employee in any fiscal year. The
Bonus plan will be reviewed and adjusted on an annual basis, if deemed
appropriate, by the Chief Executive Officer of the Corporation in coordination
with the Compensation Committee of the Board of Directors of the Corporation, in
its sole and absolute discretion.
(b) The formula or other methods for determining the Bonus for the
Employee in each fiscal year shall be determined by the Chief Executive Officer
in coordination with the Compensation Committee of the Board of Directors of the
Corporation, and shall be based upon the performance of the Corporation and the
Employee in such fiscal year as compared with the projected expected performance
of the Corporation for such fiscal years. The actual amount of the Bonus paid to
the Employee in respect to the performance of any fiscal year of the Corporation
shall be subject to the sole and absolute discretion of the Compensation
Committee of the Board of Directors of the Corporation.
(c) All bonuses with respect to any fiscal year of the Corporation shall
be paid as soon as practical subsequent to the issuance of the consolidated
financial statements of the Corporation.
(d) The Employee shall have the opportunity to earn an additional deferred
bonus (the "Deferred Bonus") of up to fifteen per cent (15%) of the Salary of
the Employee earned. The Deferred Bonus, if any, shall be in an amount equal to
the Bonus, and payable on December 31, 1998, provided that the employee
continues to be employed by the Corporation on December 31, 1998.
5. Stock Option Plan. GTS-Hermes has adopted the 1994 GTS-Hermes Stock
Option Plan, (the "Plan") for its employees. Subject to the provisions of the
Plan, a copy of which is annexed hereto as Exhibit A, and the execution and
delivery of an option agreement (the "Option Agreement"), in the form annexed
hereto as Exhibit B, Hermes to grant to the Employee options to purchase a
number of shares of common stock of GTS-Hermes (the "Common Stock"). The number
of shares of Common Stock
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which shall be subject to the option shall be an amount equal to one-half of one
per centum (0.5%) of the outstanding shares of GTS-Hermes on the date of grant.
6. Benefits.
(a) During the Term, the Employee 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 Employees, 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 shall provide to the
Employee, at the its expense, use of a late model automobile appropriate in the
geographic location of Employee's residence, and acceptable to the Corporation.
(c) During the Term, the Corporation or Hermes shall provide business
class transportation (or coach class transportation with an upgrade to business
class if more economical to the Corporation) to and from the United States for
one trip per annum for Employee and Employee's immediate family living with
Employee. Until such time as the Employee's family shall be relocated to
Belgium, the Corporation or Hermes shall provide Employee a travel allowance of
up to US $2,400 per month.
(d) During the Term, the Corporation or Hermes shall provide Employee a
housing allowance of 45,000 Belgian Francs per month. The Corporation or Hermes
shall provide for the relocation of Employee's household goods to Belgium from
their location in Sudbury, MA USA; provided, that the Employee shall have
provided the Company a written notice of election to have such household goods
moved to Belgium; provided, further, that the Corporation or Hermes shall only
be obligated to relocate such household good if it shall not have provided
Employee with a Notice of Termination, or the employment of the Employee is
otherwise terminated, on or before July 2 1996. Any such relocation of the
household goods of the Employee shall be in accordance with the Corporation's
relocation policy.
(e) The Corporation or Hermes shall pay to the Employee during the Term an
amount per annum as shall compensate the Employee for tax equalization in
connection with the requirement that the Employee reside outside the United
States in accordance with the Corporation's tax equalization policy. The
Corporation or Hermes shall prepare all all tax returns for the Employee.
7. Expense Reimbursement.
(a) During the Term, the Corporation or Hermes shall reimburse the
Employee for all reasonable expenditures actually and necessarily paid or
incurred by the Employee in the course of and pursuant to the business of the
Corporation. Such reimbursement shall be subject to the submission to the
Corporation or Hermes by the Employee of appropriate documentation and/or
vouchers, and shall be 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 Employee with a credit card, Employee
acknowledges complete personal responsibility for all charges made on such
credit card. Any charges received by the Corporation for expenses not documented
on an approved expense report may be deducted by the Corporation from the
Employee's payroll check.
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Upon termination of this Agreement, non approved charges shall be deducted from
the last payroll check issued to the Employee.
8. Vacation. In each fiscal year of the Corporation during the Term, the
Employee shall be entitled to four weeks vacation time, which shall not be
cumulative from year to year without the prior written consent of the
Corporation.
9. Termination.
(a) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation shall at all times have the right to terminate immediately this
Agreement and the employment of the Employee hereunder for "Cause" by written
notice to the Employee in accordance with Section 15. For the purpose of this
Agreement, the term "Cause" shall mean any action of the Employee or any failure
to act by the Employee which constitutes:
(i) fraud, embezzlement or any felony in connection with the
Employee's duties as an Employee 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 13
of this Agreement;
(ii) a 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 Chief Executive Officer of the
Corporation shall be deemed to be continuing if the Employee shall have
received written notice thereof and shall have not terminated the conflict
of interest or failure to follow directions within thirty days after
receipt of such notice;
(iii) an extended period of absence by the Employee from the
performance of the obligations of the Employee provided hereunder, which
absence shall be for a reason other than a disability, and which has not
been approved in writing in advance by the Managing Director of Hermes or
the Chief Executive Officer of the Corporation; or
(iv) a failure to meet minimum satisfactory performance requirements
for a performance period as determined by the Managing Director of Hermes.
(b) Notwithstanding anything to the contrary contained in this Agreement,
the Corporation, by written notice to the Employee, shall at all times have the
right to terminate this Agreement and the employment of the Employee hereunder
if the Employee 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 Employee from reasonably discharging required
services and employment duties hereunder;
(ii) be attested to in writing by a physician or a group of
physicians acceptable to the Corporation; and
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(iii) continue during any period of six consecutive months or for
periods aggregating six months in any twenty four month period.
A Total Disability shall be deemed to have occurred on the last day of
such applicable six month period.
(c) This Agreement shall terminate automatically upon the date of the
death of the Employee.
(d) The Employee may terminate the Agreement at any time by giving 120
days written notice to the Corporation in accordance with Section 15. Upon
giving such notice, the Employee shall be continued in employment with the
Corporation for the full 120 days of the notice period, be continued in
employment with the Corporation without the existence of an employement
agreement, or at the discretion of the Corporation may be paid the Employee's
salary and have applicable benefits hereunder continued for such 120 days period
in lieu of continued employment. Failure of the Employee to provide the full 120
days notice shall be deemed a breach of the agreement by the Employee and permit
the Corporation to cease immediately the compensation and benefits provided
herein, and if deemed necessary, to take remedial action to prohibit any further
damages as may occur from the breach by the Employee.
10. Payments Upon Termination.
(a) If the Corporation shall terminate the employment of the Employee
under this Agreement pursuant to Section 9(a) hereof, or if the employment of
the Employee hereunder shall be terminated by the Employee other than in
accordance with Section 2 or Section 9(d), then, in any such event, the
Corporation shall have no obligation to pay to the Employee base 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 Employee prior to the date of such termination and the
reimbursement of all expenses incurred by the Employee prior to the date of such
termination in accordance with Section 7 hereof. Upon termination pursuant to
Section 9(a) or by the Employee other than in accordance with Section 2 or
Section 9(d), all options granted to the Employee pursuant to Section 5 shall
immediately be canceled and no further options shall vest.
(b) If the employment of the Employee hereunder shall terminate pursuant
to subsections 9(b) or (c) hereof, if the employment of the Employee shall be
terminated by the Corporation in accordance with Section 2 hereof, or if the
Employee shall be terminated by the Corporation other than in accordance with
the provisions of this Agreement, the Corporation shall pay to the Employee or
the Employee's Estate, as the case may be, the Salary and target Bonus for the
fiscal year in which the termination occurs, prorated for the number of weeks
during which the Employee was employed by the Corporation during such fiscal
year.
(c) In the event that the Corporation terminates the employment of the
Employee by delivering notice in accordance with Section 2, or for any reason
other than those set forth in Section 9 above, the Employee shall receive as
severance an amount equal to 120 days of Salary and benefits. 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 Employees.
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(d) In the event that the employment of the Employee is terminated due to
a Total Disability or the death of the Employee in accordance with Section 9(b)
or 9(c) hereof, then the Employee or his designated beneficiary, as the case may
be, shall receive such amounts as are provided for in the disability policy or
life insurance policy provided by the Corporation for the benefit of the
Employee.
11. Covenants of the Employee. In order to induce the Corporation to enter
into this Agreement and employ the Employee hereunder, the Employee hereby
covenants and agrees as follows:
(a) During the term and for a period of twelve months thereafter, the
Employee shall not, without the prior written consent of the Corporation,
directly or indirectly, own, acquire, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with or use or permit his/her name to be
used in connection with:
(i) any business or enterprise engaged in the business of providing
carrier's carrier services in the European Union, including but not
limited to the following businesses or enterprises: AT&T/Unisource,
/Atlas, Phoenix (this subparagraph shall include any business operations
and activities that Hermes will expand into after the date this agreement
is extended); and
(ii) in a geographic area in which the Corporation or any of its
affiliates is operating either during the term or on the date Employee's
employment terminates and within which the Employee provides services or
has responsibility for the business operations and activities of the
Corporation, including but not limited to the following: the member states
of the European Union and the EFTA (including any area into which the
Corporation's business operations or activities expand after the date
hereof and within which the Employee provides services or as
responsibility for such business operations or activities) (the
"Geographic Area).
It is recognized by the Employee that the business of the Corporation,
Hermes, and their respective affiliates and the Employee's connection therewith
is or will be involved in activity throughout the Geographic Area and that more
limited geographical limitations on this non-competition covenant are therefore
not appropriate.
The foregoing provisions of this Section 11(a) shall not prevent the
Employee 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 Employee 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 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 that such information is a matter of public knowledge or is required to
be disclosed by law or judicial or administrative process.
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(c) During the Term and for a period of twelve months thereafter, the
Employee 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 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
Employee 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 or affiliates, to terminate or refrain from
renewing or extending its contractual or other relationship with the
Corporation or such subsidiary or affiliate, and the Employee 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 Employee acknowledges that a breach or
violation by the Employee of the covenants or agreements contained in Sections
11 and 13 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 Sections 11 and 13 of this Agreement
by the Employee 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 Employee of the covenants or agreements contained in Section 11 or
elsewhere in this Agreement. Notwithstanding anything herein to the contrary,
the Corporation hereby expressly reserves the right to seek damages and other
economic remedies for a breach by the Employee of the covenants or agreements
contained in Section 11 or elsewhere in this Agreement.
13. Foreign Corrupt Practices Act. You agree to comply in all respects
with the U.S. Foreign Corrupt Practices Act of 1977 (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. Your failure to comply in all respects with the
provisions of the FCPA shall constitute a material breach by you of your
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 Employee shall not delegate his employment
obligations under this Agreement to any other person.
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15. Renewal Notices. Any renewal requests permitted must be approved by
the Compensation Committee according to the terms of this Agreement and must be
approved in writing and with appropriate confirmation of receipt, certified
mail, return receipt requested, or overnight courier to the following addresses:
If to the Corporation: GTS Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx 00xx Xxxxx
XxXxxx, XX 00000 XXX
Attention:General Counsel
If to the Employee: 0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000 XXX
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. Renewal notices shall be deemed approved at the time when such are
approved by the Managing Director of Hermes .
16. 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.
17. 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.
18. Severability. In case any one or more of the provisions of this
Agreement shall be held by any court of competent jurisdiction to be illegal,
invalid or unenforceable in any respect, such provision shall be not force and
effect, but the illegality, invalidity or unenforceability of any other
provision of this Agreement, but this Agreement shall be constured as if such
illegal, invalid or unenforceable provision had never been contained herein.
19. Choice of Laws. The Employee and the Corporation intend and hereby
acknowledge that jurisdiction over disputes with regard to this Agreement shall
be exclusively in the courts of the Commonwealth of Virginia, and this
Agreement shall be governed by the laws of the Commonwealth of Virginia as to
the validity, interpretation, and enforcement thereof.
20. Arbitration. Any and all disputes, controversies and cliams arising
out of or relating to this Agreement, shall be settled and determined by
arbitration conducted before a panel of three arbitrators in Virginia 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 Employee, and judgement confirming such arbitration may be entered
thereon in any court having juridiction over such proceedings.
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21. 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.
22. 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.
GTS GROUP, INC.
by: [Illegible] /s/ Xxxxx X. Xxxx
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Title: Vice President - General Counsel Xxxxx X. Xxxx
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