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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into by and between Xxxxxxxxx X.
Xxxxx ("Executive") and NEXTLINK Communications, Inc., a Delaware corporation
("Employer" or the "Company"), to be effective on and as of January 3, 2000.
WITNESSETH:
WHEREAS, Employer is engaged in the business of providing high-quality,
non-mobile telecommunications services to the rapidly growing business market;
and
WHEREAS, Executive has skills and experience in telephony generally and
with the technology associated with NEXTLINK's business specifically; and
WHEREAS, Employer desires to obtain Executive's services for the conduct
of its business, and Executive desires to be employed in such business by and
for Employer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein set forth, the parties hereto agree as follows:
1. Employment. Employer hereby employs Executive as President and Chief
Operating Officer, and Executive hereby accepts such employment upon the terms
and conditions hereinafter set forth.
2. Duties.
a. Executive shall serve as President and Chief Operating Officer of
employer, reporting directly to the Chairman of the Board, and shall perform his
services as such within the framework of the policies, objectives and Bylaws of
Employer. In such capacity, Executive (I) shall exercise general supervisory
responsibility and management authority over the development and operation of
Employer's network including without limitation, the engineering, design and
construction of Employer's local and long distance telephony systems and the
related marketing and sales organizations and (ii) shall perform
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such other duties commensurate with his position as may be assigned to him from
time to time by Employer's board of directors (the "Board of Directors").
b. Executive shall devote substantially all his business time,
attention and energies to the performance of his duties and functions under this
Employment Agreement and shall not during the term of his employment hereunder
be engaged in any other substantial business activity for gain, profit or other
pecuniary advantage. Executive shall faithfully, loyally and diligently perform
his assigned duties and functions and shall not engage in any activities
whatsoever which conflict with his obligations to Employer during the term of
his employment hereunder.
3. Term. The term of this Employment Agreement shall commence on the date
hereof (the "Commencement Date") and, unless terminated earlier pursuant to
paragraph 12 hereof, shall continue through January 3, 2004 (the "Initial
Term"), and thereafter shall continue unless and until such time as (i) either
party hereto notifies the other, upon sixty (60) days prior written notice, that
this Employment Agreement will be terminated at the end of the Initial Term or
the later expiration of such sixty day notice period, or (ii) Executive's
employment is otherwise terminated pursuant to paragraph 12 hereof (the
"Extended Term") (the Initial Term, together with the Extended Term, if any,
being referred to herein as the "Employment Term").
4. Compensation. Employer shall pay to Executive, in consideration of
and as compensation for the services agreed to be rendered by Executive
hereunder, the following:
a. Base Salary. During the Employment Term, the Company shall pay to
Executive a Base Salary of $375,000 per annum; provided that the amount of such
Base Salary shall be reviewed at least annually and may, in Employer's sole
discretion, be increased by Employer from time to time during the Employment
Term (with the first such review to occur during [September, 2000]) in light of
the conditions then existing and the services then being rendered by Executive,
in which case Executive's Base Salary shall be such higher amount as may be
determined by Employer (such annual Base Salary, as in effect from time to time,
being referred to herein as the "Base Salary"). The Base Salary shall be payable
in accordance with Employer's normal payroll
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schedule, less appropriate deductions for federal, state and local income taxes,
FICA contributions and any other deductions required by law or authorized by
Executive.
b. Annual Performance Bonus. In addition to the Base Salary,
Executive shall be entitled to receive an annual performance bonus (the "Annual
Bonus") during each year of service during the Employment Term (each such year
being referred to as an "Annual Bonus Period"), in an amount, if any, as may be
determined by the compensation committee of the Board of Directors (the
"Compensation Committee") and/or the Board of Directors in their complete
discretion. with a target of 70% of the Base Salary payable during such Annual
Bonus Period, based on Executive's performance against objectives for the prior
year of service. Each Annual Bonus shall be payable in accordance with
Employer's normal annual bonus payment schedule, less appropriate deductions for
federal, state, and local income taxes, FICA contributions and any other
deductions required by law or authorized by Executive.
c. Options.
(i) Grant of Compensatory Options. Employer agrees to grant to
Executive, pursuant to Employer's Stock Option Plan ("Plan") and subject to the
terms and conditions set forth in this paragraph 4(c), an option to acquire
675,000 shares (the "Compensatory Options") of Employer's Class A voting common
stock ("Common Stock") on the terms set forth in Annex A hereto. The shares of
Employer's Common Stock that will be issued on exercise of the Compensatory
Options are among the Shares covered by the Form S-8 Registration Statement
previously filed and currently in effect covering awards made under the Plan,
such that, upon issuance and distribution of such shares to Executive, there are
no restrictions under federal or state securities laws on the further transfer
of such shares, other than restrictions imposed by virtue of Executive's status
as an officer or director of the Company or as may otherwise be imposed by law
with respect to unrestricted shares. In addition, the Company shall ensure that
the provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended ("Exchange Act") are applicable to the grant and distribution of the
Compensatory Options, and that the distribution of the Compensatory Options
shall not constitute a "purchase" of the Common Stock pursuant to Section 16(b)
of the Exchange Act.
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(ii) Grant of Inducement Options. At or prior to the execution of
this Agreement and subject to the terms and conditions set forth in this
paragraph 4(c), the Employer shall grant to Executive, pursuant to the Plan, an
option to acquire another 150,000 shares of Employer's Common Stock on the terms
set forth in Annex A hereto (the "Inducement Options"). The shares of Employer's
Common Stock that will be issued on exercise of the Inducement Options are among
the shares covered by the Form S-8 Registration Statement previously filed and
currently in effect covering awards made under the Plan, such that, upon
issuance and distribution of such shares to Executive, there are no restrictions
under federal or state securities laws or regulations on the further transfer of
such shares, other than restrictions imposed by virtue of Executive's status as
an officer or director of the Company or as otherwise may be imposed by law with
respect to unrestricted shares. In addition, the Employer shall exercise its
best efforts to ensure that the provisions of Rule 16b-3 under the Exchange Act
are applicable to the grant of the Inducement Options and any subsequent
distribution of the shares issued upon exercise thereof, and that the
distribution of such shares to Executive shall not constitute a "purchase" of
Common Stock pursuant to Section 16(b) of the Exchange Act. The Compensatory
Options and the Inducement options are collectively referred to as the
"Options".
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(iii) Vesting. The Options shall be subject to vesting schedules, as
follows:
NUMBER OF YEARS OF CONTINUOUS SHARES AVAILABLE
EMPLOYMENT FROM THE EFFECTIVE UPON EXERCISE OF THE
DATE OF THIS AGREEMENT COMPENSATORY OPTION
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1 168,750
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2 168,750
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3 168,750
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4 168,750
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NUMBER OF YEARS OF
CONTINUOUS EMPLOYMENT FROM SHARES AVAILABLE
THE EFFECTIVE DATE OF THIS UPON EXERCISE OF THE
AGREEMENT INDUCEMENT OPTIONS
--------------------------------------------------------
1 0
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2 0
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3 0
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4 150,000
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Executive may, in his sole discretion, elect to defer vesting
of the Compensatory or the Inducement Options by delivering to the Employer a
written notice of such election no later than December 31 of the calendar year
immediately preceding the calendar year in which such vesting would otherwise
occur. Any such election shall be irrevocable and shall set a specific date for
the vesting of such Options; provided that Executive may also specify that the
applicable Options shall vest on the earlier of such specified date or the
termination of Executive's employment hereunder. In the event of such election,
Executive shall indemnify and hold harmless Employer from any and all
withholding amounts and penalties and interest associated therewith that may be
assessed by the Internal Revenue Service or any relevant state of local taxing
authority in connection with any such deferral by Executive in the vesting of
any of the Options and the recognition of income associated therewith.
(iv) Termination. Upon termination of employment for any reason
other than (w) termination by Employer other than for Cause, (x) permanent
disability (as defined below) or (y) death or (z) by Executive upon
establishment of Constructive Termination or upon a Change in Control, the
unvested portion (if any) of the Options shall immediately expire and be
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forfeited. If termination of employment occurs because of permanent disability
or death, Executive shall be deemed to have one additional year of continuous
employment from the date of death or permanent disability for purposes of
applying the vesting schedules. If termination of employment occurs upon
establishment of Constructive Termination or upon a Change in Control, vesting
of all of the Options shall occur upon the consummation of such Change in
Control, or upon final effectiveness of such Constructive Termination.
(v) Exercise of Options. Executive's right to exercise the Options shall
be governed by the terms of the Employer's Stock Option Plan and the individual
option letter agreements issued to Executive.
(vi) Withholding. Upon the vesting of any Inducement Options, or in
connection with the exercise of any Compensatory Options, Executive shall pay to
Employer an amount equal to such amount as Employer shall be obligated to remit
to the Internal Revenue Service or any relevant state or local taxing authority
as withholding attributable to the compensation evidenced by the Inducement
Options that have vested. At the discretion of the Compensation Committee,
Executive may pay such amount either in cash or by delivery to the Company of a
number of shares of Common Stock (or proceeds from the sale thereof) having a
Fair Market Value equal to such withholding amount (which delivery may be made
by an instruction to the Company to retain a portion of the shares available
upon exercise of the Compensatory Options, or shares available upon exercise of
Inducement Options, otherwise distributable to Executive or by an instruction to
the selling broker to remit such sales proceeds, otherwise distributable to
Executive, to the Company).
(vii) Adjustments. In the event that the Common Stock is changed
into or exchanged for a different number or kind of securities of Employer or of
another entity (by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, stock combination or otherwise),
or if there is a distribution of cash, securities or other property made to the
holders of the Common Stock (other than cash dividends made out of current
earnings of Employer) then an appropriate and equitable adjustment shall be made
in the number and kind of securities issuable upon exercise of the Options
hereunder, with a view towards preserving the value to Executive of the rights
granted pursuant to this paragraph 4(c). Without limiting the generality of the
foregoing, in the event that an adjustment is required pursuant
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to the terms of any options, warrants or convertible securities of Employer
pursuant to any event of the kind specified above, at least an equivalent
adjustment shall be required pursuant to this paragraph 4(c)(vii). In the event
any adjustment is required under this paragraph 4(c)(vii), appropriate
conforming adjustment shall be made to the exercise price of the Compensatory
Options, as appropriate, to all references to numbers of Inducement Options
and/or to the number of shares covered by the Compensatory Options, as
appropriate, contained in this paragraph 4(c), to the definition of Common
Stock, and to any other provisions of this paragraph 4(c) as necessary to
accomplish the intent of this subparagraph (vii).
5. Certain Definitions. For purposes of this Agreement:
"Change of Control" shall mean the occurrence of any of the
following events:
(A) The Company is merged or consolidated or reorganized into
or with another company or other legal entity, other than a merger or
consolidation or reorganization into or with a company or other legal entity
that is an affiliate of Xxxxx X. XxXxx, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such company or person immediately
after such transaction is held directly or indirectly in the aggregate by the
holders of voting securities of the Company immediately prior to such sale or
transfer, including voting securities issuable upon exercise or conversion of
options, warrants or other securities or rights;
(B) The Company sells or otherwise transfers all or
substantially all of its assets to any other company or other legal entity,
other than a such a sale or transfer to a company or other legal entity that is
an affiliate of Xxxxx X. XxXxx, and as a result of such sale or other transfer
of assets, less than a majority of the combined voting power of the
then-outstanding securities of such company or person immediately after such
sale or transfer is held directly or indirectly in the aggregate by the holders
of voting securities of the Company immediately prior to such sale or transfer,
including voting securities issuable upon exercise or conversion of options,
warrants or other securities or rights;
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(C) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing
that any person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) other than Xxxxx X. XxXxx and his affiliates has
become the beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 50% or more of the voting securities of the
Company, including voting securities issuable upon exercise or conversion of
options, warrants or other securities or rights;
(D) Notwithstanding the foregoing provisions of subparagraphs
(A), (B), (C) and (D) hereof, a "Change of Control" shall not be deemed to have
occurred solely because Xxxxx X. XxXxx or one or more of his affiliates, or the
Ampersand Trust or a combination thereof, has converted some or all of the
shares of Class B common stock of the Company held by any of them into shares of
Class A common stock of the Company.
(E) Notwithstanding the foregoing provisions of subparagraphs
(C) and (D) hereof, a "Change of Control" shall not be deemed to have occurred
solely because (x) the Company, (y) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting securities, or (z) any
Company-sponsored employee stock ownership plan or other employee benefit plan
of the Company, either files or becomes obligated to file a report or proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of voting securities,
whether in excess of 50% or otherwise, or because the Company reports that a
change of control of the Company has or may have occurred or will or may occur
in the future by reason of such beneficial ownership.
(F) Notwithstanding the foregoing provisions of subparagraphs
(A) through (D) above, no Change in Control shall result from a merger,
consolidation or reorganization of the Company with any entity in which Eagle
River Investments, L.L.C. has prior to such merger, consolidation or
reorganization invested at least $10,000,000 in equity.
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"Fair Market Value" of a share of Common Stock shall mean, as of any
given date, (i) the closing price of a share of Common Stock on the principal
exchange on which Common Stock then trades, if any, on the day previous to such
date, or, if shares were not traded on the day previous to such date, then on
the next preceding trading day during which a sale occurred; or (ii) if such
Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, (1) the last sales price (if the Common Stock is then listed
as a National Market Issue under the NASDAQ National Market System) or (2) the
mean between the closing representative bid and asked prices (in all other
cases) for the Common Stock on the day previous to such date (or, if shares were
not traded on the day previous to such date, then on the next preceding trading
day during which a sale occurred), as reported by NASDAQ or such successor
quotation systems.
"Cause" shall have the meaning ascribed in Paragraph 12(b) below.
"Permanent Disability" shall have the same meaning as "permanent and
total disability," as defined in the Employer's Stock Option Plan.
6. Additional Options The Compensation Committee of the Board of Directors
of Employer may, in its discretion, grant to Executive, pursuant to Employer's
Stock Option Plan, additional options to acquire shares of Employer's Common
Stock ("Additional Options").Except as otherwise provided herein, the terms and
conditions of such Additional Options shall be as determined by Employer in its
sole discretion. Executive's rights with respect to any Additional Options shall
be separate from (and in addition to) the rights set forth in paragraph 4(c)
above with respect to the Compensatory Options and Inducement Options.
7. Benefits. During the Employment Term, Executive shall be entitled to
participate in all group health, major medical, pension and profit sharing,
401(k) and other benefit plans maintained by Employer and provided generally to
its executive officers, on the same terms as apply to participation therein by
management generally (except as otherwise provided herein). Further, during the
Employment Term, Executive shall be entitled to participate in all fringe
benefit programs and shall receive all perquisites if and to the extent that
Employer establishes and makes such benefits and perquisites available to
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management generally, including, but not limited to, Employer-paid long-term
disability insurance and life insurance coverage.
8. Expenses. During the Employment Term, Employer shall reimburse
Executive for all reasonable travel, entertainment and other business expenses
incurred or paid by Executive in performing his duties and functions hereunder.
Employer shall reimburse Executive for legal accounting and other expenses
incurred in connection with the negotiation of this Agreement up to a maximum of
$10,000.
9. Vacations. Executive shall be entitled to such vacations, holidays,
sick leave and personal time off as is allowed under the policies of Employer to
management generally (except as otherwise provided herein).
10. Non-Competition. During the Employment Term and (except as provided in
paragraph 12 herein) for a period of two years thereafter, Executive shall not
enter into or participate in any business competitive to the business carried on
by Employer. The provisions of this paragraph 10 shall survive the expiration
and/or termination of this Employment Agreement.
11. Confidential Information. During the Employment Term and for a period
of two years thereafter, Executive will not use for his own advantage or
disclose any proprietary or confidential information relating to the business
operations or properties of Employer, any affiliate of Employer or any of their
respective customers, suppliers, landlords, licensors or licensees. Upon the
expiration or termination of the Employment Term, upon Employer's request,
Executive will surrender and deliver to Employer all documents and information
of every kind relating to or connected with Employer and its affiliates and
their respective businesses, customers, suppliers, landlord, licensors and
licensees. The foregoing confidential information provisions shall not apply to
information which: (i) is or becomes publicly known through no wrongful act of
the Executive, (ii) is rightfully received from any third party without
restriction and without breach by Executive of this Employment Agreement; or
(iii) is independently developed by Executive after the term of his employment
hereunder or is independently developed by a competitor of Employer at any time.
The provisions of this paragraph 11 shall survive the expiration and/or
termination of this Employment Agreement.
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12. Termination.
a. Automatic Termination Upon Death. In the event of Executive's
death during the Employment Term, Executive's employment hereunder shall be
automatically terminated upon the date of death. As soon as reasonably
practicable following Executive's death, Employer shall pay to Executive's
Representative (defined below in paragraph 22)(i) Executive's accrued but unpaid
Base Salary and Annual Bonus, through the last day of the month of his death,
and (ii) any amount due hereunder for accrued but unused vacation time as of the
date of death. In addition, Executive's Representative shall be entitled to
exercise Executive's rights with respect to the Compensatory Options and/or the
Inducement Options, as appropriate, as set forth in Paragraph 4(c) above, and
Executive's rights with respect to the Options (other than the Inducement
Options), as provided herein and in the stock option agreement(s) pertaining
thereto.
b. Termination by Employer. During the Initial Term, Employer shall
be entitled to terminate Executive's employment hereunder only upon the
establishment of "Cause" or the "Permanent Disability" of Executive (as those
terms are defined below) by giving written notice to that effect to Executive.
During any Extended Term, Employer shall be entitled to terminate Executive's
employment hereunder (i) upon the establishment of Cause or the Permanent
Disability of Executive, by giving written notice to that effect to Executive or
(ii) for any other reason or for no reason upon 6 months prior written notice to
Executive.
For purposes hereof, the term "Cause" means either (1)
Executive's failure to substantially perform his duties and functions as
contemplated hereunder, if such failure constitutes gross neglect or willful
malfeasance and such failure is not remedied within ninety (90) days after
Executive's receipt of written notice from Employer identifying such failure(s);
(2) Executive's committing fraud or embezzlement or otherwise engaging in
conduct that results in Executive being convicted of a felony from which all
appeals have been exhausted; (3) Executive's intentionally acting in a manner
which is materially detrimental or damaging to Employer's reputation, business,
operations or relations with its employees, suppliers or customers, without
taking reasonable steps to remedy such actions promptly after receiving written
notice thereof from Employer; (4) Executive's chronic or habitual abuse of
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alcohol or prescription drugs or controlled substances; or (5) Executive's
committing any other material breach of this Employment Agreement without taking
reasonable steps to cease or remedy such breach within thirty (30) days after
Executive's receipt of written notice from Employer specifically identifying the
nature of and circumstances relevant to any such claimed material breach by
Executive.
For purposes hereof the term "Permanent Disability" means: (i)
Executive's failure to devote full normal working time as required herein to his
employment hereunder for a period of at least 90 consecutive normal business
days (or for at least a majority of the normal business days in any consecutive
180-day period); and (ii) the existence of an illness or incapacity (either
physical or mental) affecting Executive which, in the reasonable opinion of a
Qualified Physician, is likely to be of such character or severity that
Executive would be unable to resume devoting his full normal working time, as
required herein, to his employment hereunder for a period of at least nine
consecutive months; the term "Qualified Physician" means an impartial physician
competent to diagnose and treat the illness or condition which Executive is
believed to be suffering, selected by Employer and reasonably acceptable to
Executive (or if Executive is then incapable of acting for himself, Executive's
Representative), who shall have personally examined Executive and shall have
personally reviewed Executive's relevant medical records; provided Employer
shall bear the costs of such Qualified Physician's services and Executive agrees
to submit to an examination by such Qualified Physician and to the disclosure of
Executive's relevant medical records to such Qualified Physician.
The date upon which any termination effected pursuant to this
subparagraph 12(b) shall be effective is set forth in subparagraph 12(d), and
the effect of any such termination shall be as described in subparagraphs 12(e)
and (f).
c. Termination by Executive. During the Initial Term, Executive
shall be entitled to terminate his employment hereunder only upon the
establishment of "Constructive Termination" (as that term is defined below) or
upon a Change of Control, by giving written notice to that effect to Employer.
During any Extended Term, Executive shall be entitled to terminate his
employment hereunder (i) upon the establishment of Constructive Termination or
upon a Change of Control, by giving notice to that effect to Employer or (ii)
for
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any other reason or for no reason upon 6 months prior written notice to
Employer.
For purposes hereof, "Constructive Termination" shall mean
Executive's termination of his employment hereunder as a direct result of (i) a
reduction in Executive's initial Base Salary or in the target Annual Bonus
percentage, (ii) a material change in the nature or extent of Executive's
responsibilities that is inconsistent with Executive's intended position and
status hereunder, (iii) the material breach by the Employer of any provision of
this Agreement which continues without reasonable steps being taken to cure such
breach for a period of 30 days after written notice thereof by Executive to
Employer or (iv) a change in Employee's reporting responsibility such that
Employee no longer reports directly to the Chairman of the Board.
The date upon which any termination effected pursuant to this
subparagraph 12(c) shall be effective is set forth in subparagraph 12(d), and
the effect of any such termination shall be as described in subparagraphs 12(f)
and (g).
d. Termination Date. In the event Executive's employment hereunder
is terminated for circumstances constituting Cause, Permanent Disability, Change
of Control or Constructive Termination, such termination shall take effect upon
the termination date set forth in the written notice to that effect given by
Executive to Employer or by Employer to Executive, as the case may be (provided
that if either party disputes the propriety of such termination, the effective
date of termination shall be as established by final resolution of such dispute,
whether by agreement of the parties or award of an arbitrator as contemplated
herein, in favor of the propriety of such termination), and in any other case
termination of Executive's employment hereunder shall take effect on the date
specified in the written notice thereof delivered by Executive to Employer or by
Employer to Executive, as the case may be (the date on which any such
termination takes effect being referred to herein as the "Termination Date").
Employer, at its option, may require Executive to continue to perform his duties
hereunder until the Termination Date or pay to Executive such amount of
compensation and benefits otherwise due hereunder in accordance with Employer's
then existing salary payment schedule or in one lump sum payment.
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e. Effect of Termination by Employer For Cause. In the event
Executive's employment is terminated by Employer for Cause, or in the event
Executive voluntarily terminates his employment as contemplated by paragraph
12(c)(ii), at any time during the Employment Term, then (i) Employer shall pay
to Executive Executive's accrued but unpaid Base Salary and Annual Bonus through
the Termination Date; (ii) notwithstanding any of the provisions of Employer's
Stock Option Plan or of any option agreement with respect thereto to the
contrary, any and all of the Options (other than the Inducement Options) that
theretofore have vested may be exercised at any time on or before the thirtieth
day following such Termination Date and, if not so exercised, thereupon
automatically shall be canceled; and (iii) Executive's rights with respect to
the Compensatory Options and/or the Inducement Options, as appropriate, shall be
as stated in paragraph 4(c) above.
f. Effect of Termination Upon Permanent Disability. In the event
Executive's employment is terminated by Employer upon the permanent disability
of Executive at any time during the Employment Term, then:
(i) Employer shall pay to Executive (x) Executive's accrued
but unpaid Base Salary and Annual Bonus through the Termination Date, (y)
Executive's then existing Base Salary for 12 months from the date written notice
of the termination of Executive's employment is given by Employer, and (z) any
amount due hereunder for accrued but unused vacation time as of the Termination
Date.
(ii) Employer, at its expense, shall make all benefit
payments, on behalf of Executive and Executive's dependents, for such benefits
Executive otherwise would have been entitled to receive hereunder, for 12 months
following the date written notice of the termination of Executive's employment
is given by Employer.
(iii) With respect to any of the Options (other than the
Inducement Options) which remain unvested upon such Termination Date,
notwithstanding any provision to the contrary in Employer's Stock Option Plan
and/or any stock option agreement with respect thereto, there shall be immediate
vesting of that portion of such unvested Options which would have vested within
12 months of the date written notice of the termination of
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Executive's employment is given by Employer. After giving effect to the
foregoing sentence, any Options (other than the Inducement Options) which remain
unvested shall automatically terminate.
(iv) Executive's rights with respect to the Compensatory
Options and/or the Inducement Options, as appropriate, shall be as stated in
paragraph 4(c) above.
g. Effect of Wrongful or Constructive Termination or Termination
Upon a Change of Control.
(i) In the event Executive's employment is terminated during
the Employment Term by Employer other than for Cause, or by Executive in
circumstances constituting Constructive Termination or upon a Change of Control,
then, from and after such Termination Date:
(A) Executive shall not be subject to the
non-competition provisions set forth in paragraph 10 hereof.
(B) Executive shall be entitled to receive the Base
Salary, Annual Bonus, and benefits, which Executive reasonably would have
expected to receive (I) in the period from the Termination Date to the
expiration of the Initial Term (if such Termination Date occurs more than 6
months prior to the expiration of the Initial Term) or (II) during the 6 months
following the date written notice of the termination of Executive's employment
is given by Employer or Executive, as the case may be, (if such Termination Date
occurs after the Initial Term or 6 months prior to the expiration of the Initial
Term). All of such amounts shall be payable upon, and the benefits shall become
effective upon, the Termination Date. The treatment of any Options other than
the Inducement Options shall be governed by the terms of the applicable granting
documents and Annex A.
(C) Executive's rights with respect to the
Compensatory Options and/or the Inducement Options, as appropriate, shall be as
stated in paragraph 4(c) above.
The foregoing shall be Executive's sole and exclusive remedy for any such
termination of his employment under this subparagraph 12(g).
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h. Excess Parachute Payment. In the event that Employer treats any
portion of Executive's payments or benefits hereunder (including, without
limitation, under the foregoing subparagraphs 12(f) and (g)) as an "excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code ("Code") or any comparable provision of state or local tax law, or it is
otherwise asserted (including on an audit of either Employer or Executive) that
any portion of such payments or benefits is such an "excess parachute payment,"
Employer shall prior to the date on which any amount of excise tax (or penalty
or interest) must be paid in respect thereof, promptly make an additional lump
sum payment in cash to Executive in an amount sufficient, after giving effect to
all federal, state and other taxes and charges (including interest and
penalties, if any) with respect to such payment to make Executive whole for all
taxes (including withholding and social security taxes) imposed under Section
4999 of the Code, or any comparable provision of state or local tax law, with
respect to the "excess parachute payment" and all associated interest and
penalty amounts. Executive shall cooperate in all reasonable respects with
Employer to attempt to minimize any such tax liability.
i. Miscellaneous. In the event of any termination or attempted
termination hereof: (i) if multiple events, occurrences or circumstances are
asserted as bases for such termination or attempted termination, the event,
occurrence or circumstance that is earliest in time, and any termination or
attempted termination found to be proper hereunder based thereon, shall take
precedence over the others; (ii) no termination of this Employment Agreement
shall relieve or release either party from liability hereunder based on any
breach of the terms hereof by such party occurring prior to the Termination
Date; (iii) the terms of this Employment Agreement relevant to performance or
satisfaction of any obligation hereunder expressly remaining to be performed or
satisfied in whole or in part at the Termination Date shall continue in force
until such full performance or satisfaction has been accomplished and otherwise
neither party hereto shall have any other or further remaining obligations to
other party hereunder; and (iv) the vesting and exercise provisions set forth in
Employer's Stock Option Plan and/or any option agreement with respect to the
Options (other than the Inducement Options) shall continue to apply except to
the extent otherwise expressly provided in this paragraph 12 or Annex A.
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j. No Set-off; No Duty of Mitigation. There shall be no right of
setoff or counterclaim, in respect of any actual or alleged claim, debt or
obligation, against any payments or benefits required to be made or provided to
Executive hereunder (including, without limitation, pursuant to subparagraphs
12(f) and (g) above). In the event of any termination of Executive's employment
under this paragraph 12, Executive shall be under no obligation to seek other
employment and shall be entitled to all payments or benefits required to be made
or provided to Executive hereunder, without any duty of mitigation of damages
and regardless of any other employment obtained by Executive.
13. Injunctive Relief. It is agreed that the services of Executive are
unique and that any breach or threatened breach by Executive of any provision of
this Employment Agreement cannot be remedied solely by damages. Accordingly, in
the event of a breach by Executive of his obligations under this Employment
Agreement, Employer shall be entitled to seek and obtain interim restraints and
permanent injunctive relief without proving the inadequacy of damages as a
remedy, restraining Executive and any business, firm, partnership, individual,
corporation or entity participating in such breach or attempted breach. Nothing
herein, however, shall be construed as prohibiting Employer from pursuing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the termination of the services of
Executive.
14. Arbitration. Any dispute or controversy arising out of or relating to
this Employment Agreement or any claimed breach hereof shall be settled, at the
request of either party, by an arbitration proceeding conducted in accordance
with the rules of the American Arbitration Association ("AAA"), with the award
determined to be appropriate by the arbitrator therein to be final,
non-appealable and binding on the parties hereto, and with judgment upon such
award as is rendered in any such arbitration proceeding available for entry and
enforcement in any court having jurisdiction of the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed
within 15 days after the initial request for arbitration of such disputed
matter, each of the parties promptly shall designate a person qualified to serve
as an arbitrator in accordance with the rules of the AAA, and the two persons so
designated promptly shall select the arbitrator from among those persons
qualified to serve
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in accordance with the rules of the AAA. The arbitration shall be held in the
greater Northern Virginia area, or in such other place as may be agreed upon at
the time by the parties. The expenses of the arbitration proceeding shall be
borne by Employer, but the arbitrator's award may provide that Executive shall
reimburse Employer for an equitable share of such expenses if Executive is not
the prevailing party on any of the issues involved in such arbitration and if
the Executive did not participate in the arbitration or contest the relevant
issue in good faith. The Employer shall pay for and bear the cost of its own and
Executive's experts, evidence and counsel in such arbitration proceeding, but
the arbitrator's award may provide that, in addition to any other amounts or
relief due to Employer, Executive shall reimburse Employer on demand for all of
such costs of Executive's experts, evidence and counsel initially incurred by
Employer, to the extent the award finds such costs properly allocable to any
issue(s) in dispute as to which the award indicates the Employer to be the
prevailing party to the extent the Executive did not participate in the
arbitration or contest the relevant issue in good faith.
15. Indemnification.
a. Employer shall indemnify Executive to the fullest extent
permitted by Delaware law as in effect on the date hereof against all costs,
expenses, liabilities and losses (including, without limitation, attorneys'
fees, judgments, penalties and amounts paid in settlement) reasonably incurred
by Executive in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative in which Executive is made, or is
threatened to be made, a party to or a witness in such action, suit or
proceeding by reason of the fact that he is or was an officer, director,
consultant, agent or Executive of the Employer or of any of Employer's
controlled affiliates or is or was serving as an officer, consultant director,
member, Executive, trustee, agent or fiduciary of any other entity at the
request of the Employer (a "Proceeding").
b. Employer shall advance to Executive all reasonable costs and
expenses incurred by him in connection with a proceeding within 20 days after
receipt by Employer of a written request for such advance, accompanied by an
itemized list of the costs and expenses and Executive's written undertaking to
repay to Employer on demand the amount of such advance if it shall ultimately be
determined that Executive is not entitled to be indemnified against such costs
and expenses.
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c. The indemnification provided to Executive hereunder is in
addition to, and not in lieu of, any additional indemnification to which he may
be entitled pursuant to Employer's Certificate of Incorporation or Bylaws, any
insurance maintained by Employer from time to time providing coverage to
Executive and other officers and directors of Employer, or any separate written
agreement with Executive. The provisions of this paragraph 15 shall survive any
termination of this Employment Agreement.
16. Amendment and Modification. This Employment Agreement (including the
Annex A hereto) contains the entire agreement between the parties with respect
to the subject matter hereof, and supersedes any and all prior agreements,
arrangements or understandings between the parties hereto with respect to the
subject matter hereof, whether written or oral Subject to applicable law and
upon the consent of the Board of Directors of Employer, this Employment
Agreement may be amended, modified and supplemented by written agreement of
Employer and Executive with respect to any of the terms contained herein.
17. Waiver of Compliance. Any failure of either party to comply with any
obligation, covenant, agreement or condition on its part contained herein may be
expressly waived in writing by the other party, but such waiver or failure to
insist upon strict compliance shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Employment Agreement
requires or permits consent by or on behalf of any party, such consent shall be
given in writing.
18. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, sent by registered or certified U.S. Mail,
postage prepaid, commercial overnight courier service or transmitted by
facsimile and shall be deemed served or delivered to the addressee at the
address for such notice specified below when hand delivered, upon confirmation
of sending when sent by fax, on the day after being sent when sent by overnight
delivery or five (5) days after having been mailed, certified or registered,
with postage prepaid:
If to Employer If to Executive:
-------------- ----------------
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NEXTLINK Communications, Inc.
0000 Xxxx Xxxxxx Xxxxx
XxXxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
or, in the case of either such party, to such substitute address as such party
may designate from time to time for purposes of notices to be given to such
party hereunder, which substitute address shall be designated as such in a
written notice given to the other party addressed as aforesaid.
19. Assignment. This Employment Agreement shall inure to the benefit of
Executive and Employer and be binding upon the successors and general assigns of
Employer. This Employment Agreement shall not be assignable, except to the
extent set forth in paragraph 22.
20. Enforceability. In the event it is determined that this Employment
Agreement is unenforceable in any respect, it is the mutual intent of the
parties that it be construed to apply and be enforceable to the maximum extent
permitted by applicable law.
21. Applicable Law. This Employment Agreement shall be construed and
enforced in accordance with the laws applicable to contracts executed, delivered
and fully to be performed in the State of Virginia.
22. Beneficiaries: Executive's Representative. Executive shall be entitled
to select (and to change, from time to time, except to the extent prohibited
under any applicable law) a beneficiary or beneficiaries to receive any
payments, distributions or benefits to be made or distributed hereunder upon or
following Executive's death. Any such designation shall be made by written
notice to Employer. In the event of Executive's death or of a judicial
determination of Executive's incompetence, references in this Agreement to
Executive shall be deemed, as appropriate, to refer to his designated
beneficiary, to his estate or to his executor or personal representative
("Executive's Representative") solely for the purpose of providing a clear
mechanism for the exercise of Executive's rights hereunder in the case of
Executive's death or Permanent Disability.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement to
be effective on and as of the day and year first above written.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
/s/ Xxxxxxxxx X. Xxxxx
------------------------------------
Xxxxxxxxx X. Xxxxx
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ANNEX A
TO
EMPLOYMENT AGREEMENT
BETWEEN
NEXTLINK COMMUNICATIONS, INC.
AND
XXXXXXXXX X. XXXXX
DATED: JANUARY 3, 2000
The Inducement Options shall be granted as follows:
Non-qualified Options to acquire 150,000 shares for Employer Class A
Common Stock awarded on January 4, 2000. The Inducement Options shall vest
in full on January 4, 2004. The exercise price of the Inducement Options
is $.01 per share.
The Compensatory Options shall be granted as follows:
Non-qualified options to acquire 675,000 shares of Employer Class A Common
Stock awarded on January 4, 2000. The Compensatory Options shall vest
annually in four equal amounts on the first, second, third and fourth
anniversary dates of the effective date of the Employment Agreement. The
exercise price of the Compensatory Options is the closing sale price on
January 4, 2000, as reported by NASDAQ.
All Options shall, to the extent not theretofore vested in accordance with
their normal terms, vest on an automatic and accelerated basis (i) in the
circumstances set forth in paragraphs 12(f) and (g) of the Employment Agreement,
or (ii) upon the occurrence of a Change of Control Event.
All Options (upon vesting) will have an exercise period of ten (10) years
after the relevant grant date subject to earlier termination of the exercise
period in the event of termination of Executive's employment either (i) by
Employer in circumstances constituting Cause or (ii) by Executive other than in
circumstances constituting Constructive Termination; in either of which case,
the Options shall be canceled if not exercised within 90 days following the
Termination Date with respect to such termination.
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All Options (and all shares issued on exercise of such Options) will be
subject to an effective Form S-8 (or other appropriate form) registration
statement and will be qualified for the treatment afforded under Rule 16b-3.
To the extent not otherwise provided above, or in the Employment Agreement
of which this Annex A forms a part, the terms applicable to all of the Options
(and of any option agreement entered into in connection therewith) shall be the
standard terms normally applicable to a grant of "non-qualified" stock options
granted pursuant to the NEXTLINK Communications, Inc. Stock Option Plan.
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