EXHIBIT 10.5
INTERIM CHIEF EXECUTIVE OFFICER AGREEMENT
This Agreement ("the Agreement") is entered into as of October 10, 2002
("Effective Date") between FLAG TELECOM GROUP LIMITED, a limited company
organized under the laws of Bermuda ("Company") and XXXXXXXX GROUP LP, a Texas
limited partnership whose address is 0000 Xxxxxxxx Xxxxx Xxxx Xxxxx, Xxxxx 00000
(hereinafter "CEO").
1. SERVICES; PLACE OF PERFORMANCE; TERM
1.1 SCOPE OF SERVICES. CEO's Designee (as defined below) will perform
the services ("Services") described in the Task Orders executed by the
parties and attached hereto as EXHIBIT A.
1.2 PLACE OF PERFORMANCE. CEO's Designee shall perform Services
primarily at Company's or its affiliates' office in London, England;
PROVIDED, THAT, CEO's Designee may be required to travel on Company
business during the Term.
1.3 TERM. Unless terminated earlier in accordance with this Agreement,
the term of this Agreement shall be the lesser of six months, beginning on
the Effective Date, or until such time as the Company retains a new chief
executive officer (the "Term").
2. PAYMENT
2.1 PAYMENT. Company will pay CEO in the amounts and in accordance with
the arrangements specified in each Task Order. CEO shall not be eligible
for any other payments or benefits other than those that are specifically
provided in the Task Order.
2.2 INVOICING. Except as otherwise set forth in a Task Order, CEO will
invoice semi-monthly for the Services. Company will pay the amounts
properly invoiced as soon as administratively possible following Company's
receipt of the invoice.
2.3 EXPENSES. Company will reimburse CEO for all reasonable business
expenses incurred by CEO in connection with the Services in accordance with
Company's business expense reimbursement policy as it may exist from time
to time.
3. WARRANTIES
3.1 CEO and Designee (as defined below) warrant that (a) it will perform
the Services hereunder in a competent, professional and workmanlike manner
utilizing reasonable care, prudence and skill as would be reasonably
expected for the chief executive officer of a comparable company, (b) Xxxx
X. Xxxxxxxx, an employee of CEO (the "Designee"), will be the only
individual providing the Services and acting as a service provider to
Company, and (c) neither CEO nor Designee is precluded from providing the
Services pursuant to any law, regulation, contract or otherwise. During the
Term, CEO shall cause the Designee to adhere to all Company employment
policies, including, without limitation, those relating to conduct, as
though Designee were an employee of Company for that purpose.
1
4. TERMINATION
4.1 TERMINATION. Either party may terminate this Agreement for any
reason, or no reason, upon thirty (30) days prior written notice; PROVIDED,
THAT, this Agreement shall automatically terminate without notice upon (i)
expiration of the Term, (ii) Designee's death or disability, or (iii) CEO's
and/or Designee's, as the case may be, termination by Company for cause or
due to any other material breach of this Agreement. In the event of a
termination, Company will pay CEO for all Services rendered and reasonable
expenses (to the extent such expenses would otherwise be reimbursable)
incurred by CEO prior to the termination of the Agreement, and otherwise
will have no further obligations hereunder. CEO shall have no liability to
the Company for acts or omissions committed by the CEO in good faith and
with a reasonable belief that such acts or omission were in the best
interests of the Company unless CEO acted negligently with respect thereto.
4.2 SURVIVAL. The terms of Sections 3 through 8 will survive the
termination or expiration of this Agreement for any reason to carry out
their intended effect.
5. INDEPENDENT CONTRACTOR RELATIONSHIP
5.1 CEO will undertake the Services to be performed hereunder as an
independent contractor. CEO will determine the manner and method of its
performance of the Services, and Company's general right to direct the
Services will not make CEO, or its agents, or personnel, the agents or
employees of Company. The provision of Services under this Agreement will
not result in any partnership, joint venture, or trust relationship between
CEO and Company. Neither party will have the authority to make any
statements, representations, or commitments of any kind on behalf of the
other party, or to take any action binding upon the other. As an
independent contractor, CEO shall not participate in any employee benefit
plan, program or policy, including vacation.
5.2 All wages paid to employees of CEO, including, without limitation,
the Designee, shall constitute wages paid to such employees solely by CEO
and neither Company, nor its officers, directors, and employees shall have
any obligation or liability whatsoever to CEO for workers' compensation,
federal and state payroll taxes, unemployment compensation, minimum wages,
Social Security assessments or similar charges, taxes or liabilities
applicable to an employment relationship. CEO further agrees that it shall
maintain sufficient insurance to protect it, its Designee and such other
parties who may perform services on its behalf hereunder from claims under
workers' compensation laws and other similar acts, and also from any
damage, personal injury or death suffered by it, its Designee or any
parties engaged by it, and which may arise in the performance of services
hereunder.
5.3 CEO recognizes and acknowledges that it is free from control or
direction over the performance of its services, both under this Agreement
and in fact, and CEO represents to Company that it (i) has established a
place of business separate, independent and outside of any place of
business of Company, (ii) is engaged in an independently established trade,
occupation, or business, and (iii) has other customers and clients for
which it performs services. Designee may, at the direction of Company's
Chairman, meet with third parties on behalf of Company to discuss potential
client, strategic or financial relationships with Company. CEO may not
contact the same third parties in any matters for at least six (6) months
following the end of the Term in any way that would violate the provisions
of this Agreement.
2
5.4 CEO and/or Designee agrees to fully indemnify Company and its
shareholders, subsidiaries, affiliates, officers, directors, employees and
independent contractors against and will hold Company, its shareholders,
subsidiaries, affiliates, officers, directors, employees and independent
contractors harmless from any and all claims, costs, damages, demands,
expenses (including without limitation attorneys' fees), judgments, losses
or other liabilities of any kind or nature whatsoever arising from or
directly or indirectly related to CEO's and/or Designee's breach of any
provision(s) of this Agreement, including but not limited to any breach or
failure, and the resulting tax ramifications thereof, of CEO and/or
Designee to comply with this Section 5.
6. INTELLECTUAL PROPERTY; CONFIDENTIALITY
6.1 The provisions of EXHIBIT B are hereby incorporated herein and made
a part hereof.
6.2 The parties have executed a confidentiality and non-disclosure
agreement on September 13, 2002 whose terms shall be incorporated herein
and made a part hereof. For the avoidance of doubt, the parties to such
agreement are CEO, the Designee and Company.
7. GENERAL PROVISIONS
7.1 INDEMNIFICATION. Company shall provide indemnification coverage for
CEO and its Designee to the same extent as if such parties were executive
officers of Company to the maximum extent permitted under Company's
Bye-Laws.
7.2 NON-SOLICITATION. During the Term of this Agreement, and for a
period of one year thereafter, CEO and/or Designee will not, directly or
indirectly, on behalf of itself or as a partner or as an officer, director,
employee, agent, consultant or shareholder of any other entity or person,
or as a trustee, fiduciary or other representative of any other person or
entity, induce, or attempt to induce any employee of Company or its
affiliates to leave the employ of Company or its affiliates, or in any way
interfere with the relationship between any such employee and Company or
its affiliates.
7.3 SEVERABILITY. If any term or provision of this Agreement is be found
by a court of competent jurisdiction or by an arbitrator to be invalid,
illegal or otherwise unenforceable, such finding will not affect the other
terms or provisions of this Agreement or the whole of this Agreement, but
such term or provision found to be invalid, illegal or otherwise
unenforceable will be deemed modified or narrowed to the extent necessary
in the court's or arbitrator's opinion to render such term or provision
enforceable, and the rights and obligations of the parties will be
construed and enforced accordingly, preserving to the fullest permissible
extent the intent and agreements of the parties set forth in this
Agreement.
7.4 NOTICES. Any notice or other communication given pursuant to this
Agreement must be in writing and will be effective when delivered
personally to the party for whom intended, or when signed for by that
person (or that person's authorized representative) if delivered by
messenger or express courier service or by certified or registered United
States or United Kingdom mail, or five (5) days following deposit of the
same into the United States or United Kingdom mail, first class postage
prepaid, provided that in each case other than personal delivery the notice
is addressed and sent to such party at the address set forth above.
7.5 FORCE MAJEURE. Neither party will be liable for any delays or
failures in performance of any obligations under this Agreement, due to
causes beyond its reasonable control,
3
including, but not limited to: acts of God, fire, explosion, or other
similar catastrophes; any law, order, regulation, direction, action or
request of any government (or body thereof) having jurisdiction over either
of the parties; national emergencies, insurrections, riots, wars or
terrorist attacks; or strikes, lock-outs, work stoppages or other labor
difficulties.
7.6 COMPLETE AGREEMENT. This Agreement includes Task Orders executed
hereunder (which are incorporated herein and made a part hereof) and sets
forth the entire understanding between the parties with respect to the
performance of the Services and the subject matter of this Agreement, and
supersedes all prior and contemporaneous agreements, arrangements,
correspondence, requests for proposals, proposals, and communications,
whether oral or written, with respect to the performance of the Services or
the subject matter of this Agreement.
7.7 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without giving effect to
any choice-of-law rules that may otherwise require application of the laws
of another jurisdiction.
7.8 LEGAL AND EQUITABLE REMEDIES. Company shall have the right to
enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice
to any other rights and remedies that Company may have for a breach of this
Agreement by CEO and/or Designee.
7.9 ASSIGNMENT. Neither this Agreement nor any interest herein nor any
claim arising under or in connection with or relating to this Agreement may
be assigned by CEO or Designee without Company's prior written consent, and
any attempted assignment without such consent will be void. Company may
assign this Agreement without the consent of CEO or Designee.
7.10 SUCCESSORS. This Agreement will inure to the benefit of and will be
binding upon the parties, their respective successors and permitted
assignees and transferees, unless otherwise provided in this Agreement.
7.11 AMENDMENTS. The terms and conditions of this Agreement may not be
amended, changed, modified, supplemented or waived without the signature of
each party. No waiver of any breach, delay or default under this Agreement
will constitute a waiver of any other or subsequent breach, delay or
default hereunder, whether or not similar.
4
AGREED AND ACCEPTED:
FLAG TELECOM GROUP LIMITED XXXXXXXX GROUP, LP
----------------------------------------------------------------
Authorized Signature Authorized Signature
Xxxx X. Xxxxxxxx, President
-----------------------------------------------------------------
Printed Name Printed Name
----------------------------------------------------------------
Date Date
With respect to the Obligations and rights under Sections 6.1 (including Exhibit
B), 6.2, and 7.2:
DESIGNEE
---------------------------------
Name:
Date:
5
EXHIBIT A
TASK ORDER
Task Order under Interim CEO Agreement (the "Agreement") with Flag Telecom Group
Limited dated as of October 10, 2002.
DESCRIPTION OF SERVICES:
Designee will be named as the Interim CEO of Company reporting to the Board of
Directors of Company and, except as specifically provided in the Agreement,
shall have such duties and responsibilities as are normally associated with the
position of chief executive officer and such other duties and responsibilities
as may be reasonably assigned by the Board of Directors of Company. These
services shall be rendered on a substantially full-time basis, provided Designee
shall be permitted to engage in outside activities which do not materially
interfere or conflict with his responsibilities to Company.
COMPENSATION:
During the Term, CEO shall be paid a consulting fee of $80,000 per month for
each full month of the term (partial months to be pro-rated based on the number
of days engaged during such month over the number of days in any such month).
Other than expense reimbursements, neither CEO or Designee shall receive any
additional compensation or benefits from company or its affiliates.
In addition to the foregoing, if CEO is subject to income taxes in the United
Kingdom and/or Bermuda with respect to the Services which is in excess of such
obligations that the CEO would otherwise have in the United States, then the CEO
shall be paid an additional amount by the Company such that it is in the same
income tax position as if it were only subject to U.S. income taxation.
AGREED AND ACCEPTED:
FLAG TELECOM GROUP LIMITED XXXXXXXX GROUP, LP
----------------------------------------------------------------
Authorized Signature Authorized Signature
Xxxx X. Xxxxxxxx, President
----------------------------------------------------------------
Printed Name Printed Name
----------------------------------------------------------------
Date Date
6
EXHIBIT B
INTELLECTUAL PROPERTY
A. NO USE OF NAME OR TRADEMARKS. Neither party will utilize the names or
trademarks of the other in connection with any advertising, marketing or
promotion of any kind without obtaining the other party's prior written consent.
B. COMPANY WORK PRODUCT. Company retains all right, title and interest in and
to all software, programming documentation, technical ideas, concepts, know-how,
inventions, discoveries, improvements, techniques, notes, models, writings,
reports, formulas, specifications, memoranda, computer source code and
documentation and other data and all related intellectual property rights,
created, conceived and developed by Company prior to the commencement of this
Agreement (the "Company Prior Technology"). All right, title, and interest in
and to all derivative works, enhancements, extensions and modifications of or
related to Company Prior Technology or other products developed in whole or in
part by Company, including without limitation all intellectual property rights
therein (the "Company Developed Technology") shall be the sole property of
Company whether developed by Company, CEO or any other party in performing the
Services or otherwise.
C. CEO WORK PRODUCT. CEO retains all right, title and interest in and to all
software, programming documentation, technical ideas, concepts, know-how,
inventions, discoveries, improvements, techniques, notes, models, writings,
reports, formulas, specifications, memoranda, computer source code and
documentation and other data and all related intellectual property rights,
originated, developed or owned by CEO or its employees or representatives prior
to the commencement of this Agreement (the "CEO Prior Technology"). All right,
title, and interest in and to all derivative works, enhancements, extensions and
modifications of or related to CEO Prior Technology developed in whole or in
part by CEO, including without limitation all intellectual property rights
therein (the "CEO Developed Technology") shall be the sole property of CEO. All
ideas, know-how, techniques or other intellectual property rights originated or
developed by CEO, excluding Company Prior Technology and Company Developed
Technology, developed by CEO during the term of the Agreement for work not
performed under this Agreement shall be the sole property of CEO. CEO will
notify Company of any CEO Prior Technology or CEO Developed Technology which CEO
uses in the performance of this Agreement.
D. INVENTIONS AND DATA RIGHTS
D.1 CEO and Designee agree that all notes, models, writings, reports,
formulas, specifications, memoranda, computer source code and documentation
and other data prepared and/or produced by CEO and Designee in the
performance of this Agreement and which are or relate to Company Prior
Technology or Company Developed Technology or result from work by CEO
or/and Designee in the performance of this Agreement and all derivative
works thereof are works made for hire and are assigned to and shall become
the sole property of Company, including all rights therein of whatever kind
or nature, and CEO and Designee agree not to disclose same to any other
person, firm or corporation. Upon termination of its work on the project,
or upon the termination or expiration of this Agreement, CEO and Designee
agree to promptly deliver to Company all documents and other records that
relate to the business activities of Company, and all other materials which
belong to Company.
D.2 CEO and Designee agree and do hereby assign to Company as its exclusive
property,
7
their entire right, title and interest in those inventions, innovations or
ideas developed or conceived by them solely or jointly with others, during
the term of CEO's and/or Designee's work for or at Company, which
inventions, innovations or ideas are or relate to Company Prior Technology
or Company Developed Technology, or result from work by CEO and/or Designee
in the performance of this Agreement. All rights, title and interest in
such inventions shall be vested in Company immediately upon such
development or conception. CEO and Designee further agree that, when
requested, CEO and Designee will without charge to Company, but at Company
`s expense, sign all papers, take all rightful oaths, and do all acts which
may be necessary, desirable or convenient for securing and maintaining the
patents, copyrights and legal protection for such inventions or innovations
in any and all countries and for vesting title in Company, its successors,
assigns, and legal representatives or nominees.
D.3 If CEO and/or Designee, in the performance of this Agreement, discover,
invent, or produce, without limitation, any information, computer programs,
software or other associated intangible property, network configuration,
formulae, product, device, system, technique, drawing, program or process
which is a trade secret, such information, formulae, product, device,
system, technique, drawing, program or process shall be assigned to
Company. CEO and Designee agree to fully cooperate with Company in
protecting the value and secrecy of any such trade secret, and further
agree to execute any and all documents Company deems necessary to document
any such assignment to Company. CEO and Designee appoint Company as CEO's
and Designee's attorney-in-fact to execute any documents Company may deem
necessary that relate to any such trade secret or assignment thereof to
Company.
8
