EMPLOYMENT AGREEMENT
AGREEMENT made this 5th day of June, 1997, by and between GST Action
Telecom, Inc., a Delaware corporation with principal offices at 0000 X.X.
Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Corporation"), and Xxxx X
Xxxxxxxx residing at 000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has agreed to sell all of Executive's interest in
Action Telcom Co., a Texas corporation ("ATC"), through a merger of the
Corporation with ATC.
WHEREAS, it is a condition to such merger that Executive enter into
this Agreement; and
WHEREAS, the Corporation desires to employ Executive, and Executive
desires to undertake such employment, upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Corporation hereby employs Executive as
its Senior Vice President to perform such duties on behalf of the Corporation as
may from time to time be assigned to him, subject at all times to the control
and direction of the Corporation's Board of Directors (the "Board of Directors")
and Chief Executive Officer (the "Chief Executive Officer"). Executive may be
elected or appointed to such offices of the Corporation or its subsidiaries as
may from time to time be
determined by the Board of Directors, PROVIDED that Executive shall not be
entitled to additional compensation for serving in any such offices. The
Executive's duties and responsibilities as a Senior Vice President of the
Corporation shall be comparable to the duties and responsibilities of other
executives of operating subsidiaries of GST Telecommunications, Inc. ("GST")
holding the same title.
2. ACCEPTANCE OF EMPLOYMENT; FULL TIME AND ATTENTION. Executive hereby
accepts such employment and agrees that throughout the period of his employment
hereunder, he shall devote all of his full time, attention, knowledge and
skills, faithfully, diligently and to the best of his ability, in furtherance of
the business of the Corporation, its parent corporation, GST, and the
subsidiaries of GST (collectively, along with the Corporation and GST, the "GST
Companies"), and shall perform the duties assigned to him pursuant to Paragraph
1 hereof, subject, at all times, to the direction and control of the Board of
Directors and the Chief Executive Officer. Executive shall at all times be
subject to, observe and carry out such rules, regulations, policies, directions
and restrictions as the GST Companies shall from time to time establish. During
the period of his employment hereunder, Executive shall not, except as
hereinafter provided, directly or indirectly, accept employment or compensation
from, or perform services of any nature for compensation for, any business
enterprise other than the GST Companies. Notwithstanding the foregoing in this
Paragraph 2, Executive shall be permitted to pursue business activities relating
to his ownership of an interest in Leapfrog Technologies, L.L.C., but only to
the extent that such activities do not interfere with Executive's duties
hereunder.
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3. TERM. Except as otherwise provided herein, the term of Executive's
employment hereunder shall commence as of the date hereof and shall continue
until June 4, 2000.
4. COMPENSATION. As compensation for his services hereunder, the
Corporation shall pay to Executive a base salary at the rate of $100,000 per
annum, payable in equal installments no less frequently than semi-monthly, and
an annual bonus of up to $30,000 based upon the attainment of milestones of
achievement to be mutually agreed upon between Executive and the Corporation. In
addition, the Corporation shall pay such other incentive compensation and
bonuses, if any, as the Board of Directors in its absolute discretion may
determine to award Executive; provided, however, that this Agreement shall in no
event be construed to require the payment to Executive of any such other
incentive compensation or bonuses. All compensation paid to Executive shall be
subject to withholding and other employment taxes imposed by applicable law.
5. ADDITIONAL BENEFITS. In addition to the compensation payable to
Executive under Paragraph 4 above, he (and his family) shall be entitled to
participate, to the extent he is (and they are) eligible under the terms and
conditions thereof, in any profit sharing, stock option, pension, retirement,
hospitalization, insurance, disability, medical service, bonus or other employee
benefit plan of GST Telecommunications, Inc. and its subsidiaries applicable to
executive employees with title and responsibilities comparable to those of
Executive that may be in effect from time to time during the period of
Executive's employment hereunder. The Corporation shall be under no obligation
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to institute or continue the existence of any such employee benefit plan. The
Corporation will reimburse Executive for the payment of all customary expenses
relating to the use and operation of one automobile, including any lease
payments, insurance, maintenance and gas in an amount that shall not exceed
$400.00 per month.
6. REIMBURSEMENT OF EXPENSES. The Corporation shall reimburse Executive
in accordance with applicable policies of the Corporation for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of the Corporation, upon the submission to the
Corporation of appropriate receipts or vouchers and approval thereof by the
Chief Financial Officer of the Corporation.
7. VACATION. Executive shall be entitled to four (4) weeks paid
vacation time in respect of each 12-month period during the term of his
employment hereunder. Such vacation shall be taken by Executive at times
mutually agreeable to Executive and the Chief Executive Officer of the
Corporation. Vacation time shall not be cumulative from one 12-month period to
the next and Executive shall not be entitled to receive vacation pay for any
vacation time not taken by him.
8. RESTRICTIVE COVENANT. In consideration of the Corporation's entering
into this Agreement, Executive agrees that during the term of this Agreement and
in the event of termination of this Agreement (i) by Executive otherwise than
for Employer Breach (as hereinafter defined) or (ii) by the Corporation for
Cause (as hereinafter defined), for a period of two years after such termination
he will not (a) directly or indirectly own, manage, operate, join, advise,
control, participate in, invest in,
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finance, lend money to, guarantee the debts or obligations of or otherwise be
connected with, in any manner, whether as an officer, director, employee,
stockholder, partner, venturer, investor, agent, broker, lender, guarantor or
otherwise, any business entity that is engaged within or without the United
States of America in any business that has products or provides services similar
to those being developed or provided by the Corporation during the term of this
Agreement; (b) for himself or on behalf of any other person, partnership,
corporation or entity, directly or indirectly or by action together with others
call on any customer of the GST Companies for the purpose of soliciting,
diverting or taking away any customer from the GST Companies; or (c) directly or
indirectly induce, influence or seek to induce or influence any person engaged
as an employee, representative, agent, consultant, independent contractor or
otherwise by the GST Companies, to terminate his or her relationship with the
GST Companies or retain such person. Nothing contained herein shall be deemed to
prohibit Executive from investing his funds, solely on a passive basis, in
securities of an issuer if the securities of such issuer are listed for trading
on a national securities exchange or are traded in the over-the- counter market
and Executive's holdings therein represent less than 2% of the total number of
shares or principal amount of the securities of such issuer outstanding.
Executive acknowledges that the provisions of this Paragraph 8 are reasonable
and necessary for the protection of the GST Companies and are essential to the
willingness of the Corporation to employ Executive, and that each provision, and
the period or periods of time, geographic areas and types and scope of
restrictions on the activities specified herein
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are, and are intended to be, divisible. In the event that any provision of this
Paragraph 8, including any sentence, clause or part hereof, shall be deemed
contrary to law or invalid or unenforceable in any respect by a court of
competent jurisdiction, the remaining provisions shall not be affected, but
shall, subject to the discretion of such court, remain in full force and effect
and any invalid and unenforceable provisions shall be deemed, without further
action on the part of the parties hereto, modified, amended and limited to the
extent necessary to render the same valid and enforceable.
9. CONFIDENTIAL INFORMATION. (a) Executive shall hold in a fiduciary
capacity for the benefit of the GST Companies all information, knowledge and
data relating to or concerned with their operations, sales, business and
affairs, including without limitation, lists of customers and vendors, product
and service planning information, financing information, marketing research,
business plans, prospects and strategies (the "Confidential Information") and he
shall not, directly or indirectly at any time during the term of this Agreement
and for a period of six years after termination of his employment hereunder,
use, disclose or divulge any Confidential Information to any person, firm or
corporation other than to the GST Companies or their designees and employees, or
except as may otherwise be required in connection with the business and affairs
of the GST Companies. All originals and copies of all records, reports,
documents, lists, drawings, memoranda and notes relating to or containing any
Confidential Information are and shall remain the sole and exclusive property of
the GST Companies and shall be returned to the Corporation, whether
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or not requested by it, upon termination for any reason of Executive's
employment hereunder.
(b) Notwithstanding anything to the contrary contained in this
Paragraph 9, Executive's obligations under Paragraph 9(a) hereof shall not apply
to any information which:
(i) becomes rightfully known to Executive subsequent
or prior to his employment by the Corporation;
(ii) is or becomes available to the public other than
as a result of wrongful disclosure by Executive;
(iii) becomes available to Executive subsequent to
his employment by the Corporation on a nonconfidential basis
from a source other than the Corporation or its agents which
source has a right to disclose such information; or
(iv) results from commercial operations at any time
by or on behalf of any person, company or other entity with
which or with whom Executive shall become associated (in a
manner consistent with the terms of this Agreement) subsequent
to his employment by the Corporation or its agents totally
independent from any disclosure from the Corporation or its
agents.
(c) In the event that Executive becomes legally compelled to disclose
any confidential information, Executive will provide the Corporation with prompt
notice so that the Corporation may seek a protective order or other appropriate
remedy. In the event that such protective order or other remedy is not obtained,
Executive shall furnish only such confidential information which is legally
required to be disclosed.
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10. EQUITABLE RELIEF. The parties hereto acknowledge that Executive's
services are unique and that, in the event of a breach or a threatened breach by
Executive of any of his obligations under this Agreement, the GST Companies will
not have an adequate remedy at law. Accordingly, in the event of any such breach
or threatened breach by Executive, the GST Companies shall be entitled to such
equitable and injunctive relief as may be available to restrain Executive and
any business, firm, partnership, individual, corporation or entity participating
in such breach or threatened breach from the violation of the provisions hereof.
Nothing herein shall be construed as prohibiting the GST Companies from pursuing
any other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
11. DISABILITY. In the event that during the term of his employment by
the Corporation Executive shall become Disabled (as hereinafter defined) he
shall continue to receive the full amount of the base salary to which he was
theretofore entitled for a period of three months after he shall be deemed to
have become Disabled (the "Disability Payment Period"). Upon the expiration of
the Disability Payment Period, Executive shall not be entitled to receive any
further payments on account of his base salary until he shall cease to be
Disabled and shall have resumed his duties hereunder and provided that the
Corporation shall not have theretofore terminated this Agreement as hereinafter
provided. The Corporation may terminate this Agreement and Executive's
employment hereunder at any time after Executive is Disabled, upon at least 10
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days' prior written notice. For the purposes of this Agreement, Executive shall
be deemed to have become Disabled when (i) by reason of physical or mental
incapacity, Executive is not able to perform a substantial portion of his duties
hereunder for a period of 90 consecutive days or for 90 days in any consecutive
180-day period or (ii) when Executive's physician or a physician designated by
the Corporation shall have determined that Executive shall not be able, by
reason of physical or mental incapacity, to perform a substantial portion of his
duties hereunder. If Executive shall receive benefits under any disability
policy maintained by the GST Companies, the Corporation shall be entitled to
deduct the amount equal to the benefits so received from base salary that it
otherwise would have been required to pay to Executive as provided above.
12. TERMINATION FOR CAUSE. The Corporation shall have the right at any
time to terminate Executive's employment hereunder for Cause. For purposes of
this Agreement, the following shall constitute Cause: (i) the willful and
repeated failure of Executive to perform any material duties hereunder or the
gross negligence of Executive in the performance of such duties, and if such
failure or negligence is susceptible of cure by Executive, the failure to effect
such cure within 10 days after written notice of such breach is given to
Executive; (ii) the failure of Executive to devote his full time, attention,
knowledge and skills in furtherance of the business of the Corporation; (iii)
unexplained, willful and regular absences of Executive from the Corporation
unrelated to the Corporation's business; (iv) excessive use of alcohol or
illegal drugs by Executive interfering with the
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performance of Executive's duties hereunder; (v) theft, embezzlement, fraud,
misappropriation of funds, other acts of dishonesty or the violation of any law
or ethical rule by Executive relating to Executive's employment; (vi) Executive
being charged with a felony or Executive being charged with any crime involving
moral turpitude by Executive; (vii) Executive intentionally, recklessly or
dishonestly acting in a manner contrary to the best interests of the
Corporation; or (viii) the breach by Executive of any other material provision
of this Agreement, and if such breach is susceptible of cure by Executive, the
failure to effect such cure within 30 days after written notice of such breach
is given to Executive. Any determination of termination of Executive's
employment hereunder for Cause shall be made by the Board of Directors. For
purposes of this Agreement, an action shall be considered "willful" if it is
done intentionally, purposely or knowingly, as distinguished from an act done
carelessly, thoughtlessly or inadvertently.
13. TERMINATION FOR EMPLOYER BREACH. Executive may upon written notice
to the Corporation terminate this Agreement (a termination for "Employer
Breach") in the event of the breach by the Corporation of any material provision
of this Agreement and if such breach is susceptible of cure, the failure to
effect such cure within 30 days after written notice of such breach is given to
the Corporation.
14. INSURANCE POLICIES. The Corporation shall have the right from time
to time to purchase, increase, modify or terminate insurance policies on the
life of Executive for the benefit of the Corporation, in such amounts as the
Corporation shall determine in
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its sole discretion. In connection therewith, Executive shall, at such time or
times and at such place or places as the Corporation may reasonably direct,
submit himself to such physical examinations on an annual basis (or more
frequently) should an insurer or prospective insurer so require, and execute and
deliver such documents as the Corporation may deem necessary to obtain such
insurance policies.
15. SURVIVAL OF PROVISIONS. Neither the termination of this Agreement,
nor of Executive's employment hereunder, shall terminate or affect in any manner
any provision of this Agreement that is intended by its terms to survive such
termination.
16. ENTIRE AGREEMENT; AMENDMENT. This Agreement embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements or
understanding, oral and written, relative to said subject matter. This Agreement
may not be changed, amended, terminated, augmented, rescinded or discharged
(other than by performance), in whole or in part, except by a writing executed
by each of the parties hereto.
17. NOTICES. Any notice required, permitted or desired to be given to
any party hereto pursuant to any of the provisions of this Agreement shall be
deemed to have been sufficiently given or served for all purposes if delivered
in person or by responsible overnight delivery service or sent by certified
mail, return receipt requested, postage and fees prepaid to their addresses set
forth above, if to the Corporation at its address set forth above, with copies
to: GST Telecommunications, Inc., 0000 X.X. Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: Chief Executive
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Officer, and Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxx, Esq., and if to Executive at his
address set forth above, with a copy to McMahon, Surovik, Suttle, Buhrmann,
Xxxxx & Xxxx, PC 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention:
Xxxx Xxxxxx, Esq. Either of the parties hereto may at any time and from time to
time change the address to which notice shall be sent hereunder by notice to the
other party given under this Paragraph 17. The date of the giving of any notice
hand delivered or delivered by responsible overnight carrier shall be the date
of its delivery and of any notice sent by mail shall be the date five days after
the date of the posting of the mail.
18. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement, nor any of
the rights, interests or obligations hereunder, including the right to receive
any payments hereunder, may be transferred or assigned (by operation of law or
otherwise) by Executive. This Agreement and the various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon Executive,
his heirs, executors and administrators and upon the Corporation, its successors
and assigns.
19. WAIVERS. No waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed to in writing, no waiver by that party of any condition of this
Agreement or breach by the other party of any of its obligations hereunder shall
be deemed to be a waiver of any
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other condition or subsequent or prior breach of the same or any other
obligation or representation or warranty by such other party, nor shall any
forbearance by the first party to seek a remedy for any noncompliance or breach
by such other party be deemed to be a waiver by the first party of its rights
and remedies with respect to such noncompliance or breach.
20. GOVERNING LAW; JURISDICTION, ETC. (a) This Agreement shall in all
respects be construed in accordance with and governed by the laws of the State
of Delaware, without regard to the principles of conflicts of laws thereof.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits to the nonexclusive jurisdiction of any Delaware state court or federal
court of the United States of America sitting in the State of Delaware, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such Delaware state or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(c) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent either of them may legally and effectively do so, any
objection that either of them may now or hereafter have to the laying of venue
of any suit,
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action or proceeding arising out of or relating to this Agreement in any
Delaware state or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
21. INVALIDITY. If any clause, paragraph, section or part of this
Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
22. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original instrument, but each of
which when taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly executed on the day and year first above written.
GST ACTION TELECOM, INC.
By: /s/ Xxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxx
Title: Chairman
/s/ Xxxx X Xxxxxxxx
---------------------------------
XXXX X XXXXXXXX
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