EXHIBIT 10.3
EXECUTIVE RETENTION AND PERFORMANCE BONUS AGREEMENT
THIS EXECUTIVE RETENTION AND PERFORMANCE BONUS AGREEMENT (this
"Agreement") is by and between Allegiance Telecom Company Worldwide (the
"Company") and Xxxxxx X. Xxxx (the "Employee"), effective as of March 12, 2003.
WHEREAS, Employee is an employee of the Company or an Affiliate of the
Company; and WHEREAS, the Compensation Committee of Allegiance Telecom, Inc.'s
Board of Directors recognizes the uncertainty and questions that may arise in
the context of a recapitalization transaction which could result in the
departure or distraction of key employee personnel to the detriment of
Allegiance Telecom, Inc., its Affiliates and its stakeholders; and WHEREAS, the
Company has determined that it is in the best interests of the Company, its
Affiliates and its stakeholders to incentivize Employee to achieve certain goals
and to remain at the Company or its Affiliates during the process of, and for a
reasonable time after, the recapitalization transaction.
NOW, THEREFORE, in consideration for the promises and mutual covenants
herein contained, it is hereby agreed by the parties as follows:
1. AWARD. Employee will be entitled to an aggregate bonus equal to a maximum
of $500,000 (the "Award"), $250,000 of which shall be the "Performance
Bonus" and $250,000 of which shall be the "Retention Bonus", payable in
installments set forth below and subject to the other terms and conditions
of this Agreement:
PERFORMANCE BONUS:
o 25% of the Performance Bonus will promptly be paid after the Company or
any of its Affiliates receives at least two bona fide investment
proposals from potential venture capital or other strategic investors;
o 25% of the Performance Bonus will promptly be paid after the requisite
number of lenders to the Credit Agreement approve the Recapitalization
plan of the Company and its Affiliates, as applicable;
0 25% of the Performance Bonus will promptly be paid after the
consummation of a venture capital cash investment or other strategic
investment or arrangement (of at least $50 million) with or in the
Company or any of its Affiliates, within 12 months after the effective
date hereof (and it is understood that if any such transaction is to be
funded or performed in one or more stages, the transaction shall be
deemed to have been "consummated" when the first stage of the
transaction has closed); and
o 25% of the Performance Bonus will promptly be paid after the closing of
a Recapitalization plan (and in the case of any chapter 11 bankruptcy
proceeding, the "closing" of a Recapitalization plan shall mean the
confirmation of such a plan by the bankruptcy court).
RETENTION BONUS:
o 33% of the Retention Bonus will be paid on or about September 8, 2003,
provided that Employee has been continuously employed by the Company or
any Affiliate through such date; and
o 67% of the Retention Bonus will be paid on or about December 31, 2003,
provided that Employee has been continuously employed by the Company or
any Affiliate through such date.
2. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH, DISABILITY OR BY COMPANY WITHOUT CAUSE.
Notwithstanding anything herein to the contrary, if, prior to December
31, 2003, Employee's employment with the Company and all Affiliates is
terminated because of (i) death of Employee, (ii) Disability of
Employee or (iii) termination by the Company or any Affiliate without
Cause, then Employee will be entitled to the FULL AMOUNT of the Award
and the Performance Bonus shall promptly be paid after any death,
Disability or termination without Cause.
(b) TERMINATION BY COMPANY FOR CAUSE OR EMPLOYEE RESIGNATION FOR ANY
REASON. If, prior to December 31, 2003, Employee's employment with the
Company and all Affiliates is terminated (i) by the Company or any
Affiliate for Cause or (ii) because of Employee's resignation for any
reason, then Employee will (A) immediately repay all Net Award received
and (B) not have any rights to any Net Award.
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3. NO SPECIAL EMPLOYMENT RIGHTS. Nothing in this Agreement will (a) be deemed
to confer on Employee any right to employment or continued employment with
the Company or any Affiliate, or (b) affect any right that the Company or
any Affiliate may have to terminate the employment of Employee at any time.
4. OTHER EMPLOYEE BENEFITS. No payments made hereunder shall be includible as
an annual or long-term bonus or other compensation in creditable
compensation in computing benefits under any employee benefit plan of the
Company or any Affiliate.
5. WITHHOLDINGS. The Company may withhold from all payments due to Employee
(or his/her beneficiary or estate) hereunder all taxes or other amounts
which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.
6. OBLIGATIONS TO THE COMPANY; RIGHT TO WITHHOLD FROM PAYCHECK. If Employee
becomes entitled to payment of any installment of the Award hereunder, and
if at such time Employee has outstanding any debt, obligation, or other
liability representing an amount owed to the Company or any Affiliate, any
amount of such indebtedness, obligation or other liability may, at the
Company's option, to the extent lawful, be deducted by the Company from the
amount of the Net Award then payable to Employee or Employee's beneficiary
pursuant to this Agreement. In the event Employee is required to repay any
Net Award, Employee authorizes the Company and its Affiliates to deduct any
amount of such payment from any salary, bonus, vacation pay, commissions or
any other compensation earned by Employee and Employee specifically
authorizes the Company and its Affiliates to deduct any amount of such
payment from Employee's paycheck(s), including Employee's final paycheck
(to the extent lawful). Any such deductions shall not relieve Employee of
his/her obligation to pay any remaining amounts owing under this Agreement
or any other agreement. CONSENT TO SUCH DEDUCTION(S) SHALL BE EVIDENCED BY
EMPLOYEE'S SIGNATURE ON THIS AGREEMENT.
7. LETTER OF CREDIT. The Company shall use its reasonable efforts to support
its obligations under this Agreement with a letter of credit in a form
acceptable to the Company.
8. CONFIDENTIAL INFORMATION. Employee shall keep the existence and contents of
this Agreement in strictest confidence and shall not disclose it to anyone
other than Employee's tax and financial advisors, attorneys and immediate
family members, provided that Employee advises such persons that the
information is confidential. Employee may discuss this Agreement with the
Company's Human Resources or Legal departments or the head of Employee's
department.
9. DEFINITIONS. As used in this Agreement, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" means any entity that directly or indirectly is controlled
by, controls or is under common control with the Company.
(b) "Cause" means (i) embezzlement or misappropriation of funds of the
Company, any of its Affiliates or their successors; (ii) use of illegal
drugs or alcohol that materially impairs Employee's ability to fulfill
his duties as an employee; (iii) willful disclosure of trade secrets or
confidential information of or any material violation of any other
material published policy of the Company, any of its affiliates or
their successors; or (iv) conviction or confession of a criminal
felony.
(c) "Company" means Allegiance Telecom Company Worldwide, a Delaware
corporation and the successor to, or transferee of all or substantially
all of the assets of, the Company.
(d) "Credit Agreement" means the Credit and Guaranty Agreement dated as of
February 15, 2000, as amended, among Allegiance Telecom Company
Worldwide, Allegiance Telecom, Inc., subsidiaries of Allegiance Telecom
Company Worldwide, General Electric Capital Corporation (as successor
administrative agent) and the other lenders party thereto.
(e) "Disability" means "disability" as defined in the Company's Long-Term
Disability Insurance Plan.
(f) "Net Award" means any installment of the Award less any withholdings
taken by the Company or any Affiliate for taxes and other governmental
charges.
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(g) "Recapitalization" means any recapitalization or restructuring of
Allegiance Telecom, Inc.'s equity and/or debt securities and/or other
indebtedness or liabilities, or a sale of substantially all of
Allegiance Telecom, Inc.'s and its Affiliates' assets. A
Recapitalization shall not include any amendment, modification or
waiver of any of Allegiance Telecom, Inc.'s or Allegiance Telecom
Company Worldwide's debt securities that is not a permanent amendment.
10. SUCCESSORS; BINDING AGREEMENT. (a) This Agreement is personal to Employee
and without the prior written consent of the Company, shall not be
assignable by Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by Employee's legal representatives. (b) This Agreement shall
inure to the benefit of and be binding upon the Company and its successors.
The Company agrees that, for so long as it has any obligations under this
Agreement, it will cause any successor or transferee (if other than the
Company) to unconditionally assume, by written instrument delivered to
Employee (or his/her beneficiary or estate), all of the obligations of the
Company hereunder.
11. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be
in writing and shall be deemed to have been given when personally delivered
or on the fifth day after being sent via U.S. certified or registered mail,
return receipt requested:
TO THE COMPANY:
Allegiance Telecom Company Worldwide,
Attn: Xxxx Xxxxxx, Human Resources Department
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
TO EMPLOYEE: at Employee's office location or primary
residence listed in the Company's records
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Notwithstanding anything herein to the contrary, the Company may provide
Employee with written notice by sending Employee an email.
12. GOVERNING LAW; VALIDITY. The validity, interpretation, and enforcement of
this Agreement shall be governed by the laws of the State of Texas as to
all matters, including, but not limited to, matters of validity,
construction and performance, without regard to principles of conflict of
laws. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
13. CONSENT TO JURISDICTION; AGENT FOR SERVICE OF PROCESS; LIMITATION OF
LIABILITY. Employee consents to the non-exclusive jurisdiction and venue in
the state and federal courts located in Dallas County, Texas and waives any
defense of forum non conveniens. Service of legal process on the Company
with respect to a claim under this Agreement shall be made upon the General
Counsel of Allegiance Telecom, Inc. IN NO EVENT SHALL THE COMPANY OR ANY
AFFILIATE BE LIABLE UNDER OR RELATING TO THIS AGREEMENT FOR ANY AMOUNT IN
EXCESS OF THE AWARD. NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THE
COMPANY SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES.
14. INTEREST; PAYMENT OF COLLECTION FEES. Employee agrees to repay all amounts
due under this Agreement to the Company within ten (10) days of Employee's
termination date. Any amounts due to the Company under this Agreement and
not paid shall accrue interest at 1.5% per month (or if less, the maximum
rate permissible under law) starting from the 11th day after Employee's
termination date until paid. Employee agrees to pay all of Company's costs
of collection relating to or in connection with this Agreement, including
reasonable attorneys' fees.
15. WAIVER. Employee's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right Employee or the Company may
have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
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16. ENTIRE AGREEMENT; NO AMENDMENT. This Agreement contains the entire
agreement and supersedes all prior and contemporaneous oral or written
communications and agreements between the parties relating to the subject
matter of this Agreement. Neither this Agreement, nor any of its terms, may
be changed, added to, amended, waived or varied except in writing signed by
Employee and by either the CEO of the Company, the General Counsel of the
Company or the General Counsel of Allegiance Telecom, Inc.
17. COUNTERPARTS; DELIVERY BY FACSIMILE. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument. This Agreement
any amendments hereto to the extent signed and delivered by means of a
facsimile machine, will be treated in all manner and respects as an
original agreement and will be considered to have the same binding legal
effect as if it were the original signed version thereof delivered in
person. At the request of any party, each other party hereto will reexecute
original forms thereof and deliver them to all other parties. No party
hereto will raise the use of a facsimile machine to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
formation or enforceability of a contract and each such party forever
waives any such defense.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
dates set forth below.
BY SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT HE HAS (A) READ THIS AGREEMENT AND
(B) UNDERSTANDS THE TERMS AND CONDITIONS OF THIS AGREEMENT.
ALLEGIANCE TELECOM COMPANY WORLDWIDE
By: ________________________
Name: Xxxxx X. Xxxxxxx
Its: Chairman and Chief Executive Officer
EMPLOYEE: ___________________________
Printed Name: Xxxxxx X. Xxxx
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