AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") is made as of the
21st day of June, 2001, by and between ICG Communications, Inc., ICG Holdings,
Inc., ICG Services, Inc., ICG Equipment, Inc., and ICG Telecom, Inc.
(collectively, "Employer" or the "Company") and Xxxxxxx Xxxxxx (the
"Executive").
RECITALS
WHEREAS, the Company and Executive previously entered into an employment
agreement, dated as of September 25, 2000 (the "Prior Agreement"); and
WHEREAS, the Company desires to provide for the continued employment of
Executive and to make certain changes in Executive's employment arrangements
with the Company which the Company believes will reinforce and encourage the
continued attention and dedication to the Company of Executive, in the best
interest of the Company and its constituencies; and
WHEREAS, Executive desires to be employed by the Company as provided
herein; and
WHEREAS, the Company and Executive wish to amend and restate the Prior
Agreement, which agreement shall be superceded by this Agreement,
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, the parties agree as
follows:
1. Employment. The Company agrees to employ Executive and Executive agrees
to be employed on a full-time basis by the Company or by such of its subsidiary
or affiliate corporations as determined by the Company, for the period and upon
the terms and conditions hereinafter set forth, conditioned upon Executive
permanently relocating to the Denver Metropolitan area by October 1, 2001.
2. Term. The employment of Executive by the Company as provided in Section
1 hereof shall commence on the date hereof and shall continue until terminated
in accordance with the terms hereof; provided, that at the end of each calendar
month, the Executive's employment shall be extended through the end of the
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immediately following calendar month unless notice of non-renewal is given by
the Company to the Executive not later than 15 days prior to the end of any such
calendar month. The period during which the Executive is employed by the Company
pursuant to this Agreement is referred to herein as the "Employment Term," and
upon termination of Executive's employment with the Company for any reason
whatsoever (including breach or alleged breach of this Agreement by the
Company), the Employment Term shall be terminated. The date on which the
Employment Term ends is referred to herein as the "Termination Date."
3. Position and Duties. During the Employment Term, Executive shall serve
as Chief Executive Officer ("CEO") of the Company and shall have such
responsibilities, duties and authority as the Company's Board of Directors (the
"Board") and the Special Executive Committee of the Board (the "Special
Committee") shall determine from time to time, so long as such responsibilities,
duties and authority are consistent with those of Executive as of the date
hereof. Executive shall devote substantially all his working time and efforts to
the business and affairs of the Company and shall use his best efforts to carry
out his responsibilities faithfully and efficiently in a professional manner;
provided, however, that it is understood that reasonable time for personal
financial matters and charitable activities shall not constitute a violation of
this Agreement.
4. Place of Performance. During the Employment Term, Executive's place of
performance of his services shall be Denver Metropolitan Area, except for
required travel by Executive on the Company's business to an extent
substantially consistent with his present business travel obligations or as may
be reasonably required by the Company.
5. Compensation and Benefits.
(a) Salary. During the Employment Term, the Company shall pay to Executive
an annual base salary of Nine Hundred Thousand Dollars ($900,000) or Seventy
Five Thousand Dollars ($75,000) per month (the "Base Salary," such salary to be
paid in periodic installments in accordance with the Company's payroll practices
then in effect. The Base Salary may be increased from time to time in accordance
with normal business practices of the Company and, if so increased, shall not
thereafter be reduced. Compensation of Executive by salary payments shall not be
deemed exclusive and shall not prevent Executive from participating in any other
compensation or benefit plan of the Company. The Base Salary payments hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
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way limit or reduce the obligation of the Company to pay Executive's Base Salary
hereunder.
(b) Performance Bonus. During the Employment Period Executive shall be
eligible to receive a performance bonus, based on the Company meeting certain
financial targets set by the Company's Board and the Special Committee
("Performance Bonus"). With respect to the Performance Bonus relating to fiscal
2001 (the "2001 Bonus"), Executive's Performance Bonus shall be earned as
follows: the Executive shall earn (i) $100,000 if the Company (on a consolidated
basis with its subsidiaries) achieves $31 million EBITDA (the "2001 Bonus
Threshold") and (ii) $100,000 for each $1 million in excess of the 2001 Bonus
Threshold; provided, however, that, in no event shall EBITDA in excess of $39
million be taken into account in determining the 2001 Bonus, with the result
that the 2001 Bonus shall not exceed $900,000. Executive may be eligible to
receive a Performance Bonus during subsequent years in amounts of up to one
year's Base Salary then in effect based upon performance targets to be
established at the discretion of the Company's Board or the compensation
committee thereof.
(c) Reorganization Bonus. Executive shall be eligible to receive a
reorganization bonus (the "Reorganization Bonus") equal to $900,000, payable in
a lump sum ten (10) days after either (x) confirmation of a plan of
reorganization for the Company in its currently pending Chapter 11 cases or (y)
consummation of a sale of substantially all the assets of the Company in the
Chapter 11 cases; provided, that such condition is met on or prior to December
31, 2001. If either of conditions (x) or (y) above is met following December 31,
2001, a portion of the Reorganization Bonus may become payable, provided that
the amount of the Reorganization Bonus shall be reduced by $100,000 (but not
below $0) for each whole one-month period immediately following December 31,
2001. For purposes of clarity of this Section 5(c), in the event that condition
(x) or (y) above is met during the month of March 2002, Executive shall be
entitled to a Reorganization Bonus equal to $700,000. Notwithstanding the
foregoing, if conditions (x) or (y) are met after December 31, 2001, and the
reason such condition was not met prior to December 31, 2001 is lack of
resolution of intercreditor issues or the Official Creditors' Committee's
refusal to support an Acceptable Plan (as hereinafter defined) proposed by the
Company in sufficient time for it to be confirmed by December 31, 2001, the
Reorganization Bonus shall be $900,000. "Acceptable Plan" means a plan of
reorganization for the Company and its debtor-subsidiaries that (a) is
confirmable under section 1129 of the Bankruptcy Code and (b) distributes
substantially all of the economic value of the Company (subject to secured
creditors claims and appropriate consideration for new money infusion, if any)
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to unsecured creditors represented by the Committee and (c) otherwise has
customary and reasonable terms.
(d) Expenses. The Company will promptly reimburse Executive for all
reasonable out-of-pocket expenses incurred by Executive during the Employment
Term in connection with the business of the Company and the performance of his
duties under this Agreement including, but not limited to, the reimbursement of
Executive on a fully tax grossed-up basis for the reasonable costs of
permanently relocating to the Denver Metropolitan area (including real estate
brokerage fees and costs and the benefits under the Company's existing
relocation program for Tier I employees), upon presentation to the Company by
Executive of a reasonably itemized accounting of such expenses with reasonable
supporting data. All such expenses relating to Executive's relocation shall be
reviewed by the Board.
(e) Other Benefits. During the Employment Term, Executive shall be entitled
to continue to participate in all of the employee benefit plans and arrangements
("Benefit Plans") in effect on the date hereof in which Executive participates,
or Benefit Plans providing Executive with at least equivalent benefits
thereunder. Executive shall be entitled to participate in or receive benefits
under any Benefit Plan made available by the Company in the future to all (but
not less than all) other key employees, subject to and on a basis consistent
with the terms, conditions and administration of such Benefit Plans. Any
payments or benefits payable to Executive hereunder (other than any annual bonus
payment) in respect of any year during which the Termination Date occurs prior
to June 1 shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in such year
during which the Employment Term was in effect.
(f) Vacations. Executive shall be entitled to vacation time, paid holidays
and personal days, determined in accordance with the Company's policy then in
effect but not less than 4 weeks in any calendar year.
(g) Services Furnished. The Company shall furnish Executive with such
office space, stenographic assistance and other office facilities and services
as shall be suitable to Executive's position and adequate for the performance of
his duties as set forth in Section 3 hereof, in the Denver Metropolitan area or
at the Company's headquarters.
(h) During the term of this Agreement, Executive will have full use of a
company vehicle at Company's expense.
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6. Termination.
(a) If this Agreement is terminated by Executive for "good reason" (as
defined below), or by the Company for any reason other than Executive's death,
Disability (as defined in Section 6(d) below) or for "cause" (as defined below)
at any time after May 31, 2001 the Company shall pay Executive within five days
of the date of the notice of termination a lump sum termination benefit in an
amount equal to fifteen months' Base Salary at the rate then in effect.
For purposes of this Agreement, termination for "cause" shall be limited to
termination based on Executive's (i) willful and continued failure to
substantially perform his duties hereunder (other than any such failure arising
from his disability) provided that Executive shall first have received a notice
in writing from the Board or the Special Committee specifying in reasonable
detail the alleged failures and providing Executive a reasonable opportunity to
cure same; (ii) acts of intentional dishonesty resulting in demonstrable harm to
the Company; or (iii) conviction of felony.
For purposes of this Agreement, Executive shall be entitled to terminate
this Agreement for "good reason" if (i) Executive is no longer CEO of the
Company or is required to report to anyone other than the Board or the Special
Committee, (ii) Executive is assigned duties inconsistent with those duties
customarily assigned to senior executive officers of the Company, or (iii) there
is a material breach by the Company in the performance of any of the terms and
conditions of this Agreement, provided Executive shall first have given written
notice to the Board or the Special Committee regarding such breach and given the
Company a reasonable opportunity to cure such breach.
(b) If Executive dies during the Employment Term, Executive's obligations
under this Agreement will terminate and the Company will pay the estate of
Executive an amount equal to one year's Base Salary at the rate then in effect.
(c) If, during the Employment Term, Executive is prevented from performing
his duties by reason of illness or incapacity for three consecutive months in
any one hundred eighty (180) day period (a "Disability"), the Company may
terminate this Agreement, upon fourteen (14) days notice to Executive or his
duly appointed legal representative. Executive will be entitled to all benefits
provided under any disability plans of the Company.
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(d) The Company shall be responsible for any gross-up payment required to
offset any excise taxes placed on Executive if any payments made to Executive
under Section 5(a) are considered "parachute payments" (within the meaning of
Section 280g of the Internal Revenue Code) or any payments or reimbursements to
Executive for temporary housing or relocation expenses result in net taxable
income to Executive (net of any offsetting deductions).
7. Directors' and Officers' Insurance; Indemnification.
(a) The Company represents that Executive is covered by the Directors' and
Officers' liability insurance policy currently in effect which provides
$60,000,000 of coverage for all directors and officers, and that the Company
will use its commercially reasonable efforts to obtain such a policy providing
coverage for acts by officers and directors after such date in an amount which
the Special Committee and Executive in good faith mutually determine to be
reasonable.
(b) In addition to any rights to indemnification to which Executive is
entitled under the Company's Articles of Incorporation and Bylaws, the Company
shall indemnify Executive at all times during and after the Employment Term of
this Agreement to the maximum extent permitted under the Delaware Business
Corporation Act or any successor provision thereof, and any and all applicable
state law, and shall pay Executive's expenses in defending any civil action,
suit or proceeding in advance of the final disposition of such action, suit or
proceed ing to the maximum extent permitted under such applicable state laws for
Executive's action or inaction on behalf of the Company under the terms of this
Agreement including but not limited to any acts or alleged acts arising out of
events prior to Executive's employment by the Company which obligation shall
survive the termina tion of Executive's employment or the termination of the
other provisions of this Agreement.
8. Confidential Information, Removal of Documents, etc.
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets, confidential
information, and knowledge or data relating to the Company and the businesses
and investments of the Company, which shall have been obtained by the Executive
during the Executive's employment by the Company, including such information
with respect to any products, improvements, formulas, designs or styles,
processes, services, customers, suppliers, marketing techniques, methods, future
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plans or operating practices ("Confidential Information"); provided, however,
that Confidential Information shall not include any information known generally
to the public (other than as a result of unauthorized disclosure by the
Executive) or any specific information or type of information generally not
considered confidential by persons engaged in the same business as the Company,
or information disclosed by the Company or any officer thereof to a third party
without restrictions on the disclosure of such information. Except as may be
required or appropriate in connection with his carrying out his duties under
this Agreement, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such Confidential Information to anyone other than the Company
and those designated by the Company.
(b) Removal of Documents. All records, files, drawings, documents, models,
and the like relating to the business of the Company, which the Executive
prepares, uses or comes into contact with and which contain Confidential
Information shall not be removed by the Executive from the premises of the
Company (without the written consent of the Company) during or after the
Employment Period unless such removal shall be required or appropriate in
connection with his carrying out his duties under this Agreement, and, if so
removed by the Executive, shall be returned to the Company immediately upon
termination of the Executive's employment hereunder.
(c) Remedies. Without prejudice to any other remedies that the Company may
have for breach of this Agreement by the Executive, in the event of a breach or
threatened breach of this Section 8, the Executive agrees that the Company shall
be entitled to apply for injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the Executive
acknowledging that damages would be inadequate and insufficient.
Continuing Operation. Any termination of the Executive's employment or of
this Agreement shall have no effect on the continuing operation of this Section
8.
9. Severability. It is the desire and intent of the parties that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision or portion of
this Agreement shall be adjudicated to be invalid or unenforceable, this
Agreement shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
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respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
10. Notices. All communications, requests, consents and other notices
provided for in this Agreement shall be in writing and shall be deemed give if
delivered by hand or mailed by first class mail, postage prepaid, to the last
known address of the recipient.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
12. Assignment. Neither this Agreement nor any rights or duties hereunder
may be assigned by Executive or the Company without the prior written consent of
the other, such consent not to be unreasonably withheld.
13. Amendments. No provisions of this Agreement shall be altered, amended,
revoked or waived except by an instrument in writing, signed by each party to
this Agreement.
14. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective legal representatives, heirs, successors and assigns.
15. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constituted one and the same instrument.
16. Arbitration. Any dispute, controversy or question arising under, out
of, or relating to this Agreement (or the breach thereof), or, Executive's
employment with the Company or termination thereof, shall be referred for
arbitration in the State of Colorado to a neutral arbitrator selected by
Executive and the Company and this shall be the exclusive and sole means for
resolving such dispute.
17. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties and supersedes all prior understandings, agreements
or representations by or between the parties, whether written or oral, which
relate in any way to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
By: /s/Xxxxxxx Xxxxxx
---------------------------------
Xxxxxxx Xxxxxx
ICG COMMUNICATIONS, INC.
By: Xxxxxxx X. Xxxxxx By: /s/Xxxxxxx X. Xxxxxxx
--------------------------------- ---------------------------------
Chairman of the Special
Executive Committee of the
Board of Directors
ICG HOLDINGS, INC.
By: Xxxxxxx X. Xxxxxx
---------------------------------
ICG SERVICES, INC.
By: Xxxxxxx X. Xxxxxx
---------------------------------
ICG EQUIPMENT, INC.
By: Xxxxxxx X. Xxxxxx
---------------------------------
ICG TELECOM, INC.
By: Xxxxxxx X. Xxxxxx
---------------------------------
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