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EXHIBIT 10.20
ESPRIT TELECOM UK LIMITED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 1st July, 1998 by and between Esprit
Telecom Group Plc (the "Company"), and Xx. Xxxx-Xxxxx Xxxxxxxxxx ("Employee")
(jointly, the "Parties").
WHEREAS, the Company desires to employ Employee, and Employee desires
to become an employee of the Company, all on the terms and conditions set forth
herein; and
NOW, THEREFORE, in consideration of the promises and the mutual
agreements made herein, the Company and Employee agree as follows:
1. Employment.
(a) Position and Location. The Company shall employ Employee in an
Executive Management Team position, reporting to Chief
Executive Officer. Employee will be based at the Company's
office in Reading, U.K. travelling to other locations as
reasonably required in the performance of his/her duties.
(b) Commencement and Period of Employment. The employment contract
shall become effective as of 1st October, 1998 and shall be
continued until 30th September, 2001. If it is the intention
of the parties to conclude a further contract beyond 30th
September 2001, agreement should be reached no later than 31st
March, 2001.
(c) Hours of Work. Normal hours of work are 09.00 until 17.00 hrs
Monday to Friday, with a 30 minute meal break each day. No
payment will normally be made for any additional hours worked.
(d) Duties. Except as expressly authorized by the Company, during
the Employment Period Employee shall render his/her business
services solely in the performance of such duties as
Management shall assign to him, and shall be engaged
substantially full time with the Company. The Company may
direct Employee to perform services for, or on behalf of, the
Company or any affiliate of the Corporation (collectively, the
"Group"). Employee shall use his best efforts to promote the
interests and welfare of the Group.
(e) Shareholder Agreement. Employee shall at all times comply with
Company policies regarding share trading, particularly those
regarding xxxxxxx xxxxxxx.
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2. Compensation, Fringe Benefits, and Holidays.
(a) Base Compensation. The Company shall pay Employee a base
salary at the rate of (pound)140,000 per year in monthly
installments paid into a bank account designated by the
Employee. Performance will be subject to a review annually
commencing 1st January 2000.
(b) Bonus. For the 1998/1999 fiscal year, Employee will be
eligible for an incentive bonus of 60% base salary based on
meeting all the following targets:
Revenue: o 212,000,000.00
Total Gross Profit: o 61,500,000.00
EBIT: o 1,500,000.00
Minimum eligibility for the bonus payment is 85% of all
targets being met. There is no ceiling to the potential
payout. A graduated scale is utilized to determine the payout
level.
(c) Expenses and Travel. Employee will be required to work away
from the office from time to time, including working overseas
if necessary. The Company will reimburse reasonable expenses
incurred, provided that the arrangements are made by or with
the agreement of the Company. When working overseas, the
Company will take out any necessary insurance.
(d) Holidays. In addition to normal public holidays, Employee will
be entitled to twenty five (25) days' paid holiday in each
calendar year. This entitlement accrues pro rata throughout
each year and Employee's entitlement for 1998 will therefore
be 6 days. Employee's holidays are to be taken as agreed with
Management, after having given at least two weeks' prior
notice.
The holiday year commences on 1st January and ends on 31st
December.
Any holiday not taken at the end of each calendar year will
normally be forfeited and no payment in lieu of any unused
entitlement will be made. However, subject to approval by the
C.E.O. a maximum of 10 days may be carried over from year to
year.
(e) Medical Insurance. The Employee is entitled to free private
medical cover and, if married, cover is extended to the
Employee's immediate family.
(f) Life Assurance. The Employee is eligible to join the Company's
non-contributory Life Assurance scheme.
(g) Sick Pay. The Company operates a Sick Pay Scheme which
provides the following benefits:
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Up to 10 days paid absence in any 12 month period, thereafter
75% of salary for up to 6 months continuous absence. After 6
months continuous absence 75% of salary subject to acceptance
by the Company's insurers. Employee is required to notify the
Company immediately of any absence and to provide a Sickness
Certificate signed by a Doctor after an absence of 7 days
including non-working days.
(h) Health & Safety. Employee will be required to take reasonable
care with regard to health and safety and to cooperate with
the Company in complying with the requirements of the Health &
Safety at Work Xxx 0000.
(i) Company Car. Owing to the nature of the Employee's duties, the
company will provide a car allowance of (pound)550 per month.
In line with the Company's Car Policy this requires the
Employee to have a car for business use when required.
(j) Supplemental housing and Transportation Allowance. Employee
will be eligible to receive an allowance of (pound)500 per
month to cover air travel costs incurred from Germany to the
U.K. and accommodation costs when employee is required to
attend the Reading offices. The amount of this allowance will
be reviewed annually.
(k) Employee Stock Ownership Programme. The Corporation has
developed an employee stock ownership programme to allow
qualified employees of any Group company to earn and to
purchase ordinary shares of the Corporation on preferential
terms or conditions. Employee is entitled to participate in
such programme on terms in accordance with the Corporation's
regular practice for employees.
(l) Management Share Option Plan. Employee will be eligible to
participate in a special Management Share Option plan created
for key personnel integral to the building of the business
over the next three years, the details of which are as
follows:
140,000 ordinary shares (20,000 ADSs) are being set-aside in
your name with a maturity date of 26th February, 2001.
The exercise price for these ADSs is $17.75
The conditions that must be met before these options can be
executed are:
You must be an employee in good standing with Esprit Telecom
on 26th February, 2001 and the actual value of the ADSs must
have increased by at lest 50% to $26,625 per seven (7) shares
or one ADS.
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(m) Option Package. The Company undertakes that it will procure at
the first meeting of the Board of Directors after the date of
this Agreement that the following Options will be granted
subject to the Specified Conditions.
52,500 ordinary shares (7,500 ADSs) will be vested on 1st
October, 1998
52,500 ordinary shares (7,500 ADSs) will vest every six months
commencing 1st April, 1999 until 1st October, 2001.
The exercise price shall be US$17.75 per Option.
The Specified Conditions are: (1) each "Option" represents 7
ordinary shares of the Company (equal to 1 ADS); (2) unvested
Options shall lapse immediately upon early termination of this
Agreement by either the Employee or the Company; and (3)
Options may be exercisable up to 5 years from the vesting date
upon payment of the exercise price as directed by the Company.
3. Trade Secrets. During the Employment Period, and after the termination
of Employee's employment for any reason, Employee shall not use or
disclose any of the Group's trade secrets or other confidential
information. The term "trade secrets or other confidential information"
includes, by way of example, matters of a technical nature, such as
scientific, trade, and engineering secrets, "know-how," formulae,
secret processes or machines, inventions, computer programs (including
documentation of such programs), and research projects, and matters of
a business nature, such as proprietary information about costs,
profits, markets, sales, lists of customers and other information of a
similar nature, to the extent not available to the public, and plans
for future development. After termination of Employee's employment by
the Company for any reason, Employee shall not use or disclose trade
secrets or other confidential information, unless such information
becomes a part of the public domain other than through a breach of this
Agreement or is disclosed to Employee by a third party who is entitled
to receive and disclose such information.
4. Return of Documents and Property. Upon the termination of Employee's
employment by the Company for any reason, or at any time upon the
request of the Company, Employee (or his/her heirs or personal
representatives) shall deliver to the Company (a) all documents and
materials containing trade secrets or other confidential information
relating to the Group's business and affairs, and (b) all documents,
materials, and other property belonging to the Group, which in either
case are in the possession or under the control of Employee.
5. Discoveries and Works. All discoveries and works made or conceived by
Employee during his/her employment by the Company, jointly or with
others, that relate to the Group's activities shall be owned by the
Group. The term "discoveries and works" includes, by way of example,
inventions, computer programs (including documentation of such
programs), technical improvements, processes, drawings, and works of
authorship. Employee shall (a) promptly notify, make full disclosure
to, and execute and
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deliver any documents requested by, the Company to evidence or better
assure title to such discoveries and works in the Group, (b) assist the
Group in obtaining or maintaining for itself, at its own expense,
patents, copyrights, trade secret protection, or other protection of
any and all such discoveries and works, and (c) promptly execute,
whether during his/her employment by the Company or thereafter, all
applications or other endorsements necessary or appropriate to maintain
patents and other rights for the Group and to protect the Group's title
thereto. Any discoveries and works which, within six months after the
termination of Employee's employment by the Company for any reason, are
made, disclosed, reduced to a tangible or written form or description,
or are reduced to practice by Employee and which pertain to the
business carried on or products or services being sold or developed by
the Group at the time of such termination shall, as between Employee
and the Group, be presumed to have been made during Employee's
employment by the Company.
6. Termination.
(b) Without Cause. In the event the Company elects to terminate
this Agreement without cause, the Company shall pay to
Employee on the effective date of his/her termination the full
amount of any unpaid salary and commission/bonuses, payment
for the sale of Employee's interest in any shares of the
Corporation in accordance with the Corporation's Articles of
Association, payment for unused vacation accrued to that date
and any payments required by law. Such payment shall be made
less such deductions that are required by law and in full and
final settlement of all and any claims which Employee may have
against the Company or the Group arising out of or in
connection with his/her employment with the Company and its
termination. Such payment will not affect Employee's
continuing obligations under Section 3 and, if applicable,
Section 12. Nothing in this paragraph shall affect Employee's
statutory rights relating to dismissal.
(c) With Cause. In the event the Company terminates this Agreement
for cause, no payment shall be made under paragraph (b) above,
and Employee's unvested rights, if any, hereunder shall cease
as of the effective date of the termination. For the purposes
of this Agreement, the Company shall have cause to terminate
Employee's employment thereunder if Employee:
(i) Is unable to perform his/her duties by reason of ill
health or injury for 120 days (whether consecutive or
not) in any period of 52 consecutive weeks;
(ii) Becomes of unsound mind or is involuntarily committed
to an institution pursuant to any statute relating to
mental health;
(iii) Is convicted of a criminal offence other than one
which in the opinion of Management does not affect
his/her position as an employee of the Company,
bearing in mind the nature of his duties and the
capacity in which he is employed; or
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(iv) Is guilty of any serious default or misconduct in
connection with or affecting the business of the
Company or commits any serious breach of his/her
obligations under this Agreement.
(a) If the Company wishes to terminate Employee's employment or if
Employee wishes to leave its employment, the Company may
require Employee not to attend for work for a period of no
more than thirty (30) days from the date he/she is requested
not to attend for work.
7. Disability. Employee agrees that if he/she is unable to perform his/her
duties for the Group as a result of ill health or injury he/she will
upon request submit him/herself to a medical examination at the
Company's expense by a suitably qualified person of its choice. If that
person is unable to confirm that Employee is fit to perform his/her
duties or if there are factors which such person considers are relevant
to the performance of those duties, Employee shall cooperate ensuring
the prompt delivery of all reports to the Company.
8. Assignment. Employee's rights and obligations under this Agreement
shall not be assignable by Employee. The Company's rights and
obligations under this Agreement shall not be assignable by the Company
except as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of the Company. In the event of any
such assignment by the Company, all rights of the Company hereunder
shall inure to the benefit of the assignee.
9. Notices. Any notice required or permitted under this Agreement shall be
deemed to have been effectively made or given if in writing and
personally delivered or mailed properly addressed in sealed envelope,
postage prepaid by certified or registered mail. Unless otherwise
changed by notice, notice shall be properly addressed to Employee if
addressed to:
Xx. Xxxx-Xxxxx Xxxxxxxxxx
Xxxxxxxx 0
00000 Xxxxxxxx
Xxxxxxx
and properly addressed to the Company if addressed to:
Esprit Telecom Group plc
Xxxxxxx Xxxxx
Xxxxx Xxxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Attention: Chief Executive Officer
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10. Amendment and Waiver. This Agreement may not be amended without the
written agreement of the Parties. The waiver by any Party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other breach.
11. Miscellaneous. This Agreement constitutes the entire agreement, and
supercedes all prior agreements of the Parties hereto relating to the
subject matter hereof, and there are no written or oral terms or
representations made by either Party other than those contained herein.
The validity, interpretation, performance and enforcement of this
Agreement shall be governed by English Law, and the Parties hereto
irrevocably submit to the non-exclusive jurisdiction of the English
Courts. If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, the Parties intend
and agree that such invalidity or unenforceability shall not affect the
remaining provisions. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12. No Competition.
(a) Whilst Employee is employed by the Company and for a period of
twelve (12) months after the termination of his/her employment
with the Company, however it arises and irrespective of its
cause or manner, Employee shall not (except with the prior
written consent of Management) directly or indirectly and
whether on his/her own behalf or for another to do or attempt
to do any of the following:
(i) solicit or accept the custom of a Customer for the
purpose of the supply of Relevant Goods or Services;
(ii) give advice or provide services with a view to
asserting or enabling another person, company,
business entity or other organization to solicit the
custom of a Customer for the purpose of the supply of
Relevant Goods or Services;
(iii) communicate with an employee in a manner calculated
or likely to cause that employee to leave or end or
seek to leave or end his or her position or
relationship with the Company or the Group for the
purpose of being involved in or concerned with either
the supply of Relevant Services or a business which
competes with or is similar to a Relevant Business,
regardless of whether or not such communication would
be in breach of any contract; or
(iv) employ, engage the services of or work directly or
indirectly with an employee of the purpose of either
the supply of Relevant Goods or Services or a
business which competes with or is similar to the
Relevant Business; and
(b) Whilst Employee is employed by the Company and for a period of
three (3) month after the termination of his/her employment
with the Company, however it
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arises and irrespective of its cause or manner, Employee shall
not (except with the prior written consent of Management)
directly or indirectly and whether on his/her own behalf or on
another do or attempt to do any of the following:
(i) undertake or carry on either alone or in partnership
or be employed engaged or interested in any capacity
whatsoever in any business directly competitive with
the Relevant Business in any territory where the
Company is at the time of such cessation carrying on
or actively seeking to carry on the Relevant
business;
(ii) invite, procure, negotiate or accept the supply of
Relevant Goods or Services from a Supplier;
(iii) stop or inhibit a Supplier from supplying, or affect
the terms on which a Supplier will supply Relevant
Goods or Services to the Company or the Group for the
purpose of the Relevant Business;
(c) For the purpose of this Section:
(i) "Customer" means a person, company, business entity
or other organization who was at any time during the
Relevant Period a customer or client of the Company
or the Group (whether or not Relevant Goods or
Services were actually provided during such period)
or with whom the Company or the Group was negotiating
to supply goods or services for the purpose of the
Relevant Business at the time of expiry of the
Relevant Period;
(ii) "Supplier means a person, company, business entity or
other organization who was at any time during the
Relevant Period:
(A) supplied goods or services specifically
designed and/or manufactured for the Company
or the Group for the purpose of the Relevant
Business; or
(B) had agreed or was negotiating to make such
supplies at the time of expiry of the
Relevant Period;
(iii) "Relevant Goods or Services" means goods or services
identical or similar to or competitive with those
which;
(A) the Company or the Group was supplying or
actively and directly seeking to supply to a
Customer as described in Section 7(b)(i) for
the purpose of the Relevant Business; or
(B) the Supplier was supplying or had agreed to
supply or was actively and directly
negotiating to supply as described in
Section 7(b)(ii)
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and which were being supplied by that
Supplier to the Company or the Group for the
purpose of the Relevant Business;
(iv) "Relevant Business" means the business being carried
on or actively sought to be carried on by the Company
or the Group at the date of termination of Employee's
employment in which, pursuant to his/her duties,
Employee has had direct personal involvement at any
time during the Relevant Period;
(v) "employee" means a person who is employed by or who
renders personal or other services to the Company or
the Group in the Relevant Business and who was so
employed or so rendered services at any time during
the Relevant Period; and
(vi) "Relevant Period" means the period of one year ending
on the day Employee ceases to be employed by the
Company.
(d) The subclause or part of such subclause of this Section
constitutes an entirely separate and independent restriction.
If any restriction is held to be invalid or unenforceable by a
court of competent jurisdiction, it is intended and understood
by the Company and Employee that such invalidity or
unenforceability will not affect the remaining restrictions.
The parties have executed this Agreement on the day and year first above
written.
ESPRIT TELECOM UK LIMITED
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
Chief Executive Officer
1st July, 1998
EMPLOYEE SIGNATURE
/s/ Xxxx-Xxxxx Kohlhammer
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Xx. Xxxx-Xxxxx Xxxxxxxxxx
Date: 1 July 1998
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