EXHIBIT 10.33
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, is made as of the fifth day of December, 1999 (this
"Agreement"), between GlobalCenter Inc., a Delaware corporation ("GC"), and Xxx
X. Xxxxxxx, Xx. ("Executive").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, GC and Executive hereby agree as follows:
1. Employment.
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Subject to the terms and conditions hereinafter contained, GC hereby
employs Executive and Executive accepts the employment by GC.
(a) Executive shall perform such duties and exercise such powers in
relation to the business of the GC as may from time to time be assigned to or
vested in him by the Board of Directors of GC and shall at all times and in all
respects comply with the reasonable directions and regulations made by the Board
of Directors of GC. Without limiting the foregoing, Executive shall hold the
title of Chairman and CEO of GC and shall be immediately elected as a member of
the GC Board.
(b) Executive shall faithfully serve GC to the utmost of his ability
and shall use his best efforts to promote the interests thereof and shall devote
all of his time and attention during the normal working hours of GC (and, for no
further remuneration, during such additional hours as shall be necessary for the
proper performance thereof) to the said duties, except insofar as he has the
consent of the GC Board of Directors in writing to do otherwise. The foregoing
shall not preclude Executive from engaging in appropriate civic, charitable or
religious activities or from devoting a reasonable amount of time to private
investments or from serving on the boards of directors of other entities or
engaging in Executive's car racing avocation, as long as such activities and
service do not materially interfere or conflict with Executive's
responsibilities to GC.
(c) Executive shall comply with such directives and manuals as GC may
issue from time to time to its officers and executives.
(d) Executive's office shall be based in the San Francisco Bay Area.
2. Board Membership
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Executive shall be recommended as a candidate for director of Global
Crossing Ltd. The Global Crossing Ltd. Board of Directors currently has no open
positions; however, an opening is anticipated on or before March 31, 2000.
During the Term (as defined in Paragraph 3), Executive shall have the
right to nominate one less than a majority (including Executive) of the
directors of the
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GC Board of Directors. Election of such nominees to the GC Board of Directors
shall not be unreasonably denied. GC shall have eleven Board members.
3. Term.
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Subject to the provisions of Paragraph 9 below, the term of this Agreement
(the "Term") shall be 3 years, commencing on December 5, 1999 (the "Commencement
Date"). The Term and provisions of this Agreement shall automatically extend for
additional one-year periods if Executive remains employed on and after the third
anniversary of the Commencement Date, unless either party notifies the other in
writing at least 30 days prior to the applicable anniversary date that it, or
he, does not want the term to so extend.
4. Remuneration.
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(a) Base Salary. GC agrees to pay and Executive agrees to accept as
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compensation for the services rendered by Executive during his Employment
hereunder an annualized salary of $500,000, less withholding taxes and other
amounts required by applicable laws, to be paid in semi-monthly installments.
(b) Guaranteed Minimum Bonus. Executive shall receive a guaranteed
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minimum bonus (the "Guaranteed Minimum Bonus") of $500,000 per year during the
Term. The GC Board of Directors in its sole discretion may award an annual bonus
greater than the Guaranteed Minimum Bonus.
(c) Global Crossing Ltd. Stock Options. Pursuant to the 1998 Global
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Crossing Ltd., Stock Incentive Plan (the "Plan"), Executive shall receive
options to purchase 500,000 shares of common stock of Global Crossing Ltd. (the
"Global Crossing Ltd. Stock Options"). The strike price shall equal $45 per
share. The Global Crossing Ltd. Stock Options shall vest as follows: 34% on the
Commencement Date and 22% on the first, second and third anniversary of the
Commencement Date. The stock options shall be subject to the additional terms
and conditions as set forth in the Plan and a non-qualified stock option
agreement.
(d) GC Stock Options. Executive shall receive options to purchase a
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number of shares of GC common stock (the "GC Stock Options") equal to 5.5% of
the currently outstanding common stock of GC at an aggregate strike price of
$100,000,000. The options shall vest 34% on the Commencement Date and 22% on the
first, second and third anniversary of the Commencement Date. The GC Stock
Options shall be subject to additional terms and conditions as may be determined
by the GC Board of Directors; provided, however, that any terms and conditions
which materially deviate from the terms and conditions of the Global Crossing
Ltd. Stock Options are subject to Executive's prior approval. In the event that
Global Crossing Ltd. issues a Tracking Stock (as defined below), the GC Stock
Options shall be equitably converted into options for the Tracking Stock or
otherwise dealt with in a manner that minimizes adverse accounting treatment
without adverse effect upon Executive.
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(e) Recommended Stock Options. In addition to the GC Stock Options,
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Executive shall have the right to recommend that the GC Compensation Committee,
whose members shall be nominated by the Chairman of the GC Board of Directors,
grant options to purchase GC common stock (the "Recommended Stock Options") to
one or more GC employees Executive hires or desires to retain. The GC Board of
Directors shall not unreasonably withhold approval of the Recommended Stock
Options. In the event that Global Crossing Ltd. issues a Tracking Stock (as
defined below), the Recommended Stock Options shall be equitably converted into
options for the Tracking Stock or otherwise dealt with in a manner that
minimizes adverse accounting treatment without adverse effect upon the optionee.
(f) Global Crossing Tracking Stock. Global Crossing, Ltd.
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anticipates establishing a tracking stock (the "Tracking Stock") for its
existing digital distribution, Internet and data services business, currently
owned and operated by GC (the "Tracked Business"). Subject to market conditions,
it is anticipated that between 10% and 20% of the equity value of the Tracked
Business will be issued in an initial public offering in the first half of 2000.
Issuance of Tracking Stock is subject to approval of the holders of Global
Crossing Ltd. common stock pursuant to Bermuda law.
5. Insurance and 401(k) Savings Plan.
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(a) Executive shall be entitled to participate, subject to any rules
and conditions and applicable laws and regulations, in any medical, dental, life
insurance and/or disability insurance plan established and operated by GC, for
the benefit of executives of GC and their dependents. Any such plan may be
changed from time to time in the sole discretion of GC.
(b) GC shall cover Executive at GC's expense for workers'
compensation and disability insurance as required by law.
(c) Subject to the terms and conditions of the GC 401(k) Plan and
applicable law, Executive shall be entitled to participate in any 401(k) savings
plan adopted by GC.
6. Vacation.
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(a) Executive shall be entitled to four weeks of paid vacation per
year, to be taken in such period and at such time as requirements of GC's
business permit. Executive shall not accrue more than four weeks paid vacation.
(b) On termination of Executive's employment for whatever reason,
Executive shall be entitled to accrued vacation pay through the date of
termination.
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7. Expense Reimbursements.
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Executive shall be reimbursed for business expenses incurred by
Executive on behalf of GC, including but not limited to, travel and
entertainment expenses.
8. Business Travel.
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Limousine service shall be available for all business travel.
9. Termination/Resignation.
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Subject to the provisions below, Executive may be terminated by GC at
any time for cause by a vote of the majority of the GC Board of Directors, or at
any time without cause by a vote of the majority plus one of the GC Board of
Directors. Executive may resign from employment at any time.
(a) Termination For Cause. Actions or omissions which will entitle
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GC to terminate Executive for cause shall be limited to the following:
(i) conviction of a felony; or
(ii) material breach of the Proprietary Information Agreement
attached hereto as Exhibit "A" and incorporated herein by
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reference; or
(iii) Executive is unable to perform his duties under this
Agreement by reason of a final, non-appealable
determination by a court or arbitration board.
For a period within 60 days after the occurrence of a termination for cause
event ("Termination For Cause Event") pursuant to subparagraph 9(a), the GC
Board shall deliver a written notice to Executive detailing the specific
Termination For Cause Event. If the GC Board reasonably determines that the
Termination For Cause Event is not curable, then the Board shall have the right
to deliver immediate notice of termination. If the GC Board reasonably
determines that the Termination For Cause Event is curable, then it shall
provide Executive with a period of 60 days to cure. In the event that Executive
does not cure the Termination For Cause Event within 60 days after receipt of
such notice, then the GC Board shall have 10 days to deliver notice of
termination to the Executive.
Upon notice by GC to Executive that it is terminating Executive for cause, the
Termination Date shall be the date on which such notice is received by Executive
pursuant to Paragraph 11(a), or any later date specified in the notice of
termination to Executive. If such termination is pursuant to subparagraph
9(a)(i) or 9(a)(iii), then
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Executive shall not be entitled to receive any further compensation or payments
hereunder (except such Base Salary and Guaranteed Minimum Bonus relating to
Executive's services prior to the Termination Date). If such termination is
pursuant to subparagraph 9(a)(ii), then Executive shall be entitled to any
remaining compensation and payments hereunder (including the continued vesting
of the Global Crossing Ltd. Stock Options and the GC Stock Options) except to
the extent of any damages to GC caused by such breach as determined by a final
settlement of the parties or a final judgment or determination in any judicial
or administrative proceeding that is no longer appealable. Nothing contained in
this Paragraph shall limit the remedies available to GC at law or as otherwise
provided in the Proprietary Information Agreement.
(b) Termination Due to Death or Disability. During the Term, in the
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event that Executive's employment is terminated due to death of Executive or in
the event that GC terminates Executive's employment due to illness or disability
which has rendered him unable to perform on a full-time basis the duties of his
employment for a period of more than four months during any twelve-month period,
then all of Executive's Global Crossing Ltd. Stock Options and GC Stock Options
shall immediately become vested and exercisable. Executive shall not be entitled
to receive any further compensation or payments hereunder (except such Base
Salary and Guaranteed Minimum Bonus relating to Executive's services prior to
the Termination Date).
(c) Termination Other Than For Cause. Executive may be terminated by
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GC at any time and for any (or no) reason, upon the giving of notice by GC to
Executive of termination for other than cause, death or disability. In such
event, GC may, in the notice of termination, discharge Executive immediately or
as of such future date, not to exceed one month, as GC may determine to be
appropriate. In the event that Executive is terminated pursuant to this
subsection, all Global Crossing Ltd. Stock Options and GC Stock Options shall
become immediately vested and exercisable and Executive shall receive his Base
Salary and Guaranteed Minimum Bonus, less such deductions as may be required by
law, for the remainder of the Term.
(d) Resignation. Events which shall entitle Executive to resign for
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cause ("For Cause Event") shall include the following:
(i) Executive is not elected or retained as Chairman,
CEO and director of GC; or
(ii) there is a significant change in the nature or
scope of Executive's authority, powers, functions, duties
or responsibilities; or
(iii) there is a substantial and continued reduction in
support service, staff, secretarial assistance or office
space to a level at which Executive is unable to perform
his duties; or
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(iv) GC or Global Crossing Ltd. shall fail to grant the
stock options required under this Agreement or GC shall fail
to make any payments due under this Agreement; or
(v) A Change in Control (as defined in the Plan) shall
occur; or
(vi) Any material breach of this Agreement by GC.
Failure on the part of GC or Global Crossing Ltd. to satisfy
the requirements of Paragraph 2 hereof shall be deemed a
material breach of this Agreement by GC.
For a period of 60 days after the occurrence of a For Cause Event, Executive
shall have the right to deliver a notice of breach to GC detailing the specific
For Cause Event that has occurred. In the event that GC does not cure the breach
within 60 days after receipt of notice, then Executive shall have 10 days to
deliver notice of resignation. Upon such resignation, all Global Crossing Ltd.
Stock Options and GC Stock Options shall become immediately vested and
exercisable and Executive shall be entitled to receive his Base Salary and
Guaranteed Minimum Bonus, less such deductions as may be required by law, for
the remainder of the Term.
10. Confidentiality and Proprietary Information.
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Executive shall comply in all respects with the terms and conditions
of the Proprietary Information Agreement.
11. Miscellaneous.
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(a) Notices. Any notice or other communications provided for in this
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Agreement shall be in writing and deemed received upon receipt after delivery by
certified mail, return receipt requested, or by hand as follows: in the case of
GC, to the CEO of Global Crossing Ltd. at 000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000 or such other address at which the office of the CEO of
Global Crossing Ltd. may be located in the case of Executive, Xxxxx 000, 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
(b) Waiver. No waiver or modification in whole or in part of this
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Agreement, or any term or condition hereof, shall be effective against any party
unless in writing and duly signed by the party sought to be bound. Any waiver or
any breach of any provision hereof, or of any right or power by any party on one
or more occasions shall not be construed as a waiver of, or a bar to, the
exercise of such right or power on any other occasion or as a waiver of any
subsequent breach.
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(c) Severability. Each provision of this Agreement shall be
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interpreted so as to be effective and valid under applicable law, but if any
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
of the remaining provisions of this Agreement.
(d) Binding Effect; Successors. This Agreement shall inure to the
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benefit of and shall be binding upon GC and its successors and assigns and
Executive and his heirs. Executive may not assign, transfer, or otherwise
dispose of this Agreement, or any of his other rights hereunder, without prior
written consent of GC, and any such attempted assignment, transfer or other
disposition without such consent shall be null and void. GC shall be entitled to
assign this Agreement, without the prior written consent of Executive, in
connection with the merger or consolidation of GC with another corporation, or
the sale of all or substantially all of the assets and business of GC to another
corporation or entity. The surviving or acquiring entity, or the purchaser of
all or substantially all of the assets and business of GC, shall assume all of
the obligations of GC hereunder and this Agreement shall continue in full force
and effect.
(e) Entire Agreement. This Agreement sets forth the entire
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agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all other agreements and understandings, written or oral, between
the parties hereto with respect to the subject matter hereof.
(f) Controlling Law. This Agreement shall be governed by, and
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construed and enforced in accordance with, the laws of the State of California.
(g) Executive Not Otherwise Bound. Executive represents and
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warrants to GC that he is not bound by any agreement or understanding,
contractual, or otherwise (including but not limited to restrictions implied in
law), that would disallow or conflict in any way with Executive fulfilling his
obligations as expressed in this Agreement, or his entering into the employment
relationship contemplated in the Agreement.
(h) Post-Termination Obligation. After the termination or
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resignation of Executive, Executive shall not, either directly or indirectly,
expressly or impliedly, at any time during a period of two years following such
termination or resignation, solicit in any manner whatsoever the employment or
engagement of, either for his own account or for any other person or entity, any
person who is employed by GC or an affiliated company.
(i) Binding Arbitration. Any controversy arising out of or relating
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to this Agreement or the breach hereof shall be settled by binding arbitration
in accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association (with the exception that there will be a panel of three
arbitrators rather than a single arbitrator) and judgement upon the award
rendered may be entered in any court having
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jurisdiction thereof. The costs of any such arbitration proceedings shall be
borne equally by GC and Executive. Neither party shall be entitled to recover
attorney's fee or costs expended in the course of such arbitration or
enforcement of the awarded rendered thereunder. The location for the arbitration
shall be San Francisco, California.
(j) Excise Tax. In the event that any amounts you receive or are
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deemed to receive in connection with a Change in Control or a termination or
resignation pursuant to subparagraph 9(b)(c) or (d) hereof (whether in respect
of stock options, severance or otherwise) would give rise to any excise tax
under Section 4999 of the Internal Revenue Code, the Company shall make payment
to Executive of such amounts as are necessary for Executive to be wholly
protected from the costs of any such excise tax (and any attendant income taxes,
penalties and/or interest charges).
(k) Attorney Fees. GC shall reimburse Executive for reasonable
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attorney fees and costs, not to exceed $30,000, associated with the negotiation
and preparation of this Agreement and any related agreements.
IN WITNESS WHEREOF, GC and Executive have executed this Agreement as
of the day and year first above written.
GLOBALCENTER INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxx DATE: December 5, 1999
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Name: Xxxx Xxxxxxx
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Title: Chairman
AGREED AND ACCEPTED:
/s/ Xxx X. Xxxxxxx, Xx. DATE: December 5, 1999
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Xxx X. Xxxxxxx, Xx.
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