EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 1st day of July,
1999 by and between ICG Communications, Inc. ("Employer" or the "Company") and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee").
R E C I T A L S
WHEREAS, the Company desires to employ Employee as provided herein; and
WHEREAS, Employee desires to be employed by Employer as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Employment. The Company agrees to employ Employee and Employee hereby
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 in the
position described in Section 2, for the period and upon the terms and
conditions hereinafter set forth.
2. Duties. The Company agrees to employ the Employee for the term of
employment under this Agreement in the position of Executive Vice President of
Products and Strategic Development, reporting to the President of the Company.
During his employment, Employee shall perform the duties and bear the
responsibilities commensurate with his position and shall serve the Employer
faithfully and to the best of his ability. These duties will include the overall
management of the Product Marketing, Product Development and Engineering, CTO,
Strategic Planning and Business Development groups of the Company. The duties
will also include setting the strategy for supporting the Company's services and
the overall Company product road map. Employee shall devote 100% of his working
time to carrying out his obligations hereunder.
3. Compensation and Benefits.
3.1 The Company shall pay Employee during the Term of this Agreement an
annual base salary, payable semi-monthly. The annual base salary will initially
be Two Hundred Forty Thousand Dollars ($240,000).
3.2 In addition to the base salary, Employee will be eligible for an annual
performance bonus in an exact amount to be determined by the Board of Directors
of the Company. The annual bonus will be determined in accordance with the bonus
plan of the Company and will be based on objectives and goals set for the
Company and the Employee. Employee's annual bonus is initially established at
45% of annual base salary if all objectives and goals are met.
3.3 In addition to salary and bonus payments as provided above, the Company
will provide Employee, during the Term of this Agreement, with the benefits of
such insurance plans, hospitalization plans and other perquisites as shall be
generally provided to employees of the Company at his level and for which
Employee may be eligible under the terms and conditions thereof. Employee will
also be entitled to all benefits provided under any directors and officers
liability insurance or errors and omissions insurance maintained by the Company.
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Throughout the Term of this Agreement, the Company will provide Employee with a
car allowance in the amount of Five Hundred Dollars ($500.00) per month.
3.4 Throughout the Term of this Agreement, the Company will reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
connection with the business of the Company and the performance of his duties
under this Agreement, upon presentation to the Company by Employee of an
itemized accounting of such expenses with reasonable supporting data.
3.5 The Company will from time to time provide to Employee stock options
pursuant to and subject to the terms and conditions of the Company's Stock
Option Plans.
4. Term. The initial term of this Agreement will be for two (2) years
commencing as of the date hereof ("Term"). After one (1) year from the date
hereof, this Agreement will thereafter automatically renew from month-to-month
such that there will always be one (1) year remaining in the Term, unless and
until either party shall give at least sixty (60) days notice to the other of
his or its desire to terminate this Agreement (in such case, the Term shall end
upon the date indicated in such notice). The applicable provisions of Sections
6, 7, and 8 shall remain in full force and effect for the time periods specified
in such Sections notwithstanding the termination of this Agreement.
5. Termination.
5.1 If Employee dies during the Term of this Agreement, this Agreement will
terminate. The Company will pay the estate of Employee an amount equal to three
months salary. In addition, the estate of Employee will be entitled to exercise
all options theretofore vested under the Company's Stock Option Plans for a
period of one (1) year after the date of death of Employee in accordance with
the plans and agreements relating to such options.
5.2 If, during the Term of this Agreement, Employee is prevented from
performing his duties by reason of illness or incapacity for one hundred forty
(140) days in any one hundred eighty (180) day period, the Company may terminate
this Agreement, upon thirty (30) days notice to Employee or his duly appointed
legal representative. Employee will be entitled to all benefits provided under
any disability plans of the Company. In addition, Employee or his duly appointed
legal representative will be entitled to exercise all options theretofore vested
under the Company's Stock Option Plans for a period of one (1) year after the
date of termination in accordance with the plans and agreements relating to such
options.
5.3 For the purposes of this Agreement, a "Change in Control" of the
Company shall mean and be deemed to have occurred if (a) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
as amended (Exchange Act)) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities; (b) at any time a majority of the directors of the
Company are persons who were not nominated for election by the Board; (c) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; (d) the
Company shall sell or otherwise dispose of, in one transaction or a series of
related transactions, assets aggregating more than 50% of the assets of the
Company and its subsidiaries consolidated; or (e) the stockholders of the
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Company approve a plan of complete liquidation of the Company or any agreement
for the sale or disposition by the Company of all or substantially all the
Company's assets. Upon the occurrence of a Change in Control, the Company shall
pay Employee an amount equal to one (1) times the aggregate amount of his annual
base salary plus his targeted annual bonus plus the annual value of his benefits
and perquisites. At the time of the occurrence of a Change in Control all
options to purchase shares of the Company that have been granted to Employee
pursuant to the Company's Stock Option Plans, but not yet vested, will
immediately vest and Employee shall be entitled to exercise such options in
accordance with the plans and agreements relating to such options. In addition,
the Company or Employee may terminate this Agreement upon at least thirty (30)
days notice at any time within one (1) year after the occurrence of a Change in
Control of the Company.
5.4 Employee may terminate this Agreement upon at least thirty (30) days
notice upon the occurrence of a constructive dismissal of Employee. For the
purposes of this Agreement, "constructive dismissal" shall mean, unless
consented to by Employee in writing, any of the following actions by the
Company:
(i) any reduction in the annual salary or bonus level of Employee;
(ii) any requirement to relocate, except for office locations that would
not increase the Employee's one-way commute distance by more than
twenty (20) miles;
(iii)any material reduction in the value of Employee's benefits plans and
programs; and
(iv) any reduction or material change in title, positions, duties,
responsibilities, powers and reporting structure.
5.5 The Company may terminate this Agreement immediately for willful and
intentional gross negligence, misconduct or the conviction of a felony by the
Employee, in which case all rights under this Agreement shall end as of the date
of such termination. No act, shall be considered "willful" unless committed
without good faith and a reasonable belief that the act or omission was in the
Company's best interest.
5.6 If this Agreement is terminated by the Company under Section 4, the
Company shall pay Employee a termination fee in an amount equal to the aggregate
amount of his annual base salary that would have been paid during the remaining
Term of the Agreement plus his targeted annual bonus plus the annual value of
his benefits and perquisites. If this Agreement is terminated by the Company
under Section 5.3, or, for the avoidance of doubt, under Section 4 within twelve
(12) months of a "change of control" as defined in Section 5.3, the Company
shall pay Employee a termination fee in an amount equal to two (2) times the
aggregate amount of his annual base salary plus his targeted annual bonus plus
the annual value of his benefits and perquisites. Such termination fee will be
paid in a lump sum within fifteen (15) days from the date of termination. If
this Agreement is terminated by Employee under Section 5.4, the Company will pay
Employee a termination fee equal to two (2) times the aggregate amount of his
annual base salary plus his targeted annual bonus plus the annual value of his
benefits and perquisites. Such termination fee will be paid in a lump sum within
fifteen (15) days from the date of termination. In addition, if Employee
terminates this Agreement under Section 5.3 or Section 5.4 or Company terminates
this Agreement under Section 4 or Section 5.3 all options to purchase shares of
the Company that have been granted to Employee pursuant to the Company's Stock
Option Plans, but not yet vested, will immediately vest on the date of
termination and Employee will be entitled to exercise all options held by the
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Employee for a period of twelve (12) months after the date of termination in
accordance with the plans and agreements relating to such options.
5.7. If Employee remains an employee of the Company until February 17,
2000, then Employee will have the right to voluntarily terminate his employment
with the Company anytime thereafter and receive six months salary and fifty
percent (50%) of his annual bonus and six (6) months health insurance benefits.
5.8. The parties acknowledge that all stock options granted to Employee
under the Netcom On-Line Communication Services, Inc. 1993 Stock Option Plan
(Amended and Restated as of January 23, 1997) have been vested. If Employee's
employment terminates for any reason, including Employee's resignation, Employee
will be entitled to exercise all such options for a period of one (1) year after
the date of termination in accordance with the plans and agreements relating to
such options.
6. Non-Compete and Non-Interference.
6.1 During the Term of this Agreement and, if Employee's employment with
the Company is terminated under Section 4 or Section 5.3, for a period of twelve
(12) months after such termination, Employee shall not, directly or indirectly,
own, manage, operate, control, be employed by, or participate in the ownership
(more than 5%), management, operation or control of, a business that is engaged
materially in the same business as the Company within any area constituting,
during the term of Employee's employment or at the time Employee's employment is
terminated, a Relevant Area. A "Relevant Area" shall be defined for the purposes
of this Agreement as any area located within, or within fifty (50) miles of, the
legal boundaries or limits of any city within which the Company is engaged in
business or in which the Company has publicly announced or privately disclosed
to Employee that it plans to engage in business.
6.2. During the Term of this Agreement and for a period of two (2) years
after termination of this Agreement, Employee shall not (i) directly or
indirectly cause or attempt to cause any employee of the Company or any of its
affiliates to leave the employ of the Company or any affiliate, (ii) in any way
interfere with the relationship between the Company and any employee or between
an affiliate and any employee of the affiliate, or (iii) interfere or attempt to
interfere with any transaction in which the Company or any of its affiliates was
involved during the Term of this Agreement.
6.3 Employee agrees that, because of the nature and sensitivity of the
information to which he will be privy and because of the nature and scope of the
Company's business, the restrictions contained in this Section 6 are fair and
reasonable.
7. Confidential Information.
7.1 The relationship between the Company and Employee is one of confidence
and trust. This relationship and the rights granted and duties imposed by this
Section shall continue until a date ten (10) years from the date Employee's
employment is terminated.
7.2 As used in this Agreement (i) "Confidential Information" means
information disclosed to or acquired by Employee about the Company's plans,
products, processes and services, including information relating to research,
development, inventions, manufacturing, purchasing, accounting, engineering,
marketing, merchandising, selling, pricing, tariffed or contractual terms,
customer lists and prospect lists and other market information, with respect to
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any of the Company's business activities; and (ii) "Inventions" means any
inventions, discoveries, concepts and ideas, whether patentable or not,
including, without limitation, processes, methods, formulas, and techniques (as
well as related improvements and knowledge) that are based on or related to
Confidential Information, that pertain in any manner to the Company's
technology, expertise or business and that are made or conceived by Employee,
either solely or jointly with others, and while employed by the Company, whether
or not made or conceived during working hours or with the use of the Company's
facilities, materials or personnel.
7.3 Employee agrees that he shall at no time during the Term of this
Agreement or at any time thereafter disclose any Confidential Information to any
person, firm or corporation to any extent or for any reason or purpose or use
any Confidential Information for any purpose other than the conduct of the
Company's business, unless such Confidential Information has been publicly
disclosed by the Company or a third party.
7.4 Any Confidential Information that is directly or indirectly originated,
developed or perfected to any degree by Employee during the term of his
employment by the Company shall be and remain the sole property of the Company
and shall be deemed trade secrets of the Company.
7.5 Upon termination of Employee's employment pursuant to any of the
provisions herein, Employee or his legal representative shall deliver to the
Company all originals and all duplicates and/or copies of all documents,
records, notebooks, and similar repositories of or containing Confidential
Information then in his possession, whether prepared by him or not.
7.6 Employee agrees that the covenants and agreements contained in this
Section 7 are fair and reasonable and that no waiver or modification of this
Section or any covenant or condition set forth herein shall be valid unless set
forth in writing and duly executed by the parties hereto.
8. Injunctive Relief. Upon a material breach by Employee of any of the
provisions of Sections 6 or 7 of this Agreement, the Company shall be entitled
to an injunction restraining Employee from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach, including recovery of damages from Employee.
9. No Waiver. A waiver by the Company of a breach of any provision of this
Agreement by Employee shall not operate or be construed as a waiver of any
subsequent or other breach by Employee.
10. 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
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
11. Gross-Up Payment. In the event it is determined that any payment or
distribution of any type to or for the benefit of the Employee, pursuant to this
Agreement or otherwise, by the Company, any person who acquires ownership or
effective control of the Company, or ownership of a substantial portion of the
assets of the Company (within the meaning of section 260G of the Internal
Revenue Code ("Code") and the regulations thereunder) or any affiliate of such
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person (the "Total Payments') would be subject to the excise tax imposed by
Section 4999 of the Code or any such interest and penalties, with respect to
such excise tax (such excise tax, together with any interest and penalties are
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that, after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payment.
12. Determination by Accountant. All mathematical determinations and
determinations as to whether any of the Total Payments are "parachute payments"
(within the meaning of Section 280G of the Code), in each case which
determinations are required to be made under this Section 12, including whether
a Gross-Up Payment is required, the amount of such Gross-Up Payment, and amounts
relevant to the last sentence of this Section 12, shall be made by an
independent accounting firm selected by the Employee from among the largest six
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide to the Company and to the Employee its determination (the
"Determination"), together with detailed supporting calculations regarding the
amount of any Gross-Up Payment and any other relevant matter, within ten (10)
days after termination of the Employee's employment, if applicable, or at such
earlier time following termination of employment as is requested by the Employee
(if the Employee reasonably believes that any of the Total Payments may be
subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax
is payable by the Employee, it shall furnish the Employee with a written
statement that such Accounting Firm has concluded that no Excise Tax is payable
(including the reasons therefor) and that the Employee has substantial authority
not to report any Excise Tax on the Employee's federal income tax return. If a
Gross-Up Payment is determined to be payable, it shall be paid to the Employee
within ten (10) days after the Determination is delivered to the Company or the
Employee. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee, absent manifest error.
As a result of uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments not made by the Company and members of the
Company should have been made ("Underpayment"), or that Gross-Up Payments will
have been made by the Company and members of the Company that should not have
been made ("Overpayments"). In either such event, the Accounting Firm shall
determine the amount of the underpayment or Overpayment that has occurred. In
the case of an Underpayment, the Company promptly shall pay, or cause to be
paid, the amount of such Underpayment to or for the benefit of the Employee. In
the case of an Overpayment, the Employee shall, at the direction and expense of
the Company, take such steps as are reasonably necessary (including the filing
of returns and claims for refund), follow reasonable instructions from, and
procedures established by the Company, and otherwise reasonably cooperate with
the Company to correct such Overpayment; provided, however, that (1) Employee
shall not in any event be obligated to return to the Company an amount greater
than the net after-tax portion of the Overpayment that he has retained or
recovered as a refund from the applicable taxing authorities and (2) this
provision shall be interpreted in a manner consistent with the intent of Section
11, which is to make the Employee whole, on an after-tax basis, from the
application of the Excise Tax, it being understood that the correction of an
Overpayment may result in the Employee repaying to the Company an amount that is
less than the Overpayment.
13. Notices. All communications, requests, consents and other notices
provided for in this Agreement shall be in writing and shall be deemed given if
delivered by hand or mailed by first class mail, postage prepaid, to the last
known address of the recipient.
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14. Governing Law; Arbitration. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Colorado. Any
dispute or controversy arising out of the Employee's employment or the
termination thereof, including, but not limited to, any claim of discrimination
under state or federal law, shall be settled exclusively by arbitration in San
Jose, California, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
15. Assignment. Neither this Agreement nor any rights or duties hereunder
may be assigned by Employee or the Company without the prior written consent of
the other, such consent not to be unreasonably withheld.
16. Amendments. No provision of this Agreement shall be altered, amended,
revoked or waived except by an instrument in writing, signed by each party to
this Agreement.
17. 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 (including pursuant to
mergers) and assigns.
18. 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 constitute one and the same instrument.
19. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ICG COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
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Title: President
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