EXECUTION COPY
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), is made as of the first day of
October, 2001 ( the "Effective Date"), between Asia Global Crossing Ltd., a
Bermuda corporation ("AGC"), and Xxxxxxx Xxxxxx ("Executive").
For good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, AGC and Executive hereby agree as follows:
1. EMPLOYMENT.
Subject to the terms and conditions hereinafter contained, AGC
hereby employs Executive to commence work on October 1, 2001, and Executive
accepts employment by AGC.
(a) During the Term (as defined below), Executive shall hold the
title of President--Business Services of AGC, or such other more senior position
to which he may be appointed, and shall have such duties and responsibilities as
are commensurate with such positions, including, without limitation, initial
responsibilities for AGC's Enterprise Sales, Customer Service, Product
Management--Services, Sub-Sea Construction and Network Operations and
Engineering. In performing such functions, Executive shall be responsible for
day-to-day leadership in directing the Business Services Organization. Executive
shall report directly to the current Chief Executive Officer ("CEO") of AGC, for
so long as he is employed by AGC or acting in such capacity, and shall
thereafter report directly to the Board of Directors of AGC (the "Board") or to
the GC Chief Executive Officer, GC President, or to such other senior executive
non-Asia Pacific region leadership position with comparable responsibilities at
the level of President as may be created. Executive, for the term of his Asia
Pacific region assignment, shall not be required to report to anyone within such
region organization structure, with the exception of the current CEO of AGC.
During the Term, Executive's principal place of business shall be in Hong Kong.
(b) Executive shall faithfully serve AGC to the utmost of his
ability and shall use his best efforts to promote the interests of AGC and shall
devote all of his time and attention during the normal working hours of AGC
(and, for no further remuneration, during such additional hours as shall be
necessary for the proper performance thereof) to the said duties. 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, subject to Board approval, from serving on the boards of
directors of other entities, provided none of such activities, investments and
services materially interfere or conflict with Executive's responsibilities to
AGC or compete, directly or indirectly, with AGC or its affiliates.
(c) Executive shall comply with such written policies as AGC may
issue from time to time to its officers and executives.
2. TERM.
Subject to the provisions of Section 8 below, the term of this
Agreement (the "Term") shall be three (3) years, commencing on the Effective
Date and ending on the third anniversary thereof. Subject to Section 8 below,
the Term and provisions of this Agreement shall automatically extend for
additional one-year periods on and after the third anniversary of the Effective
Date, unless either party notifies the other in writing at least ninety (90)
days prior to the applicable anniversary date that the Term shall not be so
extended. Upon notice of non-extension, Executive's employment hereunder shall
terminate on the close of business on the applicable anniversary date.
3. REMUNERATION.
(a) BASE SALARY. AGC agrees to pay and Executive agrees to
accept as compensation for the services rendered by Executive during his
employment hereunder an annualized salary of $325,000 ("Base Salary"), less
withholding taxes and other amounts required by applicable laws, to be paid in
semi-monthly installments. In addition, Executive shall participate in AGC's US
salary administration program (the "Salary Program"), shall be paid from the US
payroll and shall be eligible for Base Salary increases in line with percentage
increases provided to other AGC senior executives during the Salary Program
year.
(b) ANNUAL BONUS. Executive shall be eligible to receive an
annual bonus ("Annual Bonus") equal to 50% of Base Salary ("Target") based upon
individual and AGC performance. The Annual Bonus shall be paid in the sole
discretion of the Board or its designee. All payments shall be made, less
withholding taxes and other amounts required by applicable laws. The Board (or
its designee) in its sole discretion may award an annual bonus greater than
Target. Executive shall be eligible for a pro-rata Annual Bonus for 2001,
provided he executes this Agreement prior to October 3, 2001.
(c) HIRING BONUS. On the Effective Date, AGC shall pay Executive
a hiring bonus (the "Hiring Bonus"), by wire transfer in readily available US
federal funds, equal to the sum of (i) a net after-tax amount of $500,000, and
(ii) $220,000, which latter amount will be subject to all applicable payroll tax
deductions. In the event Executive voluntarily terminates his employment with
AGC (other than by reason of a Good Reason Event) prior to the first anniversary
of the Effective Date, such amounts shall be re-payable by Executive to AGC on a
pro rata basis. The hiring bonus referred to under clause (i) above shall be
considered a tax-protected item under tax equalization calculation as an
exception to AGC's Tax Equalization Policy annexed as Attachment A and
incorporated herein by reference. AGC will bear any Hong Kong and US federal,
state and local tax that may arise from the gross up and tax protection payments
made pursuant this Subsection. AGC will bear, and will promptly pay on
Executive's behalf, all interest, penalties and additions to tax that may arise
from the Company's payments pursuant to this Subsection, or failure to make such
payments (collectively "Tax Penalties"). Such Tax Penalties shall in all events
be paid within the time prescribed after any final IRS determination that is no
longer subject to appeal, or any earlier date that is necessary to avoid
imposition of a lien on Executive's assets.
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(d) AGC STOCK OPTIONS. Subject to approval by the Compensation
Committee of the Board (the "Compensation Committee"), Executive shall be
granted an option to purchase 1,000,000 shares of AGC Class A common stock (the
"AGC Stock Options") pursuant to the terms of AGC's 2000 Stock Incentive Plan,
at an exercise price per share equal to the fair market value on the day such
approval is obtained. AGC agrees to seek such approval at the first meeting of
the Compensation Committee held after the Effective Date. The options shall vest
and become exercisable as follows: one third (1/3) on the first anniversary of
the Effective Date, one third (1/3)on the second anniversary of the Effective
Date, and the final one third (1/3) on the third anniversary of the Effective
Date. The AGC Stock Options shall be subject to additional terms and conditions,
not inconsistent with this Agreement, as may be determined by the Compensation
Committee; provided, however, that Executive's prior approval shall be required
for any terms and conditions which are less favorable to him than the terms and
conditions of the Plan and the standard form of AGC Non-Qualified Stock Option
Agreement, true and complete copies of which are annexed hereto as Attachments
"B" and "C" hereto and are incorporated herein by reference.
(e) CHANGE IN CONTROL AGREEMENT. Contemporaneously with the
execution of this Agreement, Executive and AGC shall enter into a Change in
Control Agreement, in the form annexed hereto as Attachment "D" hereto and is
incorporated herein by reference.
4. PERQUISITES AND BENEFITS.
(a) General. Executive shall be treated in the same manner as,
and shall be entitled to such benefits and other perquisites as provided to the
other senior executives of AGC.
(b) Medical, Dental, Insurance, etc. Executive shall be entitled
to participate, subject to any rules and conditions and applicable laws and
regulations, in all US medical, dental, life insurance and/or disability
insurance plan established and operated by AGC, for the benefit of senior
executives of AGC and their dependents. Any such plan may be changed from time
to time in the sole discretion of AGC, provided that Executive shall at all
times be covered by AGC's US-based plans, notwithstanding his place of
employment. To the extent allowable under the terms of any insurance coverage
and/or benefit plans, Executive's coverage and/or participation shall commence
on the date hereof. In addition, AGC will (i) reimburse Executive on a tax
equivalent basis for COBRA costs incurred prior to commencement of medical
coverage under the AGC plans, (ii) reimburse Executive on a tax equivalent basis
for an annual physical for himself and his family if not covered by the AGC
medical plan, and (iii) cover Executive at AGC's expense for workers'
compensation and disability insurance as required by law.
(c) 401(k) Plan. Subject to applicable terms and conditions and
applicable law, Executive shall be entitled to participate in any all tax
qualified and non tax-qualified retirement plan adopted by AGC.
(d) Mail Forwarding. Executive shall be provided with weekly
three day express mail forwarding service from the US to Hong Kong
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(e) Cost of Living Allowance. During the Term, Executive shall
be entitled to a monthly cost of living differential, designed to provide a
comparable standard of living while assigned in Hong Kong. The allowance of
$6,337.00 shall be paid to Executive monthly, and shall be "grossed-up" to
account for any US, country and local tax implications.
(f) Transportation Allowance. During the Term, Executive shall
be entitled to an annual allowance of not greater than HK$10,000 per month to
lease a vehicle that is consistent with local policy.
(g) Housing Allowance. Executive shall be provided with a
housing allowance, not to exceed HK$150,000 per month, including utilities. The
lease for such housing will be in the name of AGC; provided, that Executive is
required to reimburse AGC for any loss of security deposit resulting from damage
in excess of normal wear and tear to the living quarters.
(h) Home Country Housing. Executive acknowledges that he will
retain all responsibility for US housing obligations including rent, the
disposition of a rented home or apartment, maintenance, tax obligations, rental
management arrangements and fees.
(i) Club Membership. During the Term, AGC shall reimburse
Executive for dues, business expenses, initiation fees and bond, as applicable,
for LRC or America Club.
(j) Home Leave. As of the Effective Date, and upon each
anniversary of the Effective Date thereafter, Executive shall be entitled to
annual home leave which shall include air transportation for Executive and his
family in business class via the most direct route to Fort Xxxxx, Florida. AGC
shall pay for home leave transportation to other locations, provided the airfare
would not exceed the cost to Fort Xxxxx, Florida. The duration of home leave
shall be two (2) weeks, which shall count against Executive's vacation
entitlement as provided in Section 6 hereof; provided, that travel days shall
not counted against home leave. Notwithstanding anything herein to the contrary,
pay-in-lieu of home leave transportation shall not be available to Executive.
(k) Emergency Travel.
(i) At the discretion of the Board, in the event of the death of
immediate family members (father, mother, children, grandparents,
brothers, sisters), AGC will reimburse the cost of round trip business
airfare, transportation to and from the airport, and any airport taxes
for Executive and Executive's accompanying family members. Temporary
living expenses during such time shall not be reimbursed. Length of such
leave will be based on the home country plan covering such events
(exclusive of travel time).
(ii) In the event of serious illness or injury of Executive
requiring medical services not available in Hong Kong, AGC will provide
appropriate round trip transportation for Executive in order to be
provided with required
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medical expertise. Temporary living expenses during such time shall not
be reimbursed.
(l) Tax Equalization Policy. Executive's shall have the benefit
of, and his tax responsibility will be administered in accordance with, AGC's
Tax Equalization Policy, as modified by the provisions of Attachment A and
Section 3(c) hereof.
(m) Repatriation. Upon the completion of Executive's expatriate
assignment, he shall be entitled to re-shipment of Household Goods (as defined
in Section 5), reimbursement for reasonable travel expenses and temporary living
expenses in connection with Executive's repatriation.
5. RELOCATION
(a) In connection with Executive's relocation, AGC shall assume
all reasonable and customary expenses incurred for insuring and moving of
personal household goods, including moving of antiques and liquids
(collectively, "Household Goods"). Notwithstanding the foregoing, AGC shall
neither pay for packing, storing, shipping, servicing, nor assume any
responsibility for loss damage to items such as automobiles, boats, trailers,
jewelry, or pianos, which items shall not be considered Household Goods.
(b) Upon the start of Executive's relocation process, Executive
shall be provided a "settling-in allowance" equal to one-month's Base Salary
(net of applicable taxes) to cover non-reimbursable relocation expenses such as
excess luggage, replacement of household supplies, tipping of moving crews, etc.
6. VACATION.
(a) Executive shall be entitled to four weeks of paid vacation
per year, in addition to local Hong Kong holidays and travel days. Executive is
encouraged to take all vacation and may not carry over more than four weeks
unused vacation per year.
(b) Subject to subsection (a) above, upon termination of
Executive's employment for whatever reason, Executive shall be entitled to
accrued vacation pay through the date of termination.
7. EXPENSE REIMBURSEMENTS.
Executive shall be reimbursed for reasonable business expenses
incurred by Executive on behalf of AGC, including but not limited to, business
class travel for all flights and all other travel and entertainment expenses in
accordance with AGC policies.
8. TERMINATION/RESIGNATION.
Subject to the provisions below, Executive may be terminated by
AGC at any time, with or without cause. Executive may resign at any time.
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(a) Termination For Cause. Actions or omissions which will
entitle AGC to terminate Executive for cause ("Termination for Cause") shall
include the following:
(i) conviction of a felony; or conviction of a crime of moral
turpitude which causes serious economic injury or serious injury to
AGC's reputation; or
(ii) material breach of the Proprietary Information Agreement
attached hereto as Exhibit "D" and incorporated herein by reference; or
(iii) fraud or embezzlement; intentional misconduct or gross
negligence which has caused serious and demonstrable injury to AGC or
its affiliates; or
(iv) egregious performance or failure to perform Executive's
duties hereunder; provided that a failure to achieve performance
objectives shall not by itself constitute grounds for Termination for
Cause.
Upon notice by AGC to Executive that it is terminating Executive
pursuant to a Termination for Cause, the "Termination Date" shall be the date on
which such notice is mailed or hand-delivered, or as otherwise specified in the
notice of termination, to Executive. Upon Termination for Cause, Executive shall
not be entitled to receive any further compensation or payments hereunder
(except for Base Salary relating to Executive's services prior to the
Termination Date, any unpaid Annual Bonus relating to the year immediately prior
to the year in which the Termination Date occurs, and accrued vacation pursuant
to Section 6(b) hereof, less withholding taxes, and other amounts required by
applicable laws) (collectively, "Accrued Obligations"). Any unvested AGC Stock
Options shall immediately be canceled as of the Termination Date. Vested AGC
Stock Options shall be subject to the provisions of Executive's stock option
agreement and the AGC stock option plan.
(b) TERMINATION OTHER THAN FOR CAUSE. Executive may be
terminated by AGC at any time and for any (or no) reason, upon the giving of
notice by AGC to Executive of termination other than a Termination for Cause. In
such event, AGC may, in the notice of termination, discharge Executive
immediately or as of such future date, not to exceed one month, as AGC may
determine to be appropriate. In the event that Executive is terminated pursuant
to this subsection, then, within five business days of termination (i) Executive
shall receive payment of all Accrued Obligations, (ii) Executive shall receive a
lump sum payment equal to two (2) times the sum of Base Salary and Annual Bonus
(calculated at Target), (iii) the AGC Stock Options that are vested as of the
Termination Date may be exercised after termination in accordance with their
terms, and (iv) Executive shall be provided with transportation and shipment of
Household Goods to Ft. Xxxxx, Florida.
(c) DEATH OR DISABILITY. In the event Executive's employment is
terminated by AGC due to death of the Executive or due to a disability which
renders Executive unable to fulfill his duties on a full-time basis for more
than 120 days during any 12-month period (a "Disability"), then (i) Executive or
his estate shall receive all
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Accrued Obligations, and (ii) the AGC Stock Options shall become immediately
vested and may be exercised after termination in accordance with their terms.
(d) RESIGNATION FOR GOOD REASON. Except as provided above,
events which shall entitle Executive to resign for Good Reason ("Good Reason
Event") during the Term shall include the following:
(i) A material adverse change in Executive's titles or in the
reporting relationships set forth in Section 1 hereof, or in any more
senior titles to which he may be appointed during the Term; or
(ii) there is a material diminution in the nature or scope of
Executive's authority, powers, functions, duties or responsibilities as
provided under this Agreement, or from any greater authority, powers,
functions, duties or responsibilities Executive acquires during the
Term; 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
(iv) AGC shall fail to grant the AGC Stock Options as
contemplated by this Agreement or AGC shall fail to make any payments
due under this Agreement; or
(v) any successor of AGC fails to assume in writing all of AGC's
obligations hereunder on or prior to the succession date, unless such
assumption otherwise occurs by operation of law.
Following the occurrence of a Good Reason Event, Executive shall have the right
to deliver a notice of breach to AGC detailing the specific Good Reason Event
that has occurred. In the event that AGC does not cure the breach within 60 days
after receipt of notice, then Executive shall have 30 days to deliver notice of
resignation. Upon such resignation, (i) Executive shall receive the same
payments and benefits as if he had been terminated by AGC without Cause.
(e) EXPIRATION OF TERM. Upon expiration of the Term without
renewal as a result of AGC's having given notice of nonrenewal pursuant to
Section 2 hereof, Executive shall be receive the same payments and benefits as
if he had been terminated by AGC without Cause.
9. CONFIDENTIALITY AND PROPRIETARY INFORMATION.
Executive shall comply in all respects with the terms and
conditions of the Proprietary Information Agreement.
10. HOLD HARMLESS.
AGC agrees that if Executive is made a party, or is threatened
to be made a party, to any action, suit or proceeding relating to Executive's
employment
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arrangements with his prior employer, AGC will indemnify and hold Executive
harmless to the fullest extent legally permitted against all cost, expense or
liability (including, without limitation, attorney's fees, judgments, fines, or
penalties and amounts paid or to be paid in settlement) reasonably incurred by
Executive in connection therewith. AGC will advance to Executive all reasonable
costs and expenses incurred by Executive in connection with any such proceeding
within 20 days after receipt by AGC of a written request for such advance.
Executive shall notify AGC promptly, and in any event within 15 days, of any
event that may give rise to a claim under this Section 10. Failure to notify
will result in loss of Executive's protections under this Section 10 to the
extent such failure actually prejudices AGC's ability to defend against prior
employer. Executive represents that AGC has been given true, correct and
complete copies of all agreements, policies and other documents constituting
"Executive's employment arrangements with his prior employer". Provided AGC is
in compliance with its obligations under this paragraph, AGC shall have the
power to choose counsel for Executive and to instruct counsel and otherwise
control the defense of any claim which is the subject to this Section 10,
including the right to settle such claim without Executive's consent.
11. MISCELLANEOUS.
(a) NOTICES. Any notice or other communications provided for in
this 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 AGC, to the Board of Directors of AGC, Attention: Chairman, at 000
Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 or such other address at
which the office of the Chairman of AGC may be located; and in the case of
Executive, at 000X Xxxxxx Xxxxxx, 9 Old Peak Road, Hong Kong, SAR , with a copy
to Xxxxxxx Xxxxx, Esq. at Wi1lkie Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000.
(b) MODIFICATION/WAIVER. No waiver or modification in whole or
in part of this Agreement, or any term or condition hereof, shall be effective
against any party unless in writing and duly signed by the parties hereto. 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.
(c) SEVERABILITY. Each provision of this Agreement shall be
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 benefit of and shall be binding upon AGC and its successors, assigns and
legal representatives and Executive, his heirs and legal representatives.
Executive may not assign, transfer, or otherwise dispose of this Agreement, or
any of his other rights or obligations hereunder (other than his rights to
payments hereunder, which may be
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transferred only by will or by the laws of descent and distribution), without
the prior written consent of AGC, and any such attempted assignment, transfer or
other disposition without such consent shall be null and void. AGC shall be
entitled to assign this Agreement, without the prior written consent of
Executive, (i) in connection with the merger or consolidation of AGC with
another unaffiliated corporation or (ii) in connection with the sale of all or
substantially all of the assets or business operations of AGC to another person
or entity, provided that such assignee expressly assumes all of the rights and
obligations of AGC hereunder. After any such assignment" this Agreement shall
continue in full force and effect.
(e) ENTIRE AGREEMENT. This Agreement (and any other agreements
referenced herein) sets forth the entire 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
construed and enforced in accordance with, the laws of the State of New York,
without regard to conflict of laws.
(g) AUTHORITY. AGC represents that, as of the Effective Date, it
has obtained all approvals, including Board and Compensation Committee approvals
(other than as permitted by Section 3(d)), required pursuant to this Agreement
and that no other agreements prevent or interfere with AGC's ability to enter
into this Agreement.
(h) BINDING ARBITRATION. Any controversy arising out of or
relating 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 jurisdiction thereof. Specific
performance, injunctive relief and other remedies at law and equity shall be
permitted to enforce the provisions hereof regarding confidentiality,
non-solicitation, the grant of AGC Stock Options and "Change in Control." The
costs of any such arbitration proceedings shall be borne equally by AGC 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 New York City,
New York.
(i) LEGAL FEES. AGC shall reimburse Executive for all reasonable
legal fees and costs incurred in the negotiation and preparation of this
Agreement, up to a maximum of US$20,000.
(j) COUNTERPARTS. This Agreement may be executed in
counterparts. Execution by facsimile shall be binding on the parties.
(k) MITIGATION AND OFFSET. Executive shall not be required to
mitigate amounts payable under this Agreement by seeking other employment or
otherwise, and there shall be no offset against amounts due Executive under this
Agreement on account of subsequent employment.
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(l) PROVISIONS TO SURVIVE TERMINATION. Upon any termination of
Executive's employment, the provisions of Sections 3, 4 and 7 through 11 shall
survive to the extent necessary to give effect to the provisions thereof.
[Signatures to appear on following page.]
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IN WITNESS WHEREOF, AGC and Executive have executed this
Agreement as of the day and year first above written.
ASIA GLOBAL CROSSING LTD.
BY: /s/ XXXX X. XXXXXXXX DATE: October 1, 2001
--------------------------------
NAME: Xxxx X. XxXxxxxx
-----------------------------
TITLE: Vice President - Human Resources
----------------------------
AGREED AND ACCEPTED:
/s/ XXXXXXX XXXXXX DATE: October 1, 2001
----------------------------------
XXXXXXX XXXXXX
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ATTACHMENT A
TAX EQUALIZATION POLICY
For tax periods beginning with January 1, 2001 and ending with the last day of
the term of this Agreement, Executive's tax responsibility will be administered
in accordance with AGC's Tax Equalization Policy. As such, a hypothetical US
income tax will be deducted from Executive's base salary, signing bonus (subject
to Subsection 3(c) of the Agreement), annual bonus, option exercises, and any
other non-allowance payments to approximate Executive's tax liability as if he
had remained in the home country. When Executive's final US income tax return is
filed his hypothetical tax will be recalculated and adjustments, if any, will be
made. Executive's actual marginal Hong Kong and US federal, state and local tax
on employment income will be paid by AGC.
All payments to be made to Executive or on his behalf under this agreement will
be made in US dollars.
Hong Kong and US federal, state and local taxes on non-employment-related income
will be Executive's responsibility.
An accounting firm selected by the Company, will assist in the preparation and
filing of Executive's Hong Kong and US federal, state and local returns at the
Company's expense and will provide the Company with a statement of the tax
liability on Executive's total income subject to limitations.
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