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EXHIBIT 10.19
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated and
effective the 1st day of November, 2000 (the "Effective Date") is made by and
between Global TeleSystems, Inc., a Delaware corporation (the "Company") and
GRIER C. RACLIN, an adult resident of Chevy Chase, Maryland (the "Executive").
RECITALS:
A. The Executive has heretofore been employed by the Company
pursuant to that certain Employment Agreement between the Executive and the
Company dated as of September 28, 1997 (the "Prior Agreement");
B. It is the desire of the Company to assure itself of the
continued services of Executive by engaging Executive as its Executive
Vice-President, General Counsel and Chief Administrative Officer; and
C. Executive desires to continue to serve the Company on the
terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below, the parties hereto agree as
follows:
1. Certain Definitions.
(a) "Annual Base Salary" shall have the meaning set forth in
Section 5(a).
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Bonus" shall have the meaning set forth in Section 5(b).
(d) The Company shall have "Cause" to terminate Executive's
employment hereunder upon Executive's
(i) failure to follow a legal order of the Board or
the Chief Executive Officer of the Company, other than any
such failure resulting from Executive's Disability, after
notice and reasonable opportunity for cure,
(ii) fraud, embezzlement, or any other similar
illegal act involving moral turpitude committed by the
Executive in connection with the Executive's duties as an
executive of the Company or any subsidiary or affiliate of the
Company,
(iii) conviction of any felony or crime involving
moral turpitude which causes or may reasonably be expected to
cause substantial economic injury to or substantial injury to
the reputation of the Company or any subsidiary or affiliate
of the Company, or
(iv) willful or grossly negligent commission of any
other act or failure to act in connection with the Executive's
duties as an executive of the Company which causes or may
reasonably be expected (as of the time of such
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occurrence) to cause substantial economic injury to or
substantial injury to the reputation of the Company or any
subsidiary or affiliate of the Company, including, without
limitation, any material violation of the Foreign Corrupt
Practices Act, as described herein below.
(e) "Change in Control" shall mean any of the following
events:
(i) a report shall be filed with the Securities and
Exchange Commission pursuant to the Exchange Act of 1934 (the
"Act), or successor law or provision, disclosing that any
"Person" (within the meaning of Section 13(d) of the Act),
other than the Company or a subsidiary of the Company, or an
employee benefit plan sponsored by the Company or a subsidiary
of the Company is, or becomes the beneficial owner (as such
term is defined in Exchange Act Rule 13d-3), directly or
indirectly of, 25% or more of the outstanding voting stock of
the Company (or securities convertible into Company Stock)
(calculated as provided in Exchange Act Rule 13d-3(d) in the
case of rights to acquire Company Stock),
(ii) any such "Person", other than the Company or a
subsidiary of the Company, or a employee benefit plan
sponsored by the Company or a Subsidiary of the Company, shall
purchase shares pursuant to a tender offer or exchange offer
to acquire any Company Stock (or securities convertible into
Company Stock) for cash, securities or any other
consideration, provided that after consummation of the offer,
the person in question is the beneficial owner (as such term
is defined in Exchange Act Rule 13d-3), directly or
indirectly, of 20% or more of the outstanding voting stock of
the Company (calculated as provided in Exchange Act Rule
13d-3(d) in the case of rights to acquire Company Stock),
(iii) the stockholders of the Company shall approve
(A) any consolidation, share exchange or merger of the Company
(a "Change of Control Transaction") (1) in which the
stockholders of the Company immediately prior to such Change
of Control Transaction do not own at least a majority of the
voting power of the entity which survives/results from such
Change of Control Transaction, or (2) in which a shareholder
of the Company immediately before such Change of Control
Transaction, but who does not own a majority of the voting
stock of the Company immediately prior to such Change of
Control Transaction, owns a majority of the Company's voting
stock after such Change of Control Transaction; or (B) any
sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all
the assets of the Company, including stock held in subsidiary
corporations or interests held in subsidiary ventures, or
(iv) there shall have been a change in a majority of
the members of the Board within a 24-month period unless the
election or nomination for election by the Company's
stockholders of each new director during such 24-month period
was approved by the vote of two-thirds of the directors then
still in office who were directors at the beginning of such
24-month period; or
(v) the Company shall file a report with the
Securities and Exchange Commission on Form 8-K (or any
successor thereto), that a change in control of or over the
Company has occurred.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
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(g) "Committee" shall mean either the Compensation Committee
or a SubCommittee of such Committee duly appointed by the Board.
(h) "Company" shall have the meaning set forth in the
preamble hereto.
(i) "Company Stock" shall mean the $.10 par value common
stock of the Company.
(j) "Date of Termination" shall mean (i) if Executive's
employment is terminated by Executive's death, the date of
Executive's death and (ii) if Executive's employment is terminated
pursuant to Section 6(a)(ii) - (vi) the date specified in the Notice
of Termination.
(k) "Disability" shall mean the absence of Executive from
Executive's duties to the Company on a full-time basis for a total of
six months during any 12-month period as a result of incapacity due
to mental or physical illness which is determined to be reasonably
likely to extend beyond the twelve-month period and which
determination is made by a physician selected by the Company and
acceptable to Executive or Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). A
Disability shall not be "incurred" hereunder until, at the earliest,
the last day of the sixth month of such absence.
(l) "Executive" shall have the meaning set forth in the
preamble hereto.
(m) "Good Reason" shall mean any of the following events
which is not cured by the Company within 15 days after written notice
thereof is given to the Company by Executive: (i) any reduction in
Executive Base Salary or Target Bonus as established from time to
time, or failure to pay Executive's Base Salary or Bonus when due to
Executive; (ii) any other material breach by the Company of any
material term of this Agreement; (iii) any material adverse change in
Executive's job titles, duties, responsibilities, status, reporting
responsibilities or perquisites granted hereunder, without
Executive's consent; or (iv) and change in the principal location of
Executive's employed more than 50 miles from its then-current
location without the Executive's consent. Except as set forth in
Section 4 hereof or as otherwise agreed in writing by the Company,
"Good Reason" shall cease to exist for an event on the 30th day
following the later of its occurrence or Executive's knowledge
thereof, unless Executive has given the Company notice thereof prior
to such date.
(n) "Notice of Termination" shall have the meaning set forth
in Section 6(b).
(o) "Options" shall have the meaning set forth in Section
5(c).
(p) "Prior Agreement" shall have the meaning set forth in
the preamble hereto.
(q) "Restricted Shares" shall have the meaning set forth in
Section 5(d).
(r) "Restructuring Actions" shall mean all of the following
events: (i) the sale of some or all of the company's interest in
Golden Telecom, Inc. (GTI) and/or
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some or all of the Company's interest in the company's Central
European subsidiaries (GTS Hungaro, Inc., GTS Hungary Holding, Inc.,
GTS Poland, Inc., GTS Czech, Inc., GTS Romania, Inc. and GTS Slovakia
s.r.o.), or their assets, for at least $150 million in total; (ii)
the refinancing of Ebone with at least $550 million from one or a
combination of (1) bank financing, (2) other external debt or equity
financing, or (3) the proceeds of asset sales, including the sale of
GTI or the Central Europe Subsidiaries to the extent those proceeds
exceed $150 million; and (iii) the sale (to some or all of the
holders of the publicly-traded bonds issued by Global TeleSystems
(Europe) Ltd., or, with such bondholder's' consent, to members of the
Company's management or to a third party) or wind-down of
substantially all of the companies and businesses currently
constituting the Company's "Business Services" Division.
(s) "Stock Option Plan" shall mean, as applicable to the
relevant Options, the Fifth Amended and Restated 1992 Stock Option
Plan of Global TeleSystems Group, Inc., the 2000 Stock Option Plan of
Global TeleSystems, Inc., or any successor plans.
(t) "Term" shall have the meaning set forth in Section 2.
2. Employment Term. The Company hereby continues to employ the
Executive, and the Executive hereby accepts continued employment, under the
terms and conditions hereof, for the period (the "Term") beginning on the
effective date hereof and ending upon the Date of Termination as set forth
herein.
3. Position and Duties. Executive shall serve as Executive
Vice-President, General Counsel and Chief Administrative Officer of the Company,
reporting to the Chief Executive Officer, with such responsibilities, duties and
authority as are customary for such role. Executive shall devote all necessary
business time and attention, and employ Executive's reasonable best efforts,
toward the fulfillment and execution of all assigned duties, and the
satisfaction of defined annual and/or longer-term performance criteria.
4. Place of Performance. In connection with Executive's
employment during the Term, Executive shall be based at the Company's offices in
or near Arlington, Virginia, except for necessary travel on the Company's
business. Executive may be reassigned to another location by mutual agreement.
5. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, Executive shall
receive a base salary at a rate not less than $350,000 per annum (the
"Annual Base Salary"), less standard deductions, paid in accordance
with the Company's general payroll practices for executives, but no
less frequently than monthly. The Annual Base Salary shall compensate
Executive for any official position or directorship that Executive is
asked to hold in the Company or its affiliates as a part of
Executive's employment responsibilities. No less frequently than
annually during the Term, the Committee, on advice of the Company's
Chief Executive Officer, shall review the rate of Annual Base Salary
payable to Executive, and may, in its discretion, increase the rate
of Annual Base Salary payable hereunder; provided, however, that any
increased rate shall thereafter be the rate of "Annual Base Salary"
hereunder.
(b) Bonus. Except as otherwise provided for herein, for each
fiscal quarterly compensation period (or other period consistent with
the Company's then-applicable normal employment practices) during
which Executive is employed
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hereunder on the last day, Executive shall be eligible to receive a
Bonus in an amount up to one-quarter (or other pro-rata portion as
appropriate) of 75% of Executive's Base Salary (the "Target Bonus")
pursuant to, and as set forth in, the terms of the GTS Senior
Executive Bonus Plan as such Plan may be amended from time to time,
plus such other bonus payments, if any, as shall be determined by the
Compensation Committee in its sole discretion
(c) Stock Options. The Company has previously granted to
Executive options to purchase 817,500 shares of Company Stock and, in
connection herewith, will grant to Executive options to purchase a
further 300,000 shares of Common Stock (all of such options,
collectively, the "Options") pursuant to the terms of a Stock Option
Plan and an associated Stock Option Agreement.
(d) Restricted Shares. The Company has granted to Executive
3,146 Restricted Shares and, in connection herewith, will grant to
Executive 150,000 further Restricted Shares (collectively, the
"Restricted Shares"), which shall be subject to restrictions on their
sale as set forth in the Company Equity Compensation Plan and an
associated Restricted Shares Grant Letter.
(e) Benefits. Executive shall be entitled to receive such
benefits and to participate in such employee group benefit plans,
including life, health and disability insurance policies, and other
perquisites plans, including the Company's 1999 Senior Executive
Perquisite Plan, as are generally provided by the Company to its
senior executives of comparable level and responsibility in
accordance with the plans, practices and programs of the Company,
provided that such benefits shall at least include, during the Term,
a one million dollar ($1,000,000) death benefit life insurance policy
on Executive life.
(f) Expenses. The Company shall reimburse Executive for all
reasonable and necessary expenses incurred by Executive in connection
with the performance of Executive's duties as an employee of the
Company including, but not limited to, the use of a mobile telephone,
pager, computer and associated equipment in Executive's home, a
laptop computer, and the payment of dues for Executive's Illinois and
D.C. Bar memberships and for Executive's membership in the American
and International Bar Associations. Such reimbursement is subject to
the submission to the Company by Executive of appropriate
documentation and/or vouchers in accordance with the customary
procedures of the Company for expense reimbursement, as such
procedures may be revised by the Company from time to time hereafter.
(g) Vacations. Executive shall be entitled to paid vacation
in accordance with the Company's vacation policy as in effect from
time to time provided that, in no event shall Executive be entitled
to less than four (4) weeks vacation per calendar year. Executive
shall also be entitled to paid holidays and personal days in
accordance with the Company's practice with respect to same as in
effect from time to time.
6. Termination.
(a) Executive's employment hereunder may be terminated by
the Company, on the one hand, or Executive, on the other hand, as
applicable, without any breach of this Agreement, under the following
circumstances:
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(i) Death. Executive's employment hereunder shall
terminate upon Executive's death.
(ii) Disability. If Executive has incurred a
Disability, the Company may give Executive written notice of
its intention to terminate Executive's employment. In such
event, Executive's employment with the Company shall terminate
effective on the 14th day after receipt of such notice by
Executive, provided that within the 14 days after such
receipt, Executive shall not have returned to full-time
performance of Executive's duties.
(iii) Cause. The Company may terminate Executive's
employment hereunder for Cause.
(iv) Good Reason. Executive may terminate Executive's
employment for Good Reason.
(v) Without Cause. The Company may terminate
Executive's employment hereunder without Cause upon 90 days
written notice to the Executive. The Executive may resign and
such resignation shall be treated as "Termination without
Cause" hereunder at the earlier of:
a. Upon 30 days' written notice to the Company,
following the completion of the
Restructuring Actions; or
b. Upon 90 days' written notice delivered to
the Company on or after October 1, 2001.
(vi) Resignation without Good Reason. Executive may
resign Executive's employment without Good Reason upon 90 days
written notice to the Company.
(b) Notice of Termination. Any termination of Executive's
employment by the Company or by Executive under this Section 6 (other
than termination pursuant to Paragraph 6(a)(i)) shall be communicated
by a written notice (the "Notice of Termination") to the other party
hereto indicating the specific termination provision in this
Agreement relied upon, setting forth in reasonable detail any facts
and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated, and
specifying a Date of Termination which, except in the case of
termination for Cause or Disability, shall be at least ninety (90)
days following the date of such notice (the "Notice Period");
provided that the Company may pay to Executive all Salary, benefits
and other rights due to Executive during such Notice Period instead
of employing Executive during such Notice Period.
(c) Upon Executive's Termination of employment with the
Company for whatever reason, he shall be deemed to have effectively
resigned from all executive, director or other positions with the
Company or its affiliates at the time of Termination, and shall
return all property owned by the Company and in Executive's
possession at that time.
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7. Severance Payments. Other than as set forth below, no
payments or benefits shall be due to Executive in connection with a termination
of this Agreement other than Salary and Benefits earned prior to the date of
termination.
(a) Termination without Cause or for Good Reason or at
Death. If Executive's employment shall be terminated by the Company
without Cause (pursuant to Section 6(a)(v)), or by the Executive for
Good Reason (pursuant to Section 6(a)(iv)) or in the event of Death,
and subject to the Company's receipt of a general release in its
customary form, the Company shall
(i) pay to the Executive (A) all Annual Base Salary
due for the period prior to the Date of Termination and the
prorated portion of the unpaid Bonus to which Executive would
otherwise be entitled for the compensation period during which
the termination occurred,, plus (B) an amount equal to two (2)
times the sum of (i) the Executive's then-current rate of
Annual Base Salary and (ii) the Executive's Target Bonus for
the entire year in which the Date of Termination occurs, as
set forth in the GTS Senior Executive Bonus Plan, which sum
shall be payable in either a lump sum cash payment as soon as
practicable following the Date of Termination, or, in the
Company's sole discretion, in installments in accordance with
the Company's normal payroll practices, provided that, upon a
Change in Control during such 24-month period, the amounts
payable to Executive under this Section 7(a)(i), to the extent
not yet paid as of such Change in Control, shall be paid to
him in a single lump sum cash payment at the time of such
Change of Control;
(ii) accelerate to 100% the vesting of the Options
referred to in Paragraph 5(c) hereof;
(iii) accelerate to 100% the removal of restrictions
on the Restricted Shares referred to in Paragraph 5(d) hereof;
(iv) continue to provide Executive with all employee
benefits and perquisites (including the Executive Perquisite
Program, which program shall be paid to Executive in a lump
sum at its remaining cash value in the event of Change of
Control) which Executive was participating in or receiving at
the time of termination of employment until the earlier of two
years from the Date of Termination or Executive's receipt of
comparable benefits from a successor employer; and
(v) pay the cost to the earlier of 24 months or the
date Executive commences employment with another company
(other than self-employment) of executive-level outplacement
services (including the use of an office and secretarial
support in or near Executive's residence) to a maximum of
$25,000 per annum;
(vi) allow Executive to retain possession and use, of
all mobile phones, pagers and home computer equipment which
have been allocated to him during his employment.
(vii) should Executive have relocated to London, then
relocation of family and household goods to the U.S. shall be
provided consistent with Company practice and shall take place
within six months from Date of Termination.
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(b) Termination by Reason of Disability. If Executive's
employment shall terminate by reason of Executive's Disability
(pursuant to Section 6(a)(ii) and subject to the Company's receipt of
a general release in its customary form, the Company shall pay to
Executive, in a lump sum cash payment as soon as practicable
following the Date of Termination, all unpaid Base Salary due for the
period prior to Termination, plus the prorated portion of the unpaid
Target Bonus to which Executive would otherwise be entitled for the
compensation period of termination and, if there is a period of time
during which Executive is not being paid Salary and not receiving
long-term disability insurance payments, the Committee may, in its
discretion, determine that the Company shall make interim payments to
Executive until commencement of disability insurance payments.
(c) Survival. The expiration or termination of the Term
shall not impair the rights or obligations of any party hereto which
shall have accrued hereunder prior to such expiration.
8. Parachute Payments.
(a) If it is determined (as hereafter provided) that by
reason of any payment or Option vesting occurring pursuant to the
terms of this Agreement (or otherwise under any other agreement, plan
or program) upon a Change in Control (collectively a "Payment") the
Executive would be subject to the excise tax imposed by Code Section
4999 or successor provision (the "Parachute Tax"), then the Executive
shall be entitled to receive an additional payment or payments (a
"Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any Parachute Tax) imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Parachute Tax imposed upon the Payment.
(b) Subject to the provisions of Section 8(a) hereof, all
determinations required to be made under this Section 8, including
whether a Parachute Tax is payable by the Executive and the amount of
such Parachute Tax and whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by the nationally
recognized firm of certified public accountants (the "Accounting
Firm") used by the Company prior to the Change in Control (or, if
such Accounting Firm declines to serve, the Accounting Firm shall be
a nationally recognized firm of certified public accountants selected
by the Executive). The Accounting Firm shall be directed by the
Company or the Executive to submit its preliminary determination and
detailed supporting calculations to both the Company and the
Executive within 15 calendar days after the determination date, if
applicable, and any other such time or times as may be requested by
the Company or the Executive. If the Accounting Firm determines that
any Parachute Tax is payable by the Executive, the Company shall pay
the required Gross-Up Payment to, or for the benefit of, the
Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines
that no Parachute Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Executive with
an opinion that he has substantial authority not to report any
Parachute Tax on his federal tax return. Any good faith determination
by the Accounting Firm as to the amount of the Gross-Up Payment shall
be binding upon the Company and the Executive absent a contrary
determination by the Internal Revenue Service or a court of competent
jurisdiction; provided, however, that no such determination shall
eliminate or reduce the Company's obligation to provide any Gross-Up
Payments that shall be due as a result
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of such contrary determination. As a result of the uncertainty in the
application of Code Section 4999 at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments
that will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to pursue
its remedies pursuant to Section 8(f) hereof and the Executive
thereafter is required to make a payment of any Parachute Tax, the
Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, the Executive
within five business days after receipt of such determination and
calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with the
preparation and issuance of the determination contemplated by Section
8(b) hereof.
(d) The federal tax returns filed by the Executive (or any
filing made by a consolidated tax group which includes the Company)
shall be prepared and filed on a basis consistent with the
determination of the Accounting Firm with respect to the Parachute
Tax payable by the Executive. The Executive shall make proper payment
of the amount of any Parachute Tax, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the
Internal Revenue Service, and such other documents reasonably
requested by the Company, evidencing such payment. If prior to the
filing of the Executive's federal income tax return, the Accounting
Firm determines in good faith that the amount of the Gross-Up Payment
should be reduced, the Executive shall within five business days pay
to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Sections 8(b) and (d) hereof shall be borne by the
Company. If such fees and expenses are initially advanced by the
Executive, the Company shall reimburse the Executive the full amount
of such fees and expenses within five business days after receipt
from the Executive of a statement therefor and reasonable evidence of
his payment thereof.
(f) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes
an "excess parachute payment" within the meaning of Code Section
280G(b)(1), or successor provision, the Executive shall notify the
Company in writing of such claim. Such notification shall be given as
soon as practicable but not later than 10 business days after the
Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30 day period following the date on which
the Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest
such claim, the Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim; (ii) take
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such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including
without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and
reasonably satisfactory to the Executive; (iii) cooperate with the
Company in good faith in order to effectively contest such claim; and
(iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay
directly all costs and expenses (including, but not limited to,
additional interest and penalties and related legal, consulting or
other similar fees) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax
basis, for and against for any Parachute Tax or income tax or other
tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of costs and expenses.
(g) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible
manner and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on
an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after tax basis, from any Parachute Tax (or other tax
including interest and penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if the Executive
is required to extend the statue of limitations to enable the Company
to contest such claim, the Executive may limit this extension solely
to such contested amount. The Company's control of the contest shall
be limited to issues with respect to which a corporate deduction
would be disallowed pursuant to Code Section 280G or successor
provision, and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. In addition, no position may
be taken nor any final resolution be agreed to by the Company without
the Executive's consent if such position or resolution could
reasonably be expected to adversely affect the Executive unrelated to
matters covered hereto.
(h) If, after the receipt by Executive of an amount advanced
by the Company in connection with the contest of the Parachute Tax
claim, the Executive receives any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto); provided, however, if the amount of that
refund exceeds the amount advanced by the Company the Executive may
retain such excess. If, after the receipt by the Executive of an
amount advanced by the Company in connection with a Parachute Tax
claim, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination such advance shall be deemed to be in consideration for
services rendered after the Date of Termination.
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9. Competition.
(a) Executive shall not, at any time during the Term, or (i)
for a period of twelve (12) months thereafter, without the prior
written consent of the Board, directly or indirectly through any
other person or entity:
(i) own, acquire in any manner any ownership interest
in (except as purely passive investments amounting to no more
than five percent of the voting equity), or serve as a
director, officer, employee, counsel or consultant of any
person, firm, partnership, corporation, consortia, association
or other entity that competes with the Company or any of its
affiliates or subsidiaries, in any European geographic market
in which the Company either (A) offers or provides broadband
telecommunications (which term hereafter shall be deemed to
include data or internet communications) services to
customers; (B) operates or manages a provider of
telecommunications services; (C) has material investments in a
provider of telecommunications services; or (D), to
Executive's knowledge, has plans to either operate a
telecommunications carrier, offer a telecommunications
service, or invest in a telecommunications carrier within the
next twelve months,
(ii) solicit, entice, persuade or induce any
individual who currently is, or at any time during the
preceding twelve months shall have been, an officer, director
or employee of the Company, or any of its affiliates, to
terminate or refrain from renewing or extending such person's
employment with the Company or such subsidiary or affiliate,
or to become employed by or enter into contractual relations
with or consultant for any other individual or entity, and
Executive shall not approach any such employee for any such
purpose or authorize or knowingly cooperate with the taking of
any such actions by any other individual or entity, or
(iii) except in accordance with Executive's duties on
behalf of the Company, solicit, entice, persuade, or induce
any individual or entity which currently is, or at any time
during the preceding twelve months shall have been, a
customer, consultant, vendor, supplier, lessor or lessee of
the Company, or any of its subsidiaries or affiliates, to
terminate or refrain from renewing or extending its
contractual or other relationship with the Company or such
subsidiary or affiliate, and Executive shall not approach any
such customer, vendor, supplier, consultant, lessor or lessee
for such purpose or authorize or knowingly cooperate with the
taking of any such actions by any other individual or entity.
(b) Executive shall not at any time:
(i) other than when required in the ordinary course
of business of the Company, disclose, directly or indirectly,
to any person, firm, corporation, partnership, association or
other entity, any trade secret, or confidential information
concerning the financial condition, suppliers, vendors,
customers, lessors, or lessees, sources or leads for, and
methods of obtaining, new business, or the methods generally
of doing and operating the respective businesses of the
Company or its affiliates and subsidiaries to the degree such
secret or information incorporates information that is
proprietary to, or was developed specifically by or for, the
Company, except such information that is a matter of public
knowledge, was provided to Executive (without breach of any
obligation of confidence owed to the Company) by a third party
which is not an affiliate of the Company, or is required to be
disclosed by law or judicial or administrative process, or
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(ii) make any oral or written statement about the
Company and/or its financial status, business, compliance with
laws, personnel, directors, officers, consultants, services,
business methods or otherwise, which is intended or reasonably
likely to disparage the Company or otherwise degrade its
reputation in the business or legal community in which it
operates or in the telecommunications industry;
provided that nothing in this Section 9(b) shall be construed
so as to prevent Executive from using, in connection with his
employment for himself or an employer other than the Company,
knowledge that was acquired by him during the course of his
employment with the Company and which is generally known to
persons of his experience in other companies in the same
industry;
(c) Executive hereby represents that (i) Executive is not
restricted in any material way from performing Executive's duties
hereunder as the result of any contract, agreement or law; and (ii)
Executive's due performance of Executive's duties hereunder does not
and will not violate the terms of any agreement to which Executive is
bound.
(d) In the event any agreement in Section 9 hereof shall be
determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too
great a geographical area or by reason of its being too extensive in
any other respect, it will be interpreted to extend only over the
maximum period of time for which it may be enforceable, and/or over
the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.
10. Injunctive Relief. It is recognized and acknowledged by
Executive that a breach of the covenants contained in Section 9 hereof will
cause irreparable damage to the Company and its goodwill, the exact amount of
which will be difficult or impossible to ascertain, and that the remedies at law
for any such breach will be inadequate. Accordingly, Executive agrees that in
the event of a breach of any of the covenants contained in Section 9 hereof, in
addition to any other remedy which may be available at law or in equity, the
Company will be entitled to specific performance and injunctive relief.
11. Mutual Non-Disparagement. Neither the Company nor
Executive shall make any oral or written statement about the other party which
is intended or reasonably likely to disparage the other party, or otherwise
degrade the other party's reputation in the business or legal community or in
the telecommunications industry.
12. Foreign Corrupt Practices Act. Executive agrees to comply
in all material respects with the applicable provisions of the U.S. Foreign
Corrupt Practices Act of 1977 ("CPA"), as amended, which provides generally
that: under no circumstances will foreign officials, representatives, political
parties or holders of public offices be offered, promised or paid any money,
remuneration, things of value, or provided any other benefit, direct or
indirect, in connection with obtaining or maintaining contracts or orders
hereunder. When any representative, employee, agent, or other individual or
organization associated with Executive is required to perform any obligation
related to or in connection with this Agreement, the substance of this section
shall be imposed upon such person and included in any agreement between
Executive and any such person. Failure by Executive to comply with the
provisions of the CPA shall constitute a material breach of this Agreement and
shall entitle the Company to terminate Executive's employment for Cause.
Additionally,
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Executive hereby acknowledges that as a condition for the Company to continue
this Agreement, Executive has executed an acknowledgment that Executive has read
"An Explanation of the Foreign Corrupt Practices Act" and "Global TeleSystems
Group, Inc. Policy on Foreign Transactions," copies of which have been provided
to Executive. Executive also acknowledges that a condition precedent to the
effectiveness of this Agreement is the execution by Executive of the "Addendum
to the Global TeleSystems Group, Inc. Policy on Foreign Transaction," a copy of
which has been provided to Executive. Additionally, and as a condition for the
Company to continue this Agreement, Executive shall be required from time to
time at the request of the Company to execute a certificate of Executive's
compliance with the aforementioned laws and regulations.
13. Purchases and Sales of the Company's Securities. Executive
has read and agrees to comply in all respects with the Company's Policy
Regarding the Purchase and Sale of the Company's Securities by Employees, as
such Policy may be amended from time to time. Specifically, and without
limitation, Executive agrees that Executive shall not purchase or sell stock in
the Company at any time (a) that Executive possesses material non-public
information about the Company or any of its businesses; and (b) during any
"Trading Blackout Period" as may be determined by the Company as set forth in
the Policy from time to time.
14. Indemnification. Executive shall be entitled to
indemnification set forth in the Company's Certificate of Incorporation to the
maximum extent allowed under the laws of the Commonwealth of Virginia and the
State of Delaware Corporations Act, and Executive shall be entitled to all
protection of and coverage under any insurance policies the Company may elect to
maintain generally for the benefit of its directors and officers against all
costs, charges and expenses incurred or sustained by Executive in connection
with any action, suit or proceeding to which Executive may be made a party by
reason of Executive's being or having been a director, officer or employee of
the Company or any of its subsidiaries or Executive's serving or having served
any other enterprise as a director, officer or employee at the request of the
Company (other than any dispute, claim or controversy arising under or relating
to this Agreement).
15. Notices. Any written notice required by this Agreement
will be deemed provided and delivered to the intended recipient when (a)
delivered in person by hand; or (b) three days after being sent via U.S.
certified mail, return receipt requested; or (c) the day after being sent via by
overnight courier, in each case when such notice is properly addressed to the
following address and with all postage and similar fees having been paid in
advance:
If to the Company: Global TeleSystems, Inc.
Attn.: Chief Executive Officer
151 Shaftesbury Avenue
London, England WC2H 8AL
If to Executive: Grier C. Raclin
Either party may change the address to which notices, requests, demands and
other communications to such party shall be delivered personally or mailed by
giving written notice to the other party in the manner described above.
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16. Binding Effect. This Agreement shall be for the benefit of
and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns.
17. Entire Agreement. This Agreement constitutes the entire
agreement between the listed parties with respect to the subject matter
described in this Agreement and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties with respect to
such subject matter including, but not limited to, the Prior Agreement. This
Agreement may not be modified, amended, altered or rescinded in any manner,
except by written instrument signed by both of the parties hereto; provided,
however, that the waiver by either party of a breach or compliance with any
provision of this Agreement shall not operate nor be construed as a waiver of
any subsequent breach or compliance.
18. Severability. In case any one or more of the provisions of
this Agreement shall be held by any court of competent jurisdiction or any
arbitrator selected in accordance with the terms hereof to be illegal, invalid
or unenforceable in any respect, such provision shall have no force and effect,
but such holding shall not affect the legality, validity or enforceability of
any other provision of this Agreement provided that the provisions held illegal,
invalid or unenforceable does not reflect or manifest a fundamental benefit
bargained for by a party hereto.
19. Dispute Resolution and Arbitration. In the event that any
dispute arises between the Company and Executive regarding or relating to this
Agreement and/or any aspect of Executive's employment relationship with the
Company, AND IN LIEU OF LITIGATION AND A TRIAL BY JURY, the parties consent to
resolve such dispute through mandatory arbitration under the Commercial Rules of
the American Arbitration Association ("AAA"), before a single arbitrator in
Arlington, Virginia. The parties hereby consent to the entry of judgment upon
award rendered by the arbitrator in any court of competent jurisdiction.
Notwithstanding the foregoing, however, should adequate grounds exist for
seeking immediate injunctive or immediate equitable relief, any party may seek
and obtain such relief; provided that, upon obtaining such relief, such
injunctive or equitable action shall be stayed pending the resolution of the
arbitration proceedings called for herein. The parties hereby consent to the
exclusive jurisdiction in the state and Federal courts of or in the Commonwealth
of Virginia for purposes of seeking such injunctive or equitable relief as set
forth above. Any and all out-of-pocket costs and expenses incurred by the
parties in connection with such arbitration (including attorneys' fees) shall be
allocated by the arbitrator in substantial conformance with his or her decision
on the merits of the arbitration; provided, however, that in no event shall
Executive be required to pay attorneys' fees in an amount that exceeds the
amount incurred by Executive for Executive's attorneys' fees.
20. Choice of Law. Executive and the Company intend and hereby
acknowledge that jurisdiction over disputes with regard to this Agreement, and
over all aspects of the relationship between the parties hereto, shall be
governed by the laws of the Commonwealth of Virginia without giving effect to
its rules governing conflicts of laws.
21. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any manner the
meaning or interpretation of this Agreement.
22. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
GLOBAL TELESYSTEMS, INC.
By:
------------------------------------------
Name: Robert J. Amman
Title: Chairman, CEO and President
EXECUTIVE
---------------------------------------------
Grier C. Raclin
Agreed and Acknowledged:
---------------------------------------------
Name: Adam Solomon
Title: Chairman, Senior Executive
Compensation Committee of Board