EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 28th day of June,
1999 by and between ICG Communications, Inc. ("Employer" or the "Company") and
William S. Beans, Jr. ("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 such
position as is designated by the Company, for the period and upon the terms and
conditions hereinafter set forth.
2. Duties. Employee shall serve as Executive Vice 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. 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 and Fifty Thousand Dollars ($250,000.00).
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 or the Compensation Committee of the Board. 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 Employee. Employee's annual
bonus is initially established at 50% of annual base salary (the "Targeted
Annual Bonus") if all objectives and goals are met. The annual bonus is payable
at the sole discretion of the Company and is contingent upon Employee being
employed by the Company as of the date of the payment of the annual bonus.
Notwithstanding the foregoing, Employee is guaranteed to receive and will
receive an annual bonus for 1999 in the amount of One Hundred and Twenty Five
Thousand Dollars ($125,000); 2/8 of this bonus will be paid to Employee when
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bonuses are paid to all employees for the second quarter of 1999, 1/8 of this
bonus will be paid to Employee when bonuses are paid to all employees for the
third quarter of 1999 and the remaining 5/8 of this bonus will be paid to
Employee when final bonuses for 1999 are paid to all employees.
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.
Throughout the Term of this Agreement, the Company will provide Employee with a
car allowance in the amount of One Thousand and Three Hundred Dollars
($1,300.00) 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 may 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. Initially, the Company will provide to Employee: (1) 14,814 stock
options under the Company's 1998 Stock Option Plan with an exercise price equal
to the closing stock price of the Company's common stock on June 28, 1999
vesting in equal increments over three years (subject to the approval of such
grant by the Stock Option Committee of the Board of Directors of the Company);
(2) 135,186 non-qualified stock options with an exercise price equal to the
closing stock price of the Company's common stock on June 28, 1999 vesting in
equal increments over three years; and (3) 260,000 Share Price Appreciation
Vesting non-qualified stock options with an exercise price equal to the closing
stock price of the Company's common stock on June 28, 1999 vesting based upon
share price appreciation, in each case pursuant to the terms of a stock option
agreement to be entered into between Employee and the Company.
3.6 The Company will pay Employee certain relocation expenses associated
with Employee's relocation from New Jersey to the Denver, Colorado metropolitan
area. This reimbursement will be pursuant to the Tier One Relocation Policy of
the Company.
3.7 Employee will be entitled to a moving allowance of $50,000 to cover
expenses incidentally incurred by Employee in moving his residence from New
Jersey to the Denver, Colorado metropolitan area. In addition, the Company will
reimburse Employee for taxes payable in respect of the reimbursement hereunder
by paying additional amounts under this Section 3.7 so that the total amount
paid under this Section 3.7 ("X") equals the $50,000 amount reimbursable to
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Employee under this Section 3.7 ("Reimbursement") divided by one (1) minus
Employee's effective federal, state and local income tax rate ("TR") by use of
the following formula: X = Reimbursement. 1 - TR
3.8 Employee will be entitled to an executive life insurance policy in an
amount equal to two (2) times the aggregate amount of Employee's annual base
salary plus the Targeted Annual Bonus plus the annual value of his benefits and
perquisites under this Agreement.
3.9 Employee will be entitled to receive up to $6,000 as a financial
planning benefit in the first year of the Term hereunder, and up to $4,500 as a
financial planning benefit in each successive year of the Term hereunder.
3.10 The Company will advance Employee on his first day of employment an
amount to be determined by Employee up to $100,000, which will be repaid by
Employee (a) in cash upon his voluntary resignation pursuant to Section 4 hereof
or (b) as a deduction to any lump-sum payment made to Employee by the Company in
connection with a termination of his employment hereunder.
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 and 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 each stock option agreement
between Employee and the Company (collectively, the "Stock Option Agreements")
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
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under the Stock Option Agreements 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
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 Stock Option Agreements or 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, provided, however, that the options granted under the Share Price
Appreciation Vesting Non-Qualified Option Agreement, dated as of June 28, 1999,
between Employee and the Company shall not vest on an accelerated basis as
provided herein upon the occurrence of a Change in Control. 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 of Employee;
(ii) prior to the occurrence of a Change in Control of the Company,
any requirement to relocate to another state or country,
provided, however, that this provision shall not be applicable if
the principal executive offices of the Company are being
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relocated to such state or country; and
(iii)any material reduction in the value of Employee's benefits plans
and programs.
5.5 The Company may terminate this Agreement immediately for gross
negligence, intentional misconduct or the commission of a felony by Employee, in
which case all rights under this Agreement shall end as of the date of such
termination.
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. If this Agreement is terminated by the Company under
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, all options to purchase shares of the Company that have been
granted to Employee pursuant to the Stock Option Agreements or 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
Employee for a period of six (6) months after the date of termination in
accordance with the plans and agreements relating to such options, provided,
however, that the options granted under the Share Price Appreciation Vesting
Non-Qualified Option Agreement, dated as of June 28, 1999, between Employee and
the Company shall not vest on an accelerated basis as provided herein upon the
occurrence of a Change in Control.
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,
management, operation or control of, a business that is engaged 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.
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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
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 or
within six (6) months thereafter, 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.
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.
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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 or threatened 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 or threatened 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. 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.
12. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado.
13. 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.
14. 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.
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15. 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 and assigns.
16. 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.
17. 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/ William S. Beans, Jr.
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William S. Beans, Jr.
ICG COMMUNICATIONS, INC.
By: /s/ John Kane
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Name: John Kane
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Title: President
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