AMENDED AND RESTATED CONSULTING AGREEMENT
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AMENDED AND RESTATED CONSULTING AGREEMENT made as of the 1st
day of September 1995, by and between SUNWEST VENTURES, INC., a British Columbia
corporation with its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("Consultant"), and GST USA, INC. ("GUSA")
and GST TELECOM INC. ("Telecom" and, together with GUSA, the "Corporations"),
each Delaware corporations with their principal offices at ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Consultant has heretofore been retained to render
consulting services to the Corporations' parent corporation, GST
Telecommunications, Inc. ("GST"), pursuant to that certain Consulting Agreement
dated as of December 30, 1994 between Consultant and GST; and
WHEREAS, Consultant, GST and the Corporations desire to amend
and restate the terms of Consultant's retention and to provide that Consultant
shall be jointly retained by the Corporations;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. Retention of Consultant. The Corporations hereby
retain Consultant to render to the Corporations, GST and their
subsidiaries (collectively, the "GST Companies") financial
consulting services, which shall include, without limitation, the
development and evaluation of financing, merger and acquisition proposals,
preparation of reports and studies thereon when advisable, and assistance in
negotiations and discussions pertaining thereto and such other consulting
services in connection with the operations of the GST Companies as shall be
mutually agreed. All services to be rendered by Consultant hereunder shall be
rendered by W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), who hereby agrees to provide
such services, and the performance of Consultant's duties hereunder may not be
delegated by Consultant (except to ▇▇▇▇▇▇▇▇▇▇) or by ▇▇▇▇▇▇▇▇▇▇ to any other
person, firm, corporation or entity, without the prior written consent of the
Corporations first had and obtained in each instance. Consultant hereby accepts
such retention and agrees that, for so long as it shall be retained by the
Corporations, it shall devote such time, attention, knowledge and skills as
shall be required, faithfully and to the best of its ability, in the performance
of its duties on behalf of the Corporations.
2. Compensation. As compensation for the services described in
Paragraph 1 hereof, the Corporations shall pay to Consultant a fee of $190,000
annually, or such greater amount as the Board of Directors of GST (the "GST
Board") may from time to time determine, in equal installments no less
frequently than monthly until the earliest to occur of the events specified in
Paragraph 3(a).
3. Term; Termination for Cause.
(a) Consultant's retention by the Corporations hereunder
shall commence on the date hereof and shall continue through February 28, 1999,
or until ▇▇▇▇▇▇▇▇▇▇ shall die or become
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Disabled (as hereinafter defined) or until this Agreement is terminated by the
Corporations for Cause (as hereinafter defined).
(b) The term Cause when utilized herein with respect to the
termination of this Agreement shall mean (i) the willful and repeated failure of
Consultant to perform any material duties hereunder or gross negligence of
Consultant in the performance of such duties, and if such failure or gross
negligence is susceptible of cure by Consultant, the failure to effect such cure
within 20 days after written notice of such failure or gross negligence is given
to Consultant; (ii) excessive use of alcohol or illegal drugs by ▇▇▇▇▇▇▇▇▇▇
interfering with the performance of Consultant's duties hereunder; (iii) theft,
embezzlement, fraud, misappropriation of funds, other acts of dishonesty or the
violation of any law or ethical rule relating to Consultant's retention; (iv)
the conviction of a felony or other crime involving moral turpitude by
Consultant or ▇▇▇▇▇▇▇▇▇▇; or (v) the breach by Consultant of any other material
provision of this Agreement, and if such breach is susceptible of cure by
Consultant, the failure to effect such cure within 30 days after written notice
of such breach is given to Consultant. For purposes of this Agreement, an action
shall be considered "willful" if it is done intentionally, purposely or
knowingly, distinguished from an act done carelessly, thoughtlessly or
inadvertently. In any such event, Consultant shall be entitled to receive its
compensation provided hereunder to and including the date of termination. Should
Consultant in good faith dispute its termination for Cause, it shall give prompt
written notice thereof to the Corporations, in which event such dispute shall be
submitted to and determined by arbitration in San
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Francisco, California before an arbitrator appointed pursuant to the rules of
the American Arbitration Association (the "Arbitrator"). Such arbitration shall
be conducted in accordance with such rules as shall be promulgated by the
Arbitrator, which may include any or all of the rules then obtaining of the
American Arbitration Association. Any award or decision of the Arbitration shall
be conclusive in the absence of fraud and judgment thereon may be entered in any
court having jurisdiction thereof. The costs of such arbitration shall be borne
by the party against whom any award or decision is rendered. Consultant shall
not be entitled to receive any compensation for periods subsequent to its
dismissal pursuant to this Paragraph 3(b).
4. Additional Benefits. In addition to the compensation
payable to Consultant hereunder, ▇▇▇▇▇▇▇▇▇▇ (and his family) shall be entitled
to participate, to the extent he is (and they are) eligible under the terms and
conditions thereof, in any profit sharing, pension, retirement, hospitalization,
insurance, disability, medical service, stock option, bonus or other employee
benefit plan available to the executive officers of the Corporations that may be
in effect from time to time during the period of Consultant's retention
hereunder. The Corporations shall be under no obligation to institute or
continue the existence of any such employee benefit plan.
5. Reimbursement of Expenses. The Corporations shall reimburse
Consultant in accordance with applicable policies of the GST Companies for all
expenses reasonably incurred by it in connection with the performance of its
duties hereunder and the
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business of the GST Companies, upon the submission to the Corporations of
appropriate receipts or vouchers.
6. Restrictive Covenant. In consideration of the retention of
Consultant hereunder, Consultant and ▇▇▇▇▇▇▇▇▇▇ agree that during the period of
Consultant's retention hereunder and, in the event of termination of this
Agreement (i) by Consultant otherwise than for Principal Breach (as such term is
defined herein) or (ii) by the Corporation for Cause, for a further period
ending on the earlier of two years after such termination or February 28, 2000,
they will not (a) directly or indirectly own, manage, operate, join, control,
participate in, invest in, or otherwise be connected with, in any manner,
whether as an officer, director, employee, partner, investor or otherwise, any
business entity that is engaged in the design, development, construction or
operation of alternate access or other telecommunications networks, in providing
long distance or other telecommunications services or in any other business in
which the GST Companies, or any of them, are engaged during such period, within
the United States of America (1) in all locations in which the GST Companies, or
any of them, are doing business, and (2) in all locations in respect of which
the GST Companies are actively planning for and/or pursuing a business
opportunity, whether or not the GST Companies, or any of them, theretofore have
submitted any bids, provided that if such planning and/or pursuit relates to a
business opportunity that is not a competitive access project (a "CAP") such
planning and/or pursuit must have involved material efforts on the part of the
GST Companies, or any of them, (b) for themselves or on behalf of any other
person, partnership, corporation or entity, call on any
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customer of the GST Companies for the purpose of soliciting, diverting or taking
away any customer from the GST Companies (1) in all locations in which the GST
Companies, or any of them, are doing business, and (2) in all locations in
respect of which the GST Companies, or any of them, are actively planning for
and/or pursuing a business opportunity, whether or not the GST Companies, or any
of them, theretofore have submitted any bids, provided that if such planning
and/or pursuit relates to a business opportunity that is not a CAP, such
planning and/or pursuit must have involved material efforts on the part of the
GST Companies, or any of them, or (c) induce, influence or seek to induce or
influence any person engaged as an employee, representative, agent, independent
contractor or otherwise by the GST Companies, or any of them, to terminate his
or her relationship with the GST Companies, or any of them. Nothing herein
contained shall be deemed to prohibit Consultant and ▇▇▇▇▇▇▇▇▇▇ from (x)
investing their funds in securities of an issuer if the securities of such
issuer are listed for trading on a national securities exchange or are traded in
the over-the-counter market and their holdings therein represent less than 2% of
the total number of shares or principal amount of the securities of such issuer
outstanding, (y) owning securities, regardless of amount, of GST.
Consultant and ▇▇▇▇▇▇▇▇▇▇ acknowledge that the provisions of
this Paragraph 6 are reasonable and necessary for the protection of the GST
Companies, and that each provision, and the period or periods of time,
geographic areas and types and scope of restrictions on the activities specified
herein are, and are intended to be, divisible. In the event that any provision
of this
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▇▇▇▇▇▇▇▇▇ 6, including any sentence, clause or part hereof, shall be deemed
contrary to law or invalid or unenforceable in any respect by a court of
competent jurisdiction, the remaining provisions shall not be affected, but
shall, subject to the discretion of such court, remain in full force and effect
and any invalid and unenforceable provisions shall be deemed, without further
action on the part of the parties hereto, modified, amended and limited to the
extent necessary to render the same valid and enforceable.
7. Confidential Information. Consultant and ▇▇▇▇▇▇▇▇▇▇ shall
hold in a fiduciary capacity for the benefit of the GST Companies all
information, knowledge and data relating to or concerned with their operations,
sales, business and affairs, and they shall not, at any time for a period of two
years after termination of Consultant's retention hereunder, use, disclose or
divulge any such information, knowledge or data to any person, firm or
corporation (unless the GST Companies no longer treat such information as
confidential) other than to the GST Companies or their designees and employees
or except as may otherwise be required in connection with the business and
affairs of the GST Companies; provided, however, that Consultant and ▇▇▇▇▇▇▇▇▇▇
may use, disclose or divulge such information, knowledge or data that (i) was
known to ▇▇▇▇▇▇▇▇▇▇ at the commencement of Consultant's retention by GST; (ii)
is or becomes generally available to the public through no wrongful act on
Consultant's or Blankstein's part; or (iii) becomes available to Consultant or
▇▇▇▇▇▇▇▇▇▇ from a person or entity other than the GST Companies or their agents
not bound by this or a similar agreement with the GST Companies; and
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provided, further, that the provisions of this Paragraph 8 shall not apply to
Blankstein's know how to the extent utilized by him in subsequent retention or
employment so long as such retention or employment is not in breach of this
Agreement.
8. Equitable Relief. The parties hereto acknowledge that
Consultant's services are unique and that, in the event of a breach or a
threatened breach by Consultant of any of its obligations under this Agreement,
the Corporations will not have an adequate remedy at law. Accordingly, in the
event of any such breach or threatened breach by Consultant, the Corporations
shall be entitled to such equitable and injunctive relief as may be available to
restrain Consultant, ▇▇▇▇▇▇▇▇▇▇ and any business, firm, partnership, individual,
corporation or entity participating in such breach or threatened breach from the
violation of the provisions hereof. Nothing herein shall be construed as
prohibiting the Corporations from pursuing any other remedies available at law
or in equity for such breach or threatened breach, including the recovery of
damages and the immediate termination of the retention of Consultant hereunder.
9. Survival of Provisions; Death of ▇▇▇▇▇▇▇▇▇▇. Neither the
termination of this Agreement, nor of Consultant's retention hereunder, shall
terminate or affect in any manner any provision of this Agreement that is
intended by its terms to survive such termination.
In the event of termination of this Agreement by reason of
Blankstein's death, the Corporations shall pay a benefit (the "Benefit Payment")
to such person or persons as Consultant shall, at its option, from time to time
designate by written
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instrument delivered to the Corporations, each subsequent designation to revoke
all prior designations, or if no such designation is made, to Consultant (the
"Payment Beneficiary"). The Benefit Payment shall be in an amount equal to one
and one-half times Consultant's then current annual compensation payable
hereunder, and shall be payable to the Payment Beneficiary in equal quarterly
installments over a period of one and one-half years, provided that if the GST
Companies, or any of them, then maintain a life insurance policy on the life of
▇▇▇▇▇▇▇▇▇▇ under which they are the beneficiary, the amount of the death benefit
payable thereunder, to a maximum amount equal to the Benefit Payment, less
installments of the Benefit Payment theretofore paid, shall be paid to the
Payment Beneficiary on the Benefit Payment installment payment date next
succeeding the date on which the GST Companies receive such death benefit
proceeds, and the remainder of the Benefit Payment, if any, shall be paid in
equal quarterly installments as provided above.
10. Disability of ▇▇▇▇▇▇▇▇▇▇. In the event that during the
term of this Agreement ▇▇▇▇▇▇▇▇▇▇ shall become Disabled, Consultant shall
continue to receive the full amount of the compensation to which it was
theretofore entitled for a period of six months after ▇▇▇▇▇▇▇▇▇▇ shall be deemed
to have become Disabled (the "First Disability Payment Period"). If the First
Disability Payment Period shall end prior to February 28, 1999, Consultant
thereafter shall be entitled to receive compensation at an annual rate equal to
one-half of its then current compensation for a further period ending on the
earlier of (i) one year thereafter, or (ii) February 28, 1999 (the "Second
Disability Payment Period").
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Upon the expiration of the Second Disability Payment Period, Consultant shall
not be entitled to receive any further payments on account of its compensation
until ▇▇▇▇▇▇▇▇▇▇ shall cease to be Disabled and Consultant shall have resumed
its duties hereunder and provided that the Corporations shall not have
theretofore terminated this Agreement as hereinafter provided. The Corporations
may terminate this Agreement and Consultant's engagement hereunder at any time
after ▇▇▇▇▇▇▇▇▇▇ is Disabled, upon at least 10 days' prior written notice. For
the purposes of this Agreement, ▇▇▇▇▇▇▇▇▇▇ shall be deemed to have become
Disabled when (x) by reason of physical or mental incapacity of ▇▇▇▇▇▇▇▇▇▇,
Consultant is not able to perform a substantial portion of its duties hereunder
for a period of 135 consecutive days or for 135 days in any consecutive 225-day
period or (y) when Blankstein's physician or a physician designated by the
Corporations shall have determined that by reason of Blankstein's physical or
mental incapacity, Consultant will not be able to perform its duties under this
Agreement. In the event that Consultant shall dispute any determination of
Blankstein's Disability pursuant to clauses (x) or (y) above, the matter shall
be resolved by the determination of three physicians qualified to practice
medicine in the United States of America or Canada, one to be selected by each
of the Corporations and Consultant and the third to be selected by the
designated physicians. If ▇▇▇▇▇▇▇▇▇▇ shall receive benefits under any disability
policy maintained by the GST Companies, the Corporations shall be entitled to
deduct the amount equal to the benefits so received from compensation that they
otherwise would have been required to pay to Consultant as provided above.
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11. Termination for Breach by Corporations. Consultant may
upon written notice to the Corporations terminate this Agreement (a termination
for "Principal Breach") in the event of the breach by the Corporations of any
material provision of this Agreement (and the occurrence of any of the events
described in subparagraph (i) of Paragraph 12 hereof shall be deemed a breach by
the Corporations of a material provision of the Agreement), and if such breach
relates to a provision of this Agreement other than Paragraph 12 and is
susceptible of cure, the failure to effect such cure within 30 days after
written notice of such breach is given to the Corporations.
12. Change of Control. (i) If prior to the termination of this
Agreement, there is a Change of Control (as such term is defined herein) and
thereafter any of the following occur: (a) ▇▇▇▇▇▇▇▇▇▇ ceases to serve as
Chairman of the Board of GST; (b) ▇▇▇▇▇▇▇▇▇▇ ceases to serve as a member of the
GST Board or the Boards of Directors of the Corporations (the "Boards"); (c)
Consultant is assigned duties which, if performed, would result in a significant
change in the functions or duties of Consultant; (d) any breach of Paragraphs 2,
4 or 5 of this Agreement; or (e) any requirement of the Corporations that the
location at which Consultant performs its principal duties for the Corporations
be outside a radius of 50 miles from the location at which Consultant performed
such duties immediately prior to the Change of Control, then this Agreement
shall be deemed to have been terminated by the Corporations otherwise than by
reason of Cause and the Corporations shall pay to Consultant within five days
after notice from Consultant to such effect, as liquidated damages, a lump sum
cash
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payment equal to 2.99 times the "base amount" of Consultant's compensation. For
purposes hereof, "base amount" shall have the meaning provided in Section 280G
(b) (2) (A) of the Internal Revenue Code of 1986, as amended, and the Proposed
Regulations thereunder.
(ii) For the purposes of this Agreement, a Change of Control
means (A) the direct or indirect, sale, lease, exchange or other transfer of all
or substantially all (50% or more) of the assets of GST or the Corporations to
any person or entity or group of persons or entities acting in concert as a
partnership or other group (a "Group of Persons") excluding the GST Companies,
(B) the merger, consolidation or other business combination of GST or the
Corporations with or into another corporation with the effect that the
shareholders of GST or the Corporations, as the case may be, immediately
following the merger, consolidation or other business combination, hold 50% or
less of the combined voting power of the then outstanding securities of the
surviving corporation of such merger, consolidation or other business
combination ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors, (C) the
replacement of a majority of the GST Board or any committee of the GST Board or
of either of the Boards in any given year as compared to the directors who
constituted the GST Board or such committee or either of the Boards at the
beginning of such year, and such replacement shall not have been approved by the
GST Board or the Boards, as the case may be, as constituted at the beginning of
such year, (D) a person or Group of Persons shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases or
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otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of securities of GST or
either of the Corporations representing 50% or more of the combined voting power
of the then outstanding securities of such corporation ordinarily (and apart
from rights accruing under special circumstances) having the right to vote in
the election of directors.
13. Independent Contractor. Consultant shall, for all
purposes, be deemed an independent contractor. The Corporations shall not be
obligated to deduct social security, withholding or any other payroll or related
taxes from any payments to be made to Consultant under this Agreement.
Consultant shall not be deemed to have been granted any right or authority to
assume or create any obligation or responsibility, express or implied, on behalf
of or in the name of the Corporations in any way, except as may be specifically
authorized in writing by the Corporations from time to time. The Corporations
shall assume no responsibility for Consultant, its agents, servants, or
employees, for any injury to any of the foregoing or to any third party, and
Consultant and ▇▇▇▇▇▇▇▇▇▇ hereby assume all such responsibility and agree to
indemnify and hold the Corporations free and harmless from any liability
therefor or on account thereof.
14. Notices. Any notice required, permitted or desired to be
given pursuant to any of the provisions of this Agreement shall be deemed to
have been sufficiently given or served for all purposes if delivered in person
or by responsible overnight delivery service or sent by certified mail, return
receipt requested, postage and fees prepaid as follows:
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If to the Corporations, at their address set forth
above, Attention: Chief Executive Officer, with a
copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Consultant, at its address set forth above.
Any of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other parties
given under this Paragraph 14. The date of the giving of any notice hand
delivered or delivered by responsible overnight carrier shall be the date of its
delivery and of any notice sent by mail shall be the date five days after the
date of the posting of the mail.
15. No Assignment; Binding Effect. Neither this Agreement, nor
the right to receive any payments hereunder, may be assigned by Consultant or
the Corporations without the prior written consent of the other parties hereto.
This Agreement shall be binding upon Consultant and the Corporations, their
respective successors and permitted assigns.
16. Waivers. No course of dealing nor any delay on the part of
the Corporations in exercising any rights hereunder shall operate as a waiver of
any such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
17. Invalidity. If any clause, paragraph, section or part of
this Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in
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any way invalidate or affect any other clause, paragraph, section or part of
this Agreement.
18. Further Assurances. Each of the parties shall execute such
documents and take such other actions as may be reasonably requested by the
other party to carry out the provisions and purposes of this Agreement in
accordance with its terms.
19. Attorneys' Fees. If any action, suit or proceeding is
filed by any party to enforce or rescind this Agreement or otherwise with
respect to the subject matter of this Agreement, the party prevailing on an
issue shall be entitled to recover with respect to such issue, in addition to
costs, reasonable attorneys' fees incurred in preparation or in prosecution or
defense of such action, suit or proceeding as fixed by the arbitrator or trial
court, and if any appeal is taken from the decision of the trial court,
reasonable attorneys' fees as fixed on appeal.
20. Entire Agreement; Modification. This Agreement contains
the full understanding of the parties hereto with respect to the subject matter
hereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein. No termination,
alteration, modification or variation or waiver of this Agreement or any of the
provisions hereof shall be effective unless in writing executed by the parties
hereto, or in the case of a waiver, by the party or parties waiving compliance.
21. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
except that body of law relating to choice of laws.
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IN WITNESS WHEREOF, this Amended and Restated Consulting
Agreement has been made and executed as of the day and year first above written.
GST USA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title:
GST TELECOM INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name:
Title:
SUNWEST VENTURES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
ACKNOWLEDGED AND AGREED:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Individually
GST TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title:
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