EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made this 10th day of February,
1997, by and between GST USA, INC. ("GUSA") and GST TELECOM, INC. ("Telecom" and
together with GUSA, the "Corporations"), each Delaware corporations with their
principal offices at ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇ ▇▇▇▇▇▇▇▇, residing at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Executive").
W I T N E S S E T H :
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WHEREAS, the Corporations desire to employ Executive, and
Executive desires to undertake such employment, upon the terms and subject to
the conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1.
EMPLOYMENT OF EXECUTIVE. Effective upon the date that
is the earlier of April 10, 1997 or the day after the date on which Executive is
no longer a partner of Ernst & Young ("E&Y") (the "Effective Date"), the
Corporations employ Executive as their Chief Financial Officer to perform the
duties and responsibilities incident to such position, subject at all times to
the control and direction of the Board of Directors of the Corporations (the
"Boards") and the Chief Executive Officer of the Corporations (the "CEO").
Anything in the foregoing to the contrary notwithstanding, if the Effective Date
shall not have occurred on or before April 10, 1997, this Agreement shall be
null and void and of no force and effect AB INITIO.
2. ACCEPTANCE OF EMPLOYMENT; TIME AND ATTENTION.
Executive accepts such employment effective upon the Effective Date and
throughout the period of his employment hereunder shall devote his full time,
attention, knowledge and skills, faithfully, diligently and to the best of his
ability, in furtherance of the business of the Corporations, their parent
corporation, GST Telecommunications, Inc. ("GST"), and GST's subsidiaries
(collectively, the "GST Companies"), and will perform the duties and
responsibilities assigned to him pursuant to Paragraph 1 hereof, subject, at all
times, to the direction and control of the Boards and the CEO. As a senior
executive officer, Executive shall perform such specific duties and shall
exercise such specific authority related to the management of the day-to-day
operations of the Corporations consistent with his position as a senior
executive officer of the Corporations as may be assigned to Executive from time
to time by the Boards and the CEO. Executive shall at all times be subject to,
observe and carry out such rules, regulations, policies, directions and
restrictions as the GST Companies shall from time to time establish. During the
period of his employment hereunder, Executive shall not, directly or indirectly,
accept employment or compensation from, or perform services of any nature for,
any business enterprise other than the GST Companies; provided that nothing
herein shall be construed to prohibit Executive from rendering services as a
partner of E&Y between the date hereof and the Effective Date or from receiving
compensation from E&Y. Executive shall be elected to such offices of the GST
Companies as may from time to time be determined by the Board of Directors of
GST (the "GST Board"). The GST Board has advised the Corporations
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that its present intention to elect Executive a Senior Vice President of GST on
the Effective Date. During the period of Executive's employment hereunder, he
shall not be entitled to additional compensation for serving in any offices of
the GST Companies to which he is elected or appointed. While it is anticipated
that Executive's duties will primarily be performed in Vancouver, Washington
subsequent to the Transition Period (as such term is hereinafter defined),
Executive will be required to travel on a regular basis to perform such duties,
including without limitation, to other offices of the GST Companies.
3. TERM. Except as otherwise provided herein, the term
of Executive's employment hereunder shall commence on the Effective Date and
shall continue to and include the day preceding the third anniversary date
thereof.
4. COMPENSATION. As compensation for his services
hereunder, the Corporations shall pay to Executive (i) a base salary at the rate
of $240,000 per annum, or such greater amount as may be determined from time to
time by the GST Board based upon annual reviews of Executive's performance
hereunder, payable in equal installments no less frequently than semi-monthly.
All compensation paid to Executive shall be subject to withholding and other
employment taxes imposed by applicable law.
5. STOCK OPTIONS. The Corporations shall cause GST to
grant to Executive pursuant to the 1996 Stock Option Plan of GST (i) on the
Effective Date, a five-year option (the "Initial Option") to purchase 100,000
Common Shares, without par value (the "Common Shares"), of GST at an exercise
price equal to Fair Market Value (as such term is hereinafter defined) of a
Common Share on
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the date of such grant, which shall be exercisable as to 33,334 Common Shares
from and after the first anniversary of the date of grant, as to an additional
33,333 Common Shares from and after the second anniversary of the date of grant,
and as to the remaining 33,333 Common Shares from and after the third
anniversary of the date of grant; (ii) annually, commencing one year after the
date hereof, three-year options (the "Performance Options") with respect to
Common Shares in such amounts as shall be determined by the GST Board or the
Compensation Committee thereof based upon the performance by Executive of his
duties hereunder, such Performance Options to be exercisable from and after
their date of grant. The criteria to be utilized in evaluating such performance
shall include without limitation (w) value creation, consisting of capital
funding, lender/investor relations and participation in transactions; (x)
budgetary matters; (y) personnel-hiring and retention; and (z) compliance
matters. The exercise price of each Performance Option shall be equal to that of
the Initial Option. The number of Common Shares purchasable under each
Performance Option shall not exceed the quotient obtained by dividing an amount
equal to one-half of Executive's then current base salary by the exercise price
of the Initial Option. To the extent permissible under applicable provisions of
the Internal Revenue Code of 1986, as amended ("Code"), the Initial Option and
the Performance Options shall be granted so as to qualify as incentive stock
options (within the meaning of the Code).
6. CHANGE OF CONTROL. In the event of a Change of
Control (as such term is hereinafter defined), the following provisions shall be
applicable:
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(i) The Initial Option thereupon shall
become exercisable in full (without regard to the terms under which it was
originally granted).
(ii) Subject to the provisions of
subparagraphs (iii) and (iv) below, if at the time of effectiveness of a Change
of Control, Executive shall have been granted Performance Options with respect
to less than 35,000 Common Shares, then upon such effectiveness, without further
action on the part of GST, Executive shall be deemed to have been granted an
additional performance option (the "Additional Performance Option") with respect
to that number of Common Shares that is the difference between 35,000 and the
number of Common Shares then subject to Performance Options, such Additional
Performance Option to be exercisable from and after its date of grant.
(iii) If, at the close of business on the
trading day preceding the day upon which a Change of Control becomes effective,
the Fair Market Value of a Common Share is $10.00 or less, then the Corporations
shall pay to Executive, within 30 days after such effectiveness, a lump sum in
an amount equal to Executive's then current annual base salary in lieu and in
full satisfaction of the obligation to grant the Additional Performance Option.
(iv) If, at the close of business on the
trading day preceding the day upon which the Change of Control becomes
effective, the Fair Market Value of a Common Share is more than $10.01 but not
more than $12.00, then the Corporations shall pay to Executive, within 30 days
after such effectiveness, a lump sum in an amount equal to one-half of
Executive's then current
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annual base salary in lieu and in full satisfaction of the obligation to grant
the Additional Performance Option.
(v) For the purposes of this Agreement,
(a) a Change of Control means (1) the direct or indirect sale, lease, exchange
or other transfer of all or substantially all (50% or more) of the assets of GST
or either of 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, (2) 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 of such surviving entity, (3) the replacement of a majority of the
GST Board or of 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, or (4) a person or
Group of Persons shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of
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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;
and (b) Fair Market Value means the closing price of the Common Shares on the
U.S. national securities exchange on which the Common Shares are listed (if the
shares are so listed) or on the NASDAQ National Market or Small Cap Market (if
the Shares are regularly quoted on the NASDAQ National Market or Small Cap
Market), or, if not so listed or regularly quoted or if there is no such closing
price, the mean between the closing bid and asked prices of the Common Shares in
the over-the-counter market or on such exchange or on NASDAQ, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company. On the date hereof, the
Common Shares are listed and traded on the American Stock Exchange and the
Vancouver Stock Exchange.
7. ADDITIONAL BENEFITS. In addition to such base salary
and any incentive compensation and bonuses awarded Executive he (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
Executive's employment hereunder.
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The Corporations shall be under no obligation to institute or continue the
existence of any such employee benefit plan.
8. PRIMARY RESIDENCE COSTS. Executive is the owner of
his primary residence located at the address set forth in the introductory
paragraph of this Agreement (the "Primary Residence"). Executive shall use his
best efforts to sell the Primary Residence as promptly as practicable after the
date hereof. During the one- year period following the Effective Date and until
the Primary Residence is sold, the Corporations shall make available to
Executive an interest-free loan in an amount not to exceed $72,000 (the "Initial
Loan"), the proceeds of which shall be utilized by Executive to pay costs
incurred in the ownership and maintenance of the Primary Residence. The Initial
Loan shall be disbursed if and to the extent requested in writing by Executive
in four equal installments on the 5th day of April, July and October 1997 and
January 1998. If the Primary Residence shall not have been sold during the
one-year period following the Effective Date, during the next succeeding
one-year period and until the Primary Residence is sold, the Corporations shall
make available to Executive a second interest-free loan in an amount not to
exceed $72,000 (the "Second Loan"), the proceeds of which are to be disbursed
and utilized in the same manner as the Initial Loan. The Initial Loan shall be
due and payable on the fifth anniversary of the Effective Date, provided that it
shall be prepaid to the extent of the proceeds of sale of any Common Shares
acquired upon exercise of the Initial Option and the Performance Options. The
Second Loan shall be due and payable on the second anniversary of the Effective
Date, provided that it shall be prepaid to the extent of the proceeds of
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sale of the Primary Residence. The Initial Loan shall be evidenced by a
promissory note substantially in the form of Exhibit A hereto made by Executive
to the Corporations. The Second Loan shall be evidenced by a similar promissory
note with appropriate modifications based upon the terms and conditions of this
Paragraph 8.
9. RELOCATION EXPENSES. The Corporations shall reimburse
Executive promptly upon demand therefor for the following expenses relating to
Executive's relocation to the Vancouver, Washington area: (i) selling costs
relating to the sale of the Primary Residence, e.g., real estate commissions,
recording fees, grantor taxes payable by Executive, but not any loss on sale or
costs of preparation for sale, (ii) moving and storage costs, e.g., normal
shipping services, including up to 30 days of temporary storage, packing,
delivery, unpacking and furniture set-up, but not shipment of vehicles or boats,
crating of antiques, paintings or collections, storage in excess of 30 days; and
(iii) normal purchase costs of a home in the Vancouver, Washington area. If and
to the extent that reimbursement of any of the foregoing expenses would
constitute income to Executive under applicable tax laws, such reimbursements
shall be "grossed-up" to include additional payments sufficient to reimburse
Executive for all taxes payable in respect of such reimbursement and such
additional payments.
10. REIMBURSEMENT OF EXPENSES. The Corporations shall
reimburse Executive in accordance with applicable policies of the GST Companies
for all expenses reasonably incurred by him in connection with the performance
of his duties hereunder and the business of the GST Companies, upon the
submission to the
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Corporations of appropriate receipts or vouchers and approval thereof by the
Chief Accounting Officer of the Corporations, which approval shall not be
unreasonably withheld or delayed.
11. VACATION. Executive shall be entitled to four weeks'
paid vacation in respect of each 12-month period during the term of his
employment hereunder, such vacation to be taken at times mutually agreeable to
Executive and the CEO. Vacation time shall not be cumulative from one 12-month
period to the next, but Executive shall receive vacation pay at his then current
salary rate for any vacation time not taken by him.
12. D & O INSURANCE COVERAGE. The Corporations shall use
their best efforts to cause GST to obtain and maintain, at GST's cost and
expense, directors' and officers' liability insurance coverage for the directors
and officers of GST, including Executive. Nothing herein shall be deemed to
require GST to provide such coverage for Executive if it is not then providing
such coverage generally to its directors and officers. Executive shall not be
required to serve in any office of the GST Companies if such coverage is not
applicable to his service in such office.
13. RESTRICTIVE COVENANT. In consideration of his
employment hereunder, Executive agrees that during the period of his employment
hereunder and, in the event of termination of this Agreement (i) by Executive
otherwise than for Employer Breach (as such term is defined herein) or (ii) by
the Corporations for Cause (as such term is defined herein), for a further
period ending one year after such termination, he 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,
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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 at the time of such
termination 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 local
exchange carrier (a "CLEC") such planning and/or pursuit must have involved
material efforts on the part of the GST Companies, or any of them, (b) for
himself or on behalf of any other person, partnership, corporation or entity,
call on any 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 at the time of such termination 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 CLEC, 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
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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 Executive from (x) investing his 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
Executive's holdings therein represent less than 2% of the total number of
shares or principal amount of the securities of such issuer outstanding, or (y)
owning securities, regardless of amount, of GST.
Executive acknowledges that the provisions of this Paragraph
13 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 Paragraph 13,
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.
14. CONFIDENTIAL INFORMATION. Executive shall hold in a
fiduciary capacity for the benefit of the GST Companies all information,
knowledge and data relating to or concerned with their
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operations, sales, business and affairs, and he shall not, at any time 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 Executive may use,
disclose or divulge such information, knowledge or data (i) that is or becomes
generally available to the public through no wrongful act on Executive's part;
(ii) that was known to Executive prior to the date hereof, or (iii) that
Executive can demonstrate, to the reasonable satisfaction of the GST Companies,
was independently developed by him.
15. EQUITABLE RELIEF. The parties hereto acknowledge that
Executive's services are unique and that, in the event of a breach or a
threatened breach by Executive of any of his 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 Executive, the Corporations
shall be entitled to such equitable and injunctive relief as may be available to
restrain Executive 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 employment of Executive hereunder.
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16. TRANSITION PERIOD. During the 90-day period
commencing on the Effective Date (the "Transition Period"), (i) the duties of
Executive hereunder shall be performed primarily from the Primary Residence; and
(ii) Executive shall travel as reasonably required in the performance of such
duties.
17. DEATH. In the event of termination of Executive's
employment hereunder by reason of his death, the Corporations shall pay a
benefit (the "Benefit Payment") to such person or persons as Executive shall, at
his option, from time to time designate by written instrument delivered to the
Corporations, each subsequent designation to revoke all prior designations, or
if no such designation is made, to Executive's estate (the "Payment
Beneficiary"). The Benefit Payment shall be in an amount equal to one and
one-half times Executive's then current annual base salary, 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 Executive 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.
18. DISABILITY. In the event that during the term of his
employment by the Corporations Executive shall become Disabled (as such term is
hereinafter defined) he shall continue to receive
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the full amount of the base salary to which he was theretofore entitled for a
period of six months after he shall be deemed to have become Disabled (the
"First Disability Payment Period"). If the First Disability Payment Period shall
end prior to the third anniversary of the Effective Date, Executive thereafter
shall be entitled to receive salary at an annual rate equal to one-half of his
then current annual base salary for a further period ending on the earlier of
(i) one year thereafter, or (ii) the day preceding the third anniversary of the
Effective Date (the "Second Disability Payment Period"). Upon the expiration of
the Second Disability Payment Period, Executive shall not be entitled to receive
any further payments on account of his base salary until he shall cease to be
Disabled and shall have resumed his duties hereunder and provided that the
Corporations shall not have theretofore terminated this Agreement as hereinafter
provided. The Corporations may terminate this Agreement and Executive's
employment hereunder at any time after Executive is Disabled, upon at least 10
days' prior written notice. For the purposes of this Agreement, Executive shall
be deemed to have become Disabled when (x) by reason of physical or mental
incapacity, Executive is not able to perform a substantial portion of his duties
hereunder for a period of 135 consecutive days or for 135 days in any
consecutive 225-day period or (y) when Executive's physician or a physician
designated by the Corporations shall have determined that Executive shall not be
able, by reason of physical or mental incapacity, to perform a substantial
portion of his duties hereunder. In the event that Executive shall dispute any
determination of his Disability pursuant to clauses (x) or (y) above, the matter
shall
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be resolved by the determination of three physicians qualified to practice
medicine in the United States of America, one to be selected by each of the
Corporations and Executive and the third to be selected by the designated
physicians. If Executive 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 base salary that they
otherwise would have been required to pay to Executive as provided above.
The foregoing provisions regarding disability shall be
adjusted during the term hereof to match the most favorable disability benefits
provided to any other senior executive of the Corporations.
19. TERMINATION FOR CAUSE. The Corporations may at any
time upon written notice to Executive terminate Executive's employment for
Cause. For purposes of this Agreement, the following shall constitute Cause: (i)
the willful and repeated failure of Executive to perform any material duties
hereunder or gross negligence of Executive in the performance of such duties,
and if such failure or gross negligence is susceptible of cure by Executive, the
failure to effect such cure within 10 days after written notice of such failure
or gross negligence is given to Executive; (ii) excessive use of alcohol or
illegal drugs interfering with the performance of Executive'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 Executive's
employment; (iv) the conviction of a felony or other crime involving moral
turpitude by Executive; or (v) the
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breach by Executive of any other material provision of this Agreement, and if
such breach is susceptible of cure by Executive, the failure to effect such cure
within 30 days after written notice of such breach is given to Executive. 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, Executive shall
be entitled to receive his base salary to and including the date of termination.
20. LIQUIDATED DAMAGES. In the event that the
Corporations terminate this Agreement otherwise than by reason of Cause, (i) the
Corporations shall pay to Executive, as liquidated damages, a sum equal to 75%
of his then current annual base salary (the "Termination Payment") in a single
payment within 10 days after such termination; and (ii) the Initial Option
thereupon shall become exercisable in full (without regard to the anniversaries
on which such options are exercisable). Upon receipt of the Termination Payment,
Executive shall deliver to the Corporation his resignation as an officer and
director of the Corporation. The provisions of this Paragraph 20 constitute
liquidated damages and not a penalty and a reasonable estimate of the damage
anticipated to be suffered by the Executive were the Corporations to terminate
this Agreement otherwise than by reason of Cause, it being difficult or
impossible to determine the damage actually to be suffered by Executive in such
event.
21. TERMINATION FOR EMPLOYER BREACH. Executive may upon
written notice to the Corporations terminate this Agreement (a termination for
"Employer Breach") in the event of the breach by
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the Corporations of any material provision of this Agreement, and if such breach
is susceptible of cure, the failure to effect such cure within 30 days after
written notice of such breach is given to the Corporations.
22. INSURANCE POLICIES. The GST Companies shall have the
right from time to time to purchase, increase, modify or terminate insurance
policies on the life of Executive for the benefit of the GST Companies, in such
amounts as the GST Companies shall determine in their sole discretion. In
connection therewith, Executive shall, at such place or places as the GST
Companies may reasonably direct, submit himself to physical examinations on an
annual basis (or more frequently) should an insurer or prospective insurer so
require, and execute and deliver such documents as the GST Companies may deem
necessary to obtain such insurance policies.
23. SURVIVAL OF PROVISIONS. Neither the termination of
this Agreement, nor of Executive's employment hereunder, shall terminate or
affect in any manner any provision of this Agreement that is intended by its
terms to survive such termination, in particular, Paragraphs 5, 8, 9, 11, 12,
13, 14, 15, 17, 18 and 20.
24. ENTIRE AGREEMENT; AMENDMENT. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and any other prior agreement between the Corporations
and Executive with respect to the subject matter hereof is hereby superseded and
terminated effective immediately and shall be without further force or effect.
No amendment or modification hereto shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
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25. 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:
If to the Corporations, at their address set forth
above, ATTENTION: Chief Executive Officer, with a
copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
If to Executive, at his 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 25. 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.
26. NO ASSIGNMENT; BINDING EFFECT. Neither this
Agreement, nor the right to receive any payments hereunder, may be assigned by
Executive or the Corporations without the prior written consent of the other
party hereto. This Agreement shall be binding upon Executive, his heirs,
executors and administrators and upon the Corporations, their respective
successors and permitted assigns.
27. WAIVERS. No course of dealing nor any delay on the
part of the Corporations in exercising any rights hereunder shall
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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.
28. 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 any way invalidate or affect any other clause,
paragraph, section or part of this Agreement, unless such holding or declaration
materially reduces the benefits received by Executive under Paragraph 5 hereof,
in which case Executive shall have the option to be exercised by written notice
to the Corporations given within 10 days after any such holding or declaration,
to terminate this Agreement. Any such termination by Executive shall not
constitute a termination by the Corporations within the provisions of Paragraph
20 hereof.
29. 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.
30. 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
-20-
court, and if any appeal is taken from the decision of the trial court,
reasonable attorneys' fees as fixed on appeal.
31. GOVERNING LAW. This Agreement shall be governed,
interpreted and construed in accordance with the terms of the State of Delaware,
except that body of law relating to choice of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be duly executed as of the day and year first above
written.
GST USA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
GST TELECOM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇
THE FOREGOING AGREEMENT IS
CONSENTED TO AND ACKNOWLEDGED:
GST TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Chairman and Chief Executive Officer
-21-
Exhibit A
---------
PROMISSORY NOTE (INITIAL LOAN)
------------------------------
$72,000 Vancouver, Washington
__________, 199_
For value received, the undersigned promises to pay, without
interest, to the order of GST Telecom Inc. ("GST") on ____________, 200_ [FIVE
YEARS AFTER DATE] the principal sum of Seventy Two Thousand ($72,000) Dollars,
or if less, the aggregate unpaid principal sum of all advances made by GST to
the maker of this Note in respect of the Initial Loan pursuant to the terms and
conditions of a certain Employment Agreement dated February ___, 1997 among GST,
GST USA, Inc. and the maker of this Note (the "Employment Agreement"). Each
advance and interest thereon shall be payable by wire transfer to the account of
GST, [Account No. 68365-808, Seafirst Bank, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ABA No. ▇▇▇▇▇▇▇▇▇,] or at such other place as may be designated in
writing by the holder to the maker of this Note.
This Note shall be prepaid to the extent of proceeds of sale
of any Common Shares acquired upon exercise of the Initial Option and the
Performance Options.
The holder hereof is hereby authorized to enter on the
Schedule attached hereto the amount of each advance and each payment of
principal thereon, without any further authorization on the part of the maker or
any endorser or guarantor of this Note, but the holder's failure to make such
entry shall not limit or otherwise affect the obligations of the maker or any
endorser or guarantor of this Note.
-22-
If this Note is not paid in full when due, the undersigned
hereby agrees to pay all costs and expenses of collection, including reasonable
attorneys' fees.
This Note shall become immediately due and payable, without
notice or demand, upon the happening of any of the following events: the making
by the maker or any guarantor of this Note of an assignment for the benefit of
creditors, or a trustee or receiver being appointed for the maker or any such
guarantor or for any property of any of them, or any proceeding being commenced
by or against the maker or any such guarantor under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt,
receivership, liquidation or dissolution law or statute.
The undersigned and all endorsers and guarantors hereof,
jointly and severally waive presentment, demand for payment, notice of dishonor,
notice of protest and protest, and all other notices or demands in connection
herewith and assent to any extension or postponement of the time of payment or
other indulgence or release of any party, whether by operation of law or
otherwise.
No delay by the holder of this Note in exercising any power or
right hereunder shall operate as a waiver of any power or right, nor shall any
single or partial exercise of any power or right preclude other or further
exercise thereof, or the exercise of any other power or right hereunder or
otherwise; and no waiver whatever or modification of the terms hereof shall be
valid unless set forth in writing and signed by the holder of this Note. No
waiver shall be deemed a continuing waiver or waiver of any subsequent breach or
default, whether of a similar or different nature, unless expressly so stated in
writing.
-23-
This Note is made and delivered in and shall be governed by
and construed in accordance with the laws of the State of Delaware, except that
body of law relating to choice of laws.
All capitalized terms used herein and not otherwise defined
shall have the meanings accorded them in the Employment Agreement.
------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇
-24-
SCHEDULE TO NOTE
----------------
Maker: ▇▇▇ ▇▇▇▇▇▇▇▇ Date of Note: _________, 199_
Unpaid
Amount of Principal
Amount of Principal Balance of Name of Person
Date Advance Repaid Note Making Notation
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