RESTATED AND AMENDED EMPLOYMENT AGREEMENT
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THIS RESTATED AND AMENDED EMPLOYMENT AGREEMENT made as of this
1st day of September, 1995, 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 Four Bear Ranch,
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Executive").
W I T N E S S E T H :
WHEREAS, Executive has heretofore been employed pursuant to an
Employment Agreement dated as of August 1, 1994 between GUSA and Executive; and
WHEREAS, GUSA and Executive desire to restate and amend the
terms of Executive's employment and to provide that Executive shall be jointly
employed by GUSA and Telecom;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Employment of Executive. The Corporations hereby employ
Executive as a senior executive officer to perform the duties and
responsibilities incident to such position, subject at all times to the control
and direction of the Boards of Directors of the Corporations (the "Boards") and
the Chief Executive Officers of the Corporations.
2. Acceptance of Employment; Time and Attention. Executive
hereby accepts such employment and agrees that throughout the period of his
employment hereunder, except as hereinafter provided, he will devote
substantially all his 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 their 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 Chief Executive Officers of the Corporations. 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 Corporation consistent with his position as a senior executive
officer as may be assigned to Executive from time to time by the Boards and the
Chief Executive Officers of the Corporations. 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.
Notwithstanding the foregoing, the Corporations acknowledge that Executive
proposes to engage in charitable activities and such engagement shall not
constitute a breach of this Agreement. 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"). 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.
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3. Term. Except as otherwise provided herein, the term of
Executive's employment hereunder shall commence as of the date hereof and shall
continue to and include the 28th day of February, 1999.
4. Compensation. As compensation for his services hereunder,
the Corporation shall pay to Executive (i) a base salary at the rate of $120,000
per annum, or such greater amount as may be determined from time to time by the
GST Board, payable in equal installments no less frequently than semi-monthly
and (ii) such incentive compensation and bonuses as the GST Board may from time
to time determine to award Executive. All compensation paid to Executive shall
be subject to withholding and other employment taxes imposed by applicable law.
5. 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. The Corporations shall be under no obligation
to institute or continue the existence of any such employee benefit plan.
6. 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
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business of the GST Companies, upon the submission to the Corporations of
appropriate receipts or vouchers.
7. Facilities and Personnel. Executive shall be provided a
private office, secretarial services and such other facilities, supplies,
personnel and services as shall be required or reasonably requested for the
performance of his duties hereunder.
8. Vacation. Executive shall be entitled to five 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 Boards. Vacation time shall not be cumulative from one 12-month period
to the next, but Executive shall receive vacation pay at the then current salary
rate for any vacation time not taken by him.
9. 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.
10. 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
Corporation for Cause (as such term is defined herein), for a further period
ending on the earlier of two years after such termination or February 28,
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2000, 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, 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 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 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
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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
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
10 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 10,
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.
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11. 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 operations, sales,
business and affairs, and he shall not, at any time for a period of two years
after termination of his employment 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 Executive may use, disclose or divulge such information,
knowledge or data that (i) was known to Executive at the commencement of his
employment by GUSA; (ii) is or becomes generally available to the public through
no wrongful act on Executive's part; or (iii) becomes available to Executive
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 provided, further,
that the provisions of this Paragraph 11 shall not apply to Executive's know how
to the extent utilized by him in subsequent employment so long as such
employment is not in breach of this Agreement.
12. 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
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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.
13. Survival of Provisions; Death. 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 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 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
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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.
14. 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 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 February 28, 1999,
Executive thereafter shall be entitled to receive salary at an annual rate equal
to one-half of his then current base salary for a further period ending on the
earlier of (i) one year thereafter, or (ii) February 28, 1999 (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
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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 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 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.
15. 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 20 days after
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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 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. Should Executive in good
faith dispute his termination for Cause, he shall give prompt written notice
thereof to the Corporations, in which event such dispute shall be submitted to
and determined by arbitration in San 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
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award or decision is rendered. Executive shall not be entitled to receive any
compensation for periods subsequent to his dismissal pursuant to this Paragraph
15.
16. 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 the Corporations of any
material provision of this Agreement (and the occurrence of any of the events
described in subparagraph (i) of Paragraph 17 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 17 and is
susceptible of cure, the failure to effect such cure within 30 days after
written notice of such breach is given to the Corporation.
17. 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) Executive is placed in any position of lesser
stature than that of a senior executive officer of the Corporations; is assigned
duties inconsistent with a senior executive officer or duties which, if
performed, would result in a significant change in the nature or scope of
powers, authority, functions or duties inherent in such position on the date
hereof; is assigned performance requirements or working conditions which are at
variance with the performance requirements and working conditions in effect on
the date hereof; or is accorded treatment on a general basis that is in
derogation of his status as a senior executive officer; (b) Executive ceases to
serve as a
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member of any of the GST Board or the Boards; (c) any breach of Paragraph 2 or
Paragraphs 4 through 8, inclusive, of this Agreement; or (d) any requirement of
the Corporations that the location at which Executive performs his principal
duties for the Corporations be outside a radius of 50 miles from the location at
which Executive performed such duties immediately prior to the Change of
Control, then the Agreement shall be deemed to have been terminated by the
Corporations otherwise than by reason of Cause and the Corporations shall pay to
Executive within five days after notice from Executive to such effect, as
liquidated damages, a lump sum cash payment equal to 2.99 times the "base
amount" of Executive'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 (i) 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
(ii) 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
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apart from rights accruing under special circumstances) having the right to vote
in the election of directors, (iii) 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, (iv) 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 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.
18. 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.
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19. 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 himself shall be valid or binding unless made in writing and
signed by the party against whom enforcement thereof is sought.
20. 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: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 20. 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.
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21. 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 parties hereto. This
Agreement shall be binding upon Executive, his heirs, executors and
administrators and upon the Corporations, their respective successors and
permitted assigns.
22. 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.
23. 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.
24. 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.
25. 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
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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.
26. 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
Restated and Amended Employment Agreement to be duly executed as of the day and
year first above written.
GST USA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
GST TELECOM INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THE FOREGOING AGREEMENT IS
CONSENTED TO AND ACKNOWLEDGED:
GST TELECOMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name:
Title:
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