EMPLOYMENT AGREEMENT
DATED AS OF FEBRUARY 19, 1999
BETWEEN GLOBAL CROSSING LTD.
AND
ROBERT ANNUNZIATA
ROBERT ANNUNZIATA ('Executive') and GLOBAL CROSSING LTD. ('Company') hereby
agree as follows:
1. Term. The term of Executive's employment by Company under this Agreement
(the 'Term') shall commence on and as of February 22, 1999 for a three-year term
ending February 22, 2002, and continue thereafter for successive one-year terms
(the initial three-year term and each one-year term thereafter, collectively the
'Term'), unless either Company or Executive gives notice to the other at least
six (6) months in advance of the expiration of the current term that it wishes
to terminate this Agreement, in which event this Agreement shall terminate as of
the end of such term, unless earlier terminated as hereafter provided.
2. Title and Duties. During the Term, Executive shall be employed by
Company as Chief Executive Officer ('CEO') reporting to Lodwrick Cook and Gary
Winnick, Co-Chairmen of the Board of Directors of the Company. Executive shall
devote his full-time attention and energies to the business of the Company;
provided, however, that the foregoing shall not preclude Executive from engaging
in charitable and community affairs, or participating as a director of a non
competing business company, or managing his personal passive investments.
Executive shall perform such duties, which shall not be inconsistent with his
position as CEO of Company, as are assigned to him from time to time by the
Co-Chairmen of the Board of Company, and any other duties undertaken or accepted
by Executive consistent with his position as Chief Executive Officer of the
Company. Every executive officer of the Company (other than the Co-Chairmen and
the Vice Chairmen) designated by the Executive shall report to him. Company
agrees to use its best efforts to cause Executive to be elected to the Board of
Directors of the Company (or its successor in interest), at the next annual
meeting of the Company or earlier if possible, and to nominate Executive as a
member of the management slate at each annual meeting of stockholders during
employment hereunder at which Executive's director class comes up for election.
Executive agrees to serve on the Board if elected. A failure to elect the
Executive to the Board of Directors shall give the Executive the right to
terminate his employment under this Agreement in accordance with Section 11.
3. Salary; Signing Bonus; Loan. (a) Executive shall receive a salary of
$500,000 per annum during the first three (3) years of the Term. Executive's
salary shall be reviewed at least annually and may be increased but not
decreased. Salary payments shall be made in equal installments in accordance
with Company's then prevailing payroll policy.
(b) Within 10 days from the date of commencement of Executive's employment
with the Company, the Company shall pay to Executive a $10 million signing
bonus, payable in cash. In the event Executive voluntarily resigns or his
employment is terminated pursuant to Section 10(a)(iii) or 10(a)(iv) in the
first year of Executive's employment, Executive shall return one twelfth (1/12)
of the signing bonus to the Company for each full month Executive does not
complete during such first year.
(c) The Company shall make available a full recourse unsecured loan
facility to Executive at the commencement of Executive's employment with the
Company in an aggregate principal amount not to exceed $5 million in order to
allow Executive to purchase shares of the Company's common stock; provided,
however, loans will be available only to the extent the Executive simultaneously
uses his own funds to purchase a like amount of the Company's common stock. The
loans shall bear interest at the minimal rate required to make the loans an arms
length transaction for tax purposes and shall be payable quarterly. The
principal shall be payable after three years or, if earlier, upon the
termination of Executive's employment with the Company or the disposal of the
shares purchased with the proceeds of the loans. The proceeds of the loans shall
be used only to purchase the Company's common stock. The loan facility shall be
available during Executive's employment with the Company and shall be drawable
in minimum $100,000 increments.
4. Annual Bonus. For each year of the Term, Executive will be eligible for
an annual bonus which will be determined by the Board of Directors, but which
shall not be less than $500,000 for any year during the Term. The bonus shall be
reviewed at least annually by the Board of Directors and may be increased but
not decreased.
5. Stock Options. Subject to Board approval, Executive shall be granted
stock options (the 'Two Million Options') to purchase an aggregate of Two
Million (2,000,000) shares of common stock of the Company. The Two Million
Options are deemed to be of record as of February 16, 1999 in order to be
eligible for the March 9, 1999 stock split. The Two Million Options shall be
granted in accordance with, and subject to the following:
(a) The exercise price of the Two Million Options shall be equal to the
closing price of the common stock of the Company on the day before this
Agreement is executed and delivered and announced minus Ten Dollars
($10) per share. The Two Million Options may be exercised at any time
after vesting but prior to expiration.
(b) The Two Million Options shall be subject to the terms and conditions of
the 1998 Global Crossing Incentive Stock Option Plan, a copy of which
is attached hereto and incorporated herein by reference as Exhibit 'B'
and a Non-Qualified Stock Option Agreement, the form of which is
attached and incorporated herein by reference as Exhibit 'C'.
(c) The Two Million Options shall vest in such shares according to the
following schedule:
Tranche No. of Shares Vesting
------- ------------- -------
1 500,000 Immediately upon execution of
this Agreement
2 500,000 February 22, 2000
3 500,000 February 22, 2001
4 500,000 February 22, 2002
The vesting schedule shall be accelerated in the event of a Non-Fault
Termination (as defined in Section 12).
(d) In the event there is a Change of Control at any time during the Term,
then the acceleration of the vesting schedule of the Two Million
Options and the exercisiability of the Two Million Options shall be
governed by the Plan upon such Change of Control.
(e) The Two Million Options shall expire on the earlier of ten years from
the date of grant or the termination date set forth in the Plan after
termination of Executive's employment with Company.
(f) At the end of the initial Term, Executive shall have the right, for a
period of six (6) months thereafter exercisable on ten (10) days
written notice to Company ('Put Period'), to require the Company to
purchase from him up to 2,000,000 shares of the common stock of the
Company held by Executive as a result of the exercise of the Two
Million Options at a purchase price equal to the closing price of the
common stock of the Company on the day before this Agreement is
executed and delivered and announced (which the parties agree is set
forth on Exhibit A hereto).
(g) In the event the outstanding shares of common stock of Company are
changed into or exchanged for a different number or kind of shares or
other securities of Company or of another corporation by reason of
merger, consolidation, other reorganization, reclassification,
combination of shares, stock split-up or stock dividend, rights of the
Two Million Options granted hereunder, the number of subject shares and
the exercise price (and other terms herein relating thereto) shall be
adjusted appropriately.
6. Additional Stock Options. Subject to Board approval, Executive shall
be granted stock options (the '250K Options'; and together with the Two Million
Options, the 'Options') to purchase an aggregate of Two Hundred Fifty Thousand
(250,000) shares of common stock of the Company. The 250K Options are deemed to
be of record as of February 16, 1999 in order to be eligible for the March 9,
1999 stock split. The 250K Options shall be granted in accordance with, and
subject to the following:
(a) The exercise price of the 250K Options shall be equal to the closing
price of the common stock of the Company on the day before this
Agreement is executed and delivered and announced. The 250K Options may
be exercised at any time after vesting but prior to expiration.
(b) The 250K Options shall be subject to the terms and conditions of the
1998 Global Crossing Incentive Stock Option Plan, a copy of which is
attached hereto and incorporated herein by reference as Exhibit 'B' and
a Non-Qualified Stock Option Agreement, the form of which is attached
and incorporated herein by reference as Exhibit 'C'.
(c) The 250K Options shall vest in full on Executive's first day of
employment by the Company.
(d) In the event there is a Change of Control at any time during the Term,
then the exercisability of the 250K Options shall be governed by
Company policy upon such Change of Control.
(e) The 250K Options shall expire on the earlier of ten years from the date
of grant or the termination date set forth in the Plan after
termination of Executive's employment with Company.
(f) In the event the outstanding shares of common stock of Company are
changed into or exchanged for a different number or kind of shares or
other securities of Company or of another corporation by reason of
merger, consolidation, other reorganization, reclassification,
combination of shares, stock split-up or stock dividend, rights of the
250K Options granted hereunder, the number of subject shares and the
exercise price (and other terms herein relating thereto) shall be
adjusted appropriately.
7. Benefits. Executive shall be entitled to receive the following
benefits:
(a) Health care coverage equivalent to that provided to the Company's other
executive officers.
(b) Reimbursement of reasonable living expenses for temporary housing in
the Los Angeles area until permanent accommodations are arranged but
not later than December 31, 1999 and reimbursement of reasonable
relocation expenses.
(c) Monthly first class airfare to Los Angeles for members of Executive's
immediate family (spouse, mother and all children including the child
of his wife, Patricia).
(d) Private aircraft, if available, or First class airfare and limousine
service to/from residence and/or office in connection with all company
travel and for appropriate trips to New Jersey until permanent living
arrangements are made in Los Angeles as required. No such trips shall
interfere with Executive's reasonable performance of his
responsibilities as Chief Executive Officer.
(e) Four (4) weeks paid vacation each year during the Term. The maximum
accrued vacation shall be 4 weeks.
(f) The Executive shall be treated in the same manner as, and shall be
entitled to such benefits and other perquisites and terms and
conditions of employment no less favorable than those provided to the
most senior officers of the Company.
8. Reimbursement for Expenses. Executive shall be expected to incur
various business expenses customarily incurred by persons holding like
positions, including but not limited to traveling, entertainment and similar
expenses, all of which are to be incurred by Executive in the belief that they
will benefit the Company. Subject to Company's policy regarding the
reimbursement and non-reimbursement of such expenses, Company shall reimburse
Executive for such expenses from time to time, at Executive's request, and
Executive shall account to Company for such expenses.
9. Protection of Company's Interests.
(a) During the Term of Executive's employment by Company, Executive will
not compete in any manner, directly or indirectly, whether as a
principal, employee, consultant, agent, owner or otherwise, with
Company or any affiliate thereof except that the foregoing will not
prevent Executive from holding at any time less that 5% of the
outstanding capital stock of any company whose stock is publicly
traded.
(b) To the extent permitted by law, all rights worldwide with respect to
any and all intellectual or other property of any nature produced,
created or suggested by Executive during the Term of his employment or
resulting from his service shall be deemed to be a work for hire and
shall be the sole and exclusive property of Company. Executive agrees
to execute, acknowledge and deliver to Company, at Company's request,
such further documents as Company finds appropriate to evidence
Company's rights in such property. Any confidential and/or proprietary
information of Company or any affiliate thereof (including, without
limitation, any information relating to the identities, capabilities,
compensatory and contractual arrangements and/or general personnel data
of employees of Company and its affiliates) shall not be used by
Executive or disclosed or made available by
Executive to any person except as required in the course of his
employment, and upon expiration or earlier termination of the term of
this Agreement, Executive shall return to Company all such information
that exists in written or other physical form (and all copies thereof)
under his control. Executive agrees to sign the Company's standard form
of confidentiality agreement contemporaneously with the execution and
delivery of this Agreement.
10. Termination. In addition to any right to terminate under Section 1
above:
(a) Company shall have the right to terminate Executive's employment with
Company under the following circumstances:
(i) Upon death of Executive;
(ii) Upon notice from the Company to Executive in the event of an
illness or other disability which has totally and permanently
incapacitated him from performing his duties as Executive on a
substantially full-time basis as described in the Company's long
term disability plan;
(iii) For good cause immediately upon notice from Company. Termination
by Company of Executive's employment for 'good cause' as used in
this Agreement shall mean actual fraud, embezzlement or
intentional misconduct which has caused demonstrable and serious
injury to the Company; or
(iv) Conviction of a felony or crime of moral turpitude which has
caused serious injury to the Company.
(b) If Executive's employment is terminated pursuant to Section 10(a)(iii)
or 10(a)(iv) above, Executive's rights and Company's obligations
hereunder, and all unvested stock options granted in accordance with
this Agreement which have not already vested shall forthwith terminate
in their entirety, except that, notwithstanding the foregoing, (i) the
expiration date of any Options which have already vested in accordance
with this Agreement shall be 30 days after the date of termination
pursuant to Section 10(a).
(c) If Executive's employment is terminated pursuant to this Section 10 no
Termination Payment (as defined in Section 12) shall be payable.
11. Termination By Executive. Prior to the expiration of the Term,
Executive shall have the right to terminate his employment under this
Agreement upon 30 days' notice to Company given within 60 days
following the occurrence of any of the following events,
provided that Company shall have 20 days after the date such notice has been
given to Company in which to cure the conduct or cause specified in such notice:
(a) Executive is not elected or retained in accordance with Section 2 as
CEO (reporting to Company's Co-Chairman) and a director of Company;
(b) There is a significant change in the nature or scope of the Executive's
authority, powers, functions, duties or responsibilities;
(c) There is a substantial and continued reduction in the level of support
services, staff, secretarial and other assistance, office space and
accoutrements available to a level below that which is reasonably
necessary for the performance of Executive's duties;
(d) Company shall fail to issue stock pursuant to Executive's stock options
provided for herein or shall reduce his salary or shall deny Executive
eligibility for annual discretionary bonuses, or Company shall fail to
make any compensation payment required hereunder;
(e) A Change of Control shall occur; and
(f) Any breach of this agreement by the Company.
12. Termination Payment. If a Non-Fault Termination (as defined below) of
Executive's employment with Company shall occur other than by means of the death
or disability of Executive, Executive shall be entitled to receive a lump sum
payment equal to the sum of two times the sum of Executive's then annual base
salary and bonus (provided, however, that in no event shall the annual bonus be
less than $500,000) (Termination Payment). The Termination Payment shall be made
to Executive not later than 30 days after the date of such Non-Fault
Termination. 'Non-Fault Termination' shall mean Executive's employment with
Company shall be terminated (i) without cause, (ii) be reason of death or total
and permanent disability pursuant to Section 9(a)(i) or (ii) hereof, or (iii)
Executive shall validly terminate his employment pursuant to Section 11 hereof.
Except for Executive's rights under Sections 5(e), 5(f) and 6(e), which shall
remain in full force and effect after any Non-Fault Termination of this
Agreement, and for the acceleration of the vesting of the Two Million Options,
the Termination Payment described in this Section 12 shall be Executive's sole
and exclusive remedy under this Agreement in the event of a Non-Fault
Termination.
13. Assignment. Company may assign this Agreement or all or any part of its
rights hereunder to any entity that succeeds to all or substantially all of
Company's assets or that holds, directly or indirectly, all or substantially all
of the capital stock of Company or that is otherwise a successor in interest to
Company generally, and this Agreement shall insure to the benefit of, and be
binding upon, such assignee or successor in interest. This Agreement is personal
to Executive and Executive may not, without the express written permission of
Company, assign or pledge any rights or obligations hereunder to any person,
firm, corporation or other entity.
14. No Conflict With Prior Agreements. Executive represents and warrants to
Company that, to the best of his personal knowledge and belief, neither the
execution and delivery of this Agreement, his commencement of employment
hereunder nor the performance of his duties hereunder conflicts with any
contractual commitment on his part of any third party or violates or interferes
with any rights of any third party.
15. Key Man Insurance. Company shall have the right to secure, in its own
name or otherwise, and at its own expense, life, disability, accident or other
insurance covering Executive and Executive shall have no right, title or
interest in or to such insurance. Executive shall assist Company in procuring
such insurance by submitting to reasonable examinations and signing such
applications and other instruments as may be required by the insurance carriers
to which applications is made for any such insurance.
16. Post-Termination Obligation. After the expiration or earlier
termination of the Executive's employment hereunder for any reason whatsoever,
Executive shall not either alone or jointly, with or on behalf of others, either
directly or indirectly, expressly or implied, whether as principal, partner,
agent, shareholder, director, employee, consultant or otherwise, at any time
during a period of two years following such expiration or termination, solicit
in any manner whatsoever the employment or engagement of, either for his own
account or for any other person, firm, company or other entity, any person who
is employed by Company or any affiliated entity, whether or not such person
would commit any breach of his contract of employment by reason of his leaving
the service of Company or any affiliated entity.
17. Reimbursement of Legal Expenses; Personal Automobile.
(a) Company agrees to reimburse Executive for his reasonable out-of-pocket
legal expenses and costs incurred in connection with the negotiation
and preparation of this Agreement.
(b) Promptly after the commencement of Executive's employment with the
Company, the Company shall purchase, on behalf of Executive, a brand-
new 1999 model Mercedes-Benz SL 500 (or car of equivalent value) for
use by the Executive and his spouse.
18. Entire Agreement, Amendment, Waiver, Etc.
(a) This Agreement supersedes all prior and/or contemporaneous agreement
and/or statements, whether written or oral, concerning the terms of
Executive's employment, and no amendment or modification of this
Agreement shall be binding unless set forth in writing signed by
Company and Executive. No waiver by either party of any breach by the
other party of any provision or condition of this Agreement shall be
effective unless in writing and signed by the party effecting the
waiver, and no such waiver shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or
subsequent time.
(b) All payments required to be made to Executive hereunder, whether during
the term of his employment hereunder or otherwise, shall be subject to
all applicable federal, state and local tax withholding laws.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of California. In the event of any controversy or
claim by either party hereunder, the prevailing party in any final and
legally binding adjudication (as to which all periods for the filing of
any appeal have expired) with respect to such controversy or claim
shall be entitled to reimbursement from the losing party for reasonable
attorney's fees and costs and for all other reasonable expenses of such
adjudication.
19. Notices. All notices that either party is required or may desire to
give the other shall be in writing and shall be effective (i) upon personal
delivery or (ii) three business days after deposit of the same with the United
States Postal Service for delivery by certified mail, return receipt requested,
addressed to the party to be given notice as follows:
To Company: Global Crossing Ltd.
150 El Camino Dr., Suite 204
Beverly Hills, CA 90212
Attn: Lodwrick Cook, Co-Chairman
To Executive: Robert Annunziata
95 Minnisink Road
Short Hills, NJ 07078
Either party may by written notice designate a different address for giving
notices. The date of mailing of any such notices shall be deemed to be the date
on which such notice is given.
20. Arbitration. Any dispute arising out of this Agreement shall be
determined by arbitration in Los Angeles, California, under the rules of the
American Arbitration Association then in effect and judgement upon any award
pursuant to such arbitration may be enforced in any court having jurisdiction
thereof, provided each of the parties to this Agreement will appoint one person
as an arbitrator to hear and determine the dispute, and if they are unable to
agree, then the two arbitrators so chosen will select a third impartial
arbitrator whose decision will be final and conclusive upon the parties to this
Agreement. Subject to Section 18(c), the expenses of the arbitration proceedings
concluded pursuant to this paragraph will be borne by the parties in such
proportions as the arbitrators decide.
21. Certain Additional Payments by the Company. Anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment, award, benefit or distribution by the Company to or for the benefit of
the Executive would be subject to the excise tax imposed by Section 4999 of the
Code or any corresponding provisions of state or local tax laws as a result of
payment upon a change of control, or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
'Excise Tax'), then the Executive shall be entitled to receive an additional
payment (a 'Gross-Up Payment') in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes) imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
payments.
22. Headings. The headings set forth herein are included solely for the
purpose of identification and shall not be used for the purpose of construing
the meaning of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
GLOBAL CROSSING LTD.
/s/ Robert Annunziata /s/ Lodwrick Cook
________________________________ _________________________________
ROBERT ANNUNZIATA LODWRICK COOK,
CO-CHAIRMAN
Exhibit A
This Exhibit A is the 'Exhibit A' referred to in the Employment Agreement, dated
as of February 19, 1999 (the 'Employment Agreement'), between Global Crossing
Ltd. and Robert Annunziata (together, the 'Parties').
The Parties agree that, for purposes of Sections 5(a), 5(f) and 6(a) of the
Employment Agreement, the day referred to in such Sections as 'the day before
this Agreement is executed and delivered and announced' shall be deemed to be
Thursday, February 18, 1999 and the closing share price of the common stock of
Global Crossing Ltd. on such day was $49-5/8 per share.