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Exhibit
10.1
EMPLOYMENT
AGREEMENT
This AGREEMENT (the
“Agreement”) is made as of the 15th day of August, 2006
(the “Effective Date”) between Global Crossing
Limited , a Bermuda corporation (the “Company”),
and John J. Legere (“Executive”).
This Agreement shall
supersede, effective as of the Effective Date, the prior employment
agreement between the Company and Executive, made as of
December 9, 2003 (the “Original Agreement”),
except to the extent otherwise specifically provided
herein.
For good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company, and Executive hereby agree as
follows:
1. Employment
.
Subject to the terms and
conditions hereinafter contained, the Company hereby agrees to
employ Executive and Executive accepts the employment by the
Company.
(a) During the Term (as
defined below), Executive shall hold the title of Chief Executive
Officer (“CEO”) of the Company, shall be the most
senior executive officer of the Company, and shall have those
powers and duties normally associated with the position of CEO and
such other powers and duties consistent with such position as may
be prescribed by the Board of Directors of the Company (the
“Board”); provided , however , that in no
event shall Executive’s powers and duties hereunder be
materially less than those duties Executive held with the Company
immediately prior to the Effective Date. During the Term, Executive
shall (i) be invited to attend and have the right, at his
election and at Company expense, to attend and participate in all
regular and telephonic meetings of the Board of Directors of the
Company (the “Board”), and committees thereof;
(ii) shall receive copies of all resolutions to be acted upon
by written consent, at the same time as they are provided to Board
members, and (iii) in either case shall receive all materials
distributed to Board members at the same time as they are provided
to such members; provided that Executive shall not be a director of
the Company and shall not have the right to vote on any matter to
be acted upon by the Board or a Board Committee. Notwithstanding
the foregoing, in no event shall Executive have the right to attend
the portion of any meeting called by (A) the Board to
determine whether or not to terminate Executive’s employment
in accordance with Section 6 of the Agreement, or (B) any
committee of the Board to act on a matter that is required under
U.S. securities or tax laws to be acted upon solely by independent
directors. In addition, Executive shall not have the right to
attend the portion of any meeting called by the Board or any
committee thereof, or to receive any resolutions or other materials
provided to the members of the Board or any committee thereof
related to such portions of such meetings, that counsel to the
Board or any committee thereof (whichever is applicable) reasonably
determines relates to a matter, either initiated by Executive or in
which Executive is otherwise involved, in which Executive’s
interests are adverse to the interests of the Company or the Board.
During the Term, Executive shall report directly to the Board in
carrying out his responsibilities under this Agreement.
Executive’s
principal business location shall be at
the Company’s principal executive offices in the New York
metropolitan area.
(b) During the Term, all
executive officers of the Company shall report to
Executive.
(c) Executive shall
faithfully serve the Company to the utmost of his ability and shall
use his best efforts to promote the interests of the Company and
shall devote all of his time and attention during the normal
working hours of the Company to the said duties. The foregoing
shall not preclude Executive from engaging in appropriate civic,
charitable or religious activities or from devoting a reasonable
amount of time to private investments or, subject to Board
approval, from serving on the boards of directors of other
entities, as long as none of such activities, investments and
service materially interfere or conflict with Executive’s
responsibilities to the Company or compete, directly or indirectly,
with the Company or its affiliates.
2. Term .
Subject to the provisions of Section 6 below, the term of this
Agreement (the “Term”) shall commence on the Effective
Date and continue for a period ending on the fourth anniversary of
the Effective Date.
3. Compensation
.
(a) Base Salary
. The Company agrees to pay and Executive agrees to accept as
compensation for the services rendered by Executive during his
employment hereunder an annualized base salary of $1,100,000
(“Base Salary”), to be paid in accordance with the
Company’s regular payroll practices, but in no event less
frequently than semi-monthly.
(b) Annual
Bonus . Executive shall also be eligible to receive an
annual bonus (“Annual Bonus”) in accordance with the
Company’s annual incentive plan beginning with the bonus
payable in respect of the fiscal year of the Company commencing
January 1, 2006. The amount of the Annual Bonus shall be
determined based upon the achievement of established performance
goals which, to the extent related to corporate goals, shall be the
same for Executive as other members of the Company’s senior
executive team. All performance goals shall be determined by the
Compensation Committee of the Board (the “Compensation
Committee”). Executive shall have a target annual bonus
opportunity equal to 100% of his Base Salary such that, upon
achievement of performance goals at target level, Executive shall
receive an Annual Bonus equal to 100% of Base Salary, with scaling
of Annual Bonus in accordance with plan parameters based on
performance above or below target performance. The Company may, at
its election, pay up to one-half of the Annual Bonus in shares of
the Company’s common stock, such stock to be valued on the
date on which the Board or the Compensation Committee (as
appropriate) approves the payment of the Annual Bonus.
(c) Company Stock
Options and Other Equity Grants. Executive shall be
eligible to receive grants of Company stock options, restricted
stock units and other equity based compensation awards, on a basis
not less favorable than the grants
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made for other senior executives of the
Company; provided, however, that any agreement evidencing such
grants shall contain terms and conditions not less favorable than
the terms and conditions set forth on Exhibit A.
(d)
Withholding. All payments required under this
Agreement shall be made net of withholding for taxes and other
amounts required by applicable laws, which shall be paid by the
withholding agent to the applicable tax authorities within the time
prescribed by law.
4. Perquisites and
Benefits .
(a) General .
Executive shall be eligible to participate in all pension and
welfare benefits provided by the Company to its employees and shall
be entitled to such benefits and shall be covered under the
Company’s perquisite programs on a basis no less favorable
than those provided to the most senior executive officers of the
Company.
(b) Vacation .
Executive shall be entitled to four weeks of paid vacation per
year. Executive may not carryover more than four weeks paid
vacation from year to year. On termination of Executive’s
employment for whatever reason, Executive shall be entitled to be
paid for all accrued but unused vacation through the date of
termination.
(c) Relocation
. In the event of Executive’s relocation, Executive shall
receive relocation benefits no less favorable than those provided
in the Company’s relocation policy as in effect on the
Effective Date.
5. Expense
Reimbursements .
Executive shall be reimbursed
for reasonable business expenses incurred by Executive on behalf of
the Company, including, but not limited to, travel and
entertainment expenses, in accordance with Company policies.
Business travel shall be by first class air.
6.
Termination/Resignation .
Subject to the provisions
below, Executive may be terminated by the Company at any time
during the Term, with or without cause. Executive may resign at any
time for any reason.
(a) Death or
Disability . In the event Executive’s employment is
terminated by the Company during the Term due to death of Executive
or due to a disability which renders Executive unable to fulfill
his duties on a full-time basis more than 180 days in any 365-day
period (a “Disability”), then Executive or his estate
shall receive at termination, a lump sum payment covering
(i) Base Salary, prorated through the date of termination,
(ii) any unpaid Annual Bonus relating to the year immediately
prior to the year in which the Termination Date occurs
(irrespective of any requirement that Executive be employed on the
date of payment), and a pro rata Annual Bonus
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(calculated by assuming that target
level performance was attained) for the year of such termination,
(iii) accrued but unused vacation, and (iv) reimbursement
for unreimbursed business expenses incurred pursuant to
Section 5 hereof (collectively, “Accrued
Obligations”). In addition, all unvested options, restricted
stock units and other equity based compensation awards regarding
shares of the Company held by Executive on the date of such
termination shall become immediately vested, and Executive or his
successors, or Executive’s estate, as applicable, shall have
the right to exercise such options for 12 months from
Executive’s date of termination, or if shorter, for the
balance of the original unexpired term at the date of grant
(“Full Option Vesting and Extended Exercise
Rights”).
(b) Termination For
Cause . (i) Actions or omissions during the Term that
will entitle the Company to terminate Executive for cause
(“Termination for Cause”) shall be:
(1) conviction of a crime of
moral turpitude, which causes serious economic injury to the
Company, or conviction of a felony; or
(2) material breach of the
Proprietary Information Agreement as described in Section 7
hereof; or
(3) fraud, embezzlement, or
gross negligence which has caused serious and demonstrable injury
to the Company or its affiliates; or
(4) egregious performance or
egregious failure to perform Executive’s duties as CEO of the
Company;
provided , however , that
a failure to achieve performance objectives shall not constitute
the sole grounds for, or be treated as the sole basis for, a
Termination for Cause under this Agreement.
(ii) A Termination for Cause
shall not take effect unless the Company shall have given or
delivered to Executive (A) reasonable notice (the
“Preliminary Notice”) setting forth, in reasonable
detail the facts and circumstances claimed to provide a basis for a
Termination for Cause, (B) an opportunity for Executive to
cure any action or omission alleged as the basis for such
termination under subsections (b)(i)(2) or (b)(i)(4) of this
Section 6, if curable, (C) a reasonable opportunity for
Executive, together with his counsel, to be heard before the Board,
and (D) following such hearing, a “Notice of Termination
for Cause,” which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the
entire membership of the Board at a meeting of the Board finding
that, in the informed, reasonable, good faith judgment of the
Board, Executive was guilty of conduct specified in the Preliminary
Notice (the date of receipt by Executive of such Notice of
Termination for Cause, the “Termination Date”). Upon
receipt of the Preliminary Notice, Executive shall have thirty
(30) days in which to appear before the Board with counsel, or
take such other action as he may deem appropriate, and
such
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thirty (30) day period
is hereby agreed to as a reasonable opportunity for Executive to be
heard.
(iii) Upon Termination for
Cause, Executive shall be entitled to a lump sum payment covering
the Accrued Obligations (except that there shall be no pro rata
payment of Annual Bonus for the year of termination) and, except as
provided under the terms of the Company compensation and benefit
plans, including without limitation, any stock incentive plans and
applicable award agreements, and under Section 9(i) and 9(j)
hereof, shall not be entitled to receive any further compensation
or payments hereunder.
(c) Termination Other
Than For Cause . Executive may be terminated by the Company
during the Term at any time and for any (or no) reason, upon the
giving of notice by the Company to Executive of termination. Unless
such termination satisfies all the conditions for a Termination for
Cause or a termination on account of Executive’s Disability,
such termination shall be treated as a Termination other than for
Cause. In the event of a Termination other than for Cause, the
Company may, in the notice of termination, discharge Executive
immediately or as of such future date, not to exceed one month, as
the Company may determine to be appropriate. In the event that
Executive is given notice of termination pursuant to this
subsection:
(i) on or prior to the second
anniversary of the Effective Date, Executive shall receive at
termination (I) a lump sum payment covering the Accrued
Obligations; (II) a lump sum cash severance payment equal to three
(3) times the sum of Base Salary plus Annual Bonus (calculated
by assuming the target level of performance was attained), (III)
for a period of three (3) years following the date of such
termination (or until such earlier date as equivalent benefits are
provided from other employment), continuation of benefits provided
in accordance with Section 4 hereof; and (IV) Full Option
Vesting and Extended Exercise Rights;
(ii) following the second
anniversary of the Effective Date but on or prior to the third
anniversary of the Effective Date, Executive shall receive at
termination (I) a lump sum payment covering the Accrued
Obligations; (II) a lump-sum payment equal to two
(2) times the sum of Base Salary plus Annual Bonus (calculated
by assuming that target level performance was attained); (III) for
a period of two (2) years following the date of such
termination (or until such earlier date as equivalent benefits are
provided from other employment), continuation of benefits provided
in accordance with Section 4 hereof; and (IV) Full Option
Vesting and Extended Exercise Rights; and
(iii) following the third
anniversary of the Effective Date, Executive shall receive at
termination (I) a lump sum payment covering the Accrued
Obligations; (II) a lump-sum payment equal to one
(1) times the sum of Base Salary plus Annual Bonus (calculated
by assuming that target level performance was attained); (III) for
a period of one (1) year following the date of such
termination (or until such earlier date as equivalent benefits are
provided
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from other employment),
continuation of benefits provided in accordance with Section 4
hereof; and (IV) Full Option Vesting and Extended Exercise
Rights.
(d) Resignation for
Good Reason . The occurrence of any of the following events
during the Term without his express written consent shall entitle
Executive to resign for Good Reason (“Good Reason
Event”) during the Term: (i) any material diminution in
the nature or scope of Executive’s authority, powers,
functions, duties, positions or responsibilities from those
provided under this Agreement, or the assignment of duties,
responsibilities or reporting relationships that are inconsistent
with and adverse to his then positions or responsibilities under
this Agreement; (ii) any material uncured breach by the
Company of this Agreement (including any failure to provide
compensation when and as required hereunder, unless cured within 10
business days of such failure); or (iii) failure of any
successor of the Company to assume in writing all obligations
imposed on the applicable assignor hereunder on or prior to the
date of such succession, unless such assumption occurs by operation
of law. For 60 days following the occurrence of a Good Reason
Event, Executive shall have the right to deliver a notice of breach
to the Company detailing the specific Good Reason Event that has
occurred. In the event that the Company does not cure the breach,
if susceptible of cure, within 60 days after receipt of notice,
then Executive shall have 30 days to deliver notice of resignation.
Upon such resignation, Executive shall receive the same payments
and benefits as provided in Section 6(c) hereof.
(e) Resignation from
Board . Upon termination of Executive’s employment
with the Company for any reason, Executive shall resign as of the
date of such termination from the Board and any affiliate board of
directors.
(f) Payments in
Cash . Unless otherwise specifically indicated, all
payments under Section 6 shall be made by wire transfer of
immediately available U.S. federal funds on the date indicated in
accordance with account instructions furnished by Executive or his
tax accountant.
(g) Notwithstanding any other
provision of this Agreement, any payments provided to Executive
under this Agreement which are treated as deferred compensation
under final regulations issued pursuant to Section 409A of the
Internal Revenue Code of 1986, as amended (“Section
409A”), or other applicable guidance in effect at the time of
termination, but only such payments, shall be deferred to the
minimum extent necessary so that they are not payable before the
first day of the seventh month following Executive’s
termination of employment. In the event of any disagreement as
to the need for any payment to be deferred, Executive may require
that such disagreement be fully and finally resolved by an
accounting firm that would qualify as an Accounting Firm if it were
appointed pursuant to Section 8(b) of this Agreement, and all
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